Saudi Investment Authority: Policies, Economic Impact, and Trends

The Saudi Investment Authority was established in 2000 as part of a comprehensive national strategy aimed at restructuring the Saudi economy and reducing dependence on the oil sector. At its inception, the authority was named the Saudi Arabian General Investment Authority (SAGIA), with its primary mission focused on attracting foreign direct investment and providing a suitable regulatory environment for the growth of the private sector. The establishment of the authority came amid international economic transformations and an increasing need to diversify national income sources, as the Saudi leadership recognized that total reliance on oil posed significant risks amid global price fluctuations. In its early years, the authority focused on studying and developing investment policies, improving regulatory frameworks, and providing facilities for foreign investors, both in terms of easing their entry into the Saudi market and granting them investment incentives.

The authority has undergone rapid development phases, launching numerous programs and initiatives to improve the Kingdom's ranking in ease of doing business and attracting investment, such as developing special economic zones, updating licensing procedures, and expanding into non-traditional sectors like technology and tourism. In 2020, as part of the restructuring plan for ministries and government agencies, the authority was transformed into the Ministry of Investment (MISA), becoming a sovereign entity encompassing all activities related to attracting and promoting investment, with broader powers to coordinate with other state institutions.

Since the transition to a ministry, its tasks have expanded to include formulating public investment policies, proposing regulations and legislation, and developing international partnerships. The ministry has also become responsible for specialized programs such as the Large Strategic Investor Program (KSVIP) and enhancing cooperation with global organizations like the World Bank and the World Economic Forum. The authority has distinguished itself since its inception by focusing on transparency, facilitating procedures through electronic platforms, and stimulating investment in modern sectors, contributing to increased foreign and local investment flows and improving the Kingdom's ranking in international indices, making it one of the most attractive countries for investment in the region.

The Saudi Investment Authority plays a pivotal role in achieving the ambitious goals of the Kingdom's Vision 2030, which focuses on building a diverse and resilient economy that reduces reliance on oil as a primary source of income. One of the authority's main objectives is to raise the contribution of non-oil sectors to GDP to nearly 50% by 2030. To achieve this, the authority has established a set of integrated strategies, including facilitating investment procedures, granting competitive incentives, and attracting diverse foreign and local capital.

The authority aims to elevate the Kingdom to the ranks of advanced economies by focusing on promising sectors such as technology, renewable energy, tourism, mining, and logistics services. In line with these objectives, the authority works on developing legislative and regulatory policies and adopting modern digital technologies to simplify the company establishment process and develop special economic zones that allow investors to benefit from tax and regulatory advantages.

An important aspect of the authority's strategy is enhancing the competitiveness of the business environment in Saudi Arabia by reducing bureaucracy and lowering restrictions on foreign ownership in strategic sectors, as evidenced by recent reforms that allowed 100% foreign ownership in several sectors. The objectives also include improving the Kingdom's ranking in international ease of doing business indices, increasing the number of investment licenses granted annually, and enhancing the quality of services provided to investors through unified electronic portals.

The authority also seeks to build long-term partnerships with global companies through programs like KSVIP, providing technical and legal support to investors, in addition to developing modern infrastructure that supports business growth. The authority coordinates with other ministries to ensure the integration of policies related to employment, education, and innovation, achieving sustainable growth objectives. Thanks to these policies, the authority has become an essential tool in implementing Vision 2030, as its efforts have led to increased investment flows, job creation, and stimulated innovation across various economic sectors.

The Saudi Investment Authority possesses a wide range of powers that enable it to perform its role as a catalyst and key driver of investment in the Kingdom. These powers focus on formulating general investment policies and plans, proposing regulations and legislation that facilitate business operations and enhance the attractiveness of the Saudi market for local and foreign investors. Among the most important regulatory tools employed by the authority are the development of executive regulations that define the conditions and controls for granting investment licenses, which are periodically updated to keep pace with global changes.

Additionally, the authority collaborates with various government entities to coordinate and simplify procedures, such as the Ministry of Commerce, the Ministry of Human Resources, and the Zakat, Tax and Customs Authority. Among the prominent regulatory tools recently utilized by the authority is the launch of unified electronic platforms like the "Aftah" platform, which allows investors to apply electronically for licenses, track applications, and receive legal and technical consultations online.

The authority pays special attention to studying bilateral and multilateral investment agreements with other countries, aimed at protecting Saudi investments abroad and attracting foreign investments into the Kingdom. The authority also provides various investment incentives, including tax exemptions, ownership facilitation, and logistical support, especially in special economic zones. Among the new tools introduced by the authority are the Strategic Investor Programs (KSVIP), which offer preferential advantages to major investors in terms of expediting procedures, granting special visas and residencies, and providing comprehensive administrative support.

