RIYADH, 5 March 2006 — Allaying concerns over the security situation, Saudi Arabia has reassured France that despite the terrorist attacks, the Kingdom attracted overseas investments worth SR200 billion in 2005-30 times more than that received the year before.
Amr Abdullah Dabbagh, governor of the Saudi Arabian General Investment Authority (SAGIA), gave out the figure during a presentation on the investment opportunities in the King Abdullah Economic City (KAEC) for a 62-member French delegation that arrived here yesterday ahead of the visit to the Kingdom of French President Jacques Chirac. French Ambassador Charles Henri d’Aragon and senior officials of SAGIA were among those present.
It was also announced that a tax credit formula is being examined for less developed regions of the Kingdom to attract foreign direct investment (FDI). This would entitle the investors to a dollar-for-dollar reduction of taxes owed. Among the other incentives for overseas investors was the setting up of a re-export zone to encourage entrepreneurs. Raw materials brought in for manufacturing would be exempted from customs duty, which would only be imposed on the finished products.
KAEC provides a wide spectrum of opportunities for investors. SAGIA has already launched a $500 million energy fund for setting up power generation plants in the Economic City. A second offering is the $500 million Hospitality Fund for the construction of hotels with a total capacity of 12,000 rooms in KAEC.
Infrastructure projects need an overall long-term investment of $26 billion. All these projects are being managed by Emaar Properties of the UAE, the prime contractor for the SR100 billion Economic City.
Water treatment facilities envisage an investment of $50 billion in the long term. The funding for all these projects will come from the private sector. As investment opportunities expand, the negative list declaring certain areas off-limits for investors is shrinking by the day.
The SAGIA Governor fielded a number of queries from the French delegates on the situation security situation, facilities and incentives for investors, Saudization, issuance of business and tourist visas, as well as other bilateral concerns.
In reply to a question on the facilities for investors, he said the foreign minister has already announced that business visas would be issued in 24 hours without the need for an invitation or a sponsor’s letter. The procedure for tourist visas has also been simplified. SAGIA was also working with various government agencies to ensure that investor’s license is issued within a maximum of three days.
The time for startup of a company has also been cut down to 30 days. This was in addition to providing all types of facilities to investors after the issuance of license and commercial registration. Further, 100 percent ownership of a project is allowed in some sectors, giving the Kingdom an edge over the UAE, where the extent of foreign ownership is limited to 49 percent outside the Jebel Ali Free Trade Zone.
Pointing out that many countries from East Asia, including China, India and Malaysia, had invested in the Kingdom’s utilities sector, Al-Dabbagh reminded prospective French investors not to miss out on the opportunities, since the country was experiencing an economic boom with a total of $1 trillion on offer in investment opportunities over the next 20 years.
Some delegates wanted to know if there would be a grace period for overseas investors in terms of Saudization of the work force. The governor replied that regulations in this regard had already been made flexible, with the level of Saudization ranging from five to ten to 30 percent, depending on the availability of skilled Saudi manpower in different sectors.
Observing that “Do in Rome as Romans do,” Al-Dabbagh said the foreign investors are expected to abide by Saudi regulations. In turn, foreign companies would be treated on a par with local companies in terms of facilities and concessions.