The authority has played an important role in classifying lands and industrial areas, equipping them with the necessary facilities to attract quality projects, especially in sectors like renewable energy and technology. The authority also supports companies in the establishment and growth stages by providing consulting and legal services and assisting in resolving investment disputes through advanced settlement mechanisms. These powers and tools aim to enhance investor confidence and increase the volume and value of investments in the Saudi economy, in line with best global practices.

The Saudi Investment Authority has launched several qualitative initiatives to support and attract foreign and local investments, the most prominent of which is the Large Strategic Investor Program (KSVIP). This program is designed to attract globally significant investors, governments, and major companies wishing to implement strategic projects in the Kingdom. The program aims to provide an exclusive business environment and preferential advantages for qualified investors, ensuring expedited establishment procedures, reduced costs, and comprehensive services.

The KSVIP program includes various incentives, such as facilitating the granting of work and residency visas, exemptions from certain regulatory requirements, and providing banking and administrative facilities. In 2024, the program's scope was expanded to include new sectors such as agriculture, biotechnology, and renewable energy, in addition to traditional sectors like industry and services. One of the program's distinctive elements is the provision of free consulting offices for investors and the allocation of government employees to follow up on their projects step by step.

The program also grants investors the opportunity to benefit from an integrated electronic platform that allows them to submit applications, track procedures, and receive technical and legal support at every stage of the project. In 2024, the authority announced receiving hundreds of new applications to benefit from KSVIP, reflecting the program's attractiveness and effectiveness in attracting significant capital. This program has stimulated global companies to open branches or relocate their regional headquarters to the Kingdom and collaborate with Saudi companies to implement joint projects.

KSVIP is part of a broader strategy to enhance Saudi Arabia's position as a regional investment hub, as the authority seeks to improve the Kingdom's ranking in global competitiveness indices and increase the quality investment flows. The program also reflects the evolution of the authority's regulatory thinking and its focus on responding quickly to the needs of major investors while ensuring a balance between attracting investment and achieving sustainable development.

The business environment in the Kingdom of Saudi Arabia has undergone a radical transformation in recent years, thanks to comprehensive reform packages led by the Investment Authority in collaboration with other government entities. These reforms focused on removing bureaucratic obstacles, updating regulations, and facilitating the establishment and operation of companies, contributing to improving the Kingdom's ranking in global ease of doing business indices. For example, recent reforms have granted foreign investors the right to full ownership (100%) in strategic sectors, which many consider a qualitative shift reflecting the government's confidence in international investors.

Among the notable reforms is the launch of the unified "Aftah" electronic platform in 2024, which allows investors to submit licensing requests, track transactions, and access government services through an easy-to-use digital interface. This platform has reduced the time required to establish companies from weeks to just a few days, helping to increase transparency and simplify procedures.

In recent years, new regulations concerning investor protection, dispute resolution, and facilitating the granting of visas and residencies to foreign investors have been issued. For instance, the requirement for a local sponsor for foreign investors has been abolished, and permanent residency programs (Golden Visa) have been adopted, making the Saudi market more attractive and flexible.

The authority has also sought to enhance integration between government entities through joint committees to resolve investment issues and develop related policies. These reforms have directly reflected on the volume and diversity of investments, with the number of licenses granted increasing by 50% in the second quarter of 2024 compared to the previous year, and total new investments exceeding 250 billion riyals.

These reforms have contributed to boosting investor confidence, increasing liquidity in the financial market, and encouraging local and foreign companies to expand in Saudi Arabia, supporting the goals of Vision 2030 in building a competitive and sustainable economy.

The Saudi Investment Authority aims to develop promising economic sectors in line with the diversification strategy of Vision 2030. The authority focuses particularly on sectors such as technology, renewable energy, tourism, mining, and logistics services, due to their significant potential in creating new jobs and increasing GDP. Through its programs and initiatives, the authority works to identify investment opportunities in these sectors and promote them locally and internationally through conferences, exhibitions, and attracting major global companies.

In the technology sector, for example, the authority has supported the establishment of special technology zones and provided incentives to encourage startups and innovative companies to invest in the Kingdom. In the renewable energy sector, the authority has contributed to attracting global companies to implement massive solar and wind energy projects by providing land, financing facilities, and regulatory support. In the tourism sector, the authority has worked on developing major projects like NEOM and the Red Sea, in collaboration with the Public Investment Fund and other government entities, leading to increased demand for hospitality and entertainment services.

In the mining sector, the authority has facilitated the granting of licenses to local and foreign companies and provided logistical and technical support, contributing to the development of massive mining projects and increasing the sector's contribution to the national economy. In the logistics services sector, the authority has worked on developing ports and free zones and stimulating transportation and storage companies to invest in the Kingdom.

The authority's efforts in these sectors have led to an increase in the number of foreign and local companies operating in them and a rise in the volume of investments directed towards them. The value of approved investment projects in 2024 reached tens of billions of riyals, distributed across technology, industrial, tourism, and logistics projects. These figures reflect the authority's success in activating economic diversification policies and increasing the Kingdom's competitiveness regionally and globally.

Recent investment data indicates a notable momentum in capital flows to the Kingdom, supported by structural reforms and various government initiatives. In the second quarter of 2024, the number of investment licenses granted increased by 50% compared to the same period in 2023, reflecting rising investor confidence in the Saudi economic environment. The total initial capital for new approved investment projects was approximately 200 billion Saudi riyals during 2024, encompassing thousands of projects in diverse sectors such as technology, renewable energy, tourism, manufacturing, and financial services.

Reports from the Ministry of Investment showed that the number of foreign companies entering the Saudi market significantly increased in 2024, with hundreds of branches and subsidiaries of global companies established, particularly in software, clean energy, and financial services. This is attributed to regulatory reforms, such as reducing restrictions on foreign ownership and facilitating establishment procedures through a unified electronic platform.

In terms of foreign direct investment flows, incoming investments to Saudi Arabia rose by 20–30% in 2024 compared to 2023, while Saudi investments abroad doubled. The government aims to raise the share of foreign direct investment to 5–6% of GDP by 2030, making the Kingdom one of the leading countries in the region in attracting investments.

The General Authority for Statistics announced an increase in the current account surplus for 2024, resulting from increased oil exports and growth in non-oil investment activities. At the same time, the state budget recorded higher allocations for development projects, positively reflecting on the private sector and investment opportunities. These indicators reflect the effectiveness of the Investment Authority's policies in making the Kingdom an attractive center for regional and global capital.

The Investment Authority plays a vital indirect role in supporting the Saudi financial market (Tadawul) by stimulating the growth of listed companies and increasing liquidity and diversity in the market. When the authority facilitates the entry of foreign investors and works to attract global companies to launch joint projects with local entities, this positively reflects on the performance of listed companies, both in terms of revenue growth and increased project sizes.

For example, major industrial companies have benefited from the facilities provided by the authority in expanding their operations, leading to profit growth and increased attractiveness to investors. Additionally, the increase in the number of foreign and local companies entering the Saudi market raises liquidity levels and diversifies listed stocks, enhancing market efficiency and reducing risks associated with concentration in specific sectors.

Data from 2024 indicates that the rise in foreign investments has led to an increase in trading volumes in the financial market, improving liquidity and sectoral diversity indicators. The authority also contributes to developing the legislative and regulatory infrastructure that ensures the protection of investor rights and enhances transparency and governance in the financial market.

On the other hand, the authority promotes the Saudi market regionally and internationally, supporting the listing of Saudi companies in emerging market indices and attracting additional capital from investment funds and global financial institutions. Thus, the Investment Authority remains a key player in achieving sustainable growth for the Saudi financial market and enhancing its competitiveness on an international level.

The cement sector is one of the vital sectors in the Saudi economy, given its importance in supporting infrastructure projects and urban development. The sector includes more than ten major companies listed on Tadawul, such as Yamama Cement, Eastern Cement, Qassim Cement, and Hail Cement. The sector has witnessed significant growth in recent years driven by major national projects under Vision 2030, such as the NEOM project, the Red Sea project, and the expansion of the Two Holy Mosques.

The Investment Authority plays a pivotal role in supporting the growth of the cement sector by facilitating the entry of new companies, granting investment licenses, and providing incentives for existing plants to modernize production lines and expand operational capacity. The authority also facilitates strategic partnerships between local companies and foreign investors, encouraging the adoption of environmentally friendly technologies to reduce carbon emissions, in line with sustainable development requirements.

In 2024, the cement sector saw an increase in domestic demand due to the continued implementation of housing and infrastructure projects, which positively reflected on the results of listed companies. Companies also benefited from the authority's programs that facilitate expansion in strategic areas and provide logistical and technical support to enhance operational efficiency.

On the other hand, the authority works to activate the sector's role in exports by facilitating access to neighboring markets and providing incentives for companies that achieve local added value. This enhances the sector's ability to face challenges related to demand and price fluctuations and provides opportunities for sustainable growth in the long term.

Hail Cement Company represents a prominent example of the impact of investment policies in supporting the growth of industrial companies in Saudi Arabia. The company was established to meet the increasing demand for cement in northern regions of the Kingdom and quickly became a key player due to its strategic location and balanced production policies. In 2024 and 2025, the number of the company's shares reached approximately 49 million shares, with an average price ranging between 12 and 14 riyals per share, making the company's market value approximately 637 million Saudi riyals.

The company benefited from government initiatives and programs from the Investment Authority that facilitated the modernization of production lines and provided incentives to reduce energy costs, especially amid rising fuel prices. Hail Cement adopted a dividend distribution policy ranging between 6% to 10% of the nominal value of the share, reflecting its ability to achieve stable profits and provide suitable returns to shareholders. The company's price-to-earnings (P/E) ratio was approximately 15–20, indicating stable financial performance within the industrial sector.

Operationally, the company saw an improvement in sales due to continued local demand, especially from large government construction projects. It also benefited from the authority's support in facilitating export operations and adopting new technologies to reduce environmental emissions, in response to increasing regulatory requirements. In 2024, the company announced the modernization of production lines to increase operational capacity by 10% as part of a five-year program to develop factories.

The experience of Hail Cement emphasizes the importance of the Investment Authority's role in providing a supportive environment for the growth of industrial companies and enhancing their competitiveness locally and regionally through regulatory, technical, and logistical support.

The Saudi cement sector is witnessing strong competition among more than ten major companies, each focusing on key geographical areas. In addition to Hail Cement, which focuses on northern Saudi Arabia, there are companies like Yamama Cement (Riyadh), Eastern Cement (Eastern Province), Qassim Cement (Qassim), Najran Cement (southern Saudi Arabia), and Yanbu Cement (the west). Each company has competitive advantages, such as production capacity, proximity to major projects, and transportation and energy costs.

Yamama Cement is distinguished by its massive production capabilities and targets major government projects in central Saudi Arabia. Meanwhile, Eastern Cement benefits from its proximity to gas fields, reducing production costs. In contrast, Hail Cement is a direct competitor in northern Saudi Arabia, leveraging its strategic location to meet local demand without high transportation costs.

Competition in the sector relies on several factors, including selling prices, product quality, the ability to win government project contracts, and responsiveness to regulatory and environmental changes. Companies face challenges such as fluctuations in energy prices, price competition, and the requirements for modern environmental technologies. However, opportunities remain due to the continued demand for cement supported by infrastructure and housing projects.

The Investment Authority plays a role in supporting competitiveness by encouraging innovation, granting incentives for updating production lines, and facilitating exports to neighboring markets. The authority also monitors the implementation of environmental policies and supports companies in adapting to new regulations related to carbon emissions. Thanks to this support, Saudi companies have succeeded in maintaining strong market shares and achieving sustainable growth despite challenges.

Despite the significant successes achieved by the Investment Authority in recent years, there are a number of future challenges that must be addressed to ensure continued investment momentum and achieve the goals of Vision 2030. Among the most prominent challenges are ongoing fluctuations in the global economy, which may affect foreign investment flows, especially amid changing geopolitical conditions and fluctuating energy prices. The authority also faces internal challenges such as the ongoing need to update systems, enhance the efficiency of digital services, and strengthen integration among various government entities.

Another major challenge is the increasing regional competition, as countries in the region race to attract investments through tax and regulatory incentives. This requires the authority to continue developing its policies, improving infrastructure, and offering competitive advantages that align with best global practices. The authority also faces a challenge in attracting quality investments that contribute to technology transfer and localizing industries, rather than just short-term financial investments.

Conversely, there are significant opportunities for the authority, especially with the government's continued support for infrastructure projects, renewable energy, and modern technologies. These projects provide opportunities for partnerships with global companies and the development of strong local supply chains. Additionally, the authority's programs such as KSVIP and the facilitation of residency and visa procedures give the Kingdom a competitive edge in attracting human and technical capital.

With ongoing regulatory updates, the development of new digital platforms, and support for innovation, the investment outlook in Saudi Arabia appears promising. The Investment Authority remains at the heart of this system, working to turn challenges into opportunities and enhance the Kingdom's position as a regional and global investment hub.

In 2024, there were many significant developments in the Investment Authority and the Saudi cement sector, reflecting the dynamics of reforms and the continued attraction of capital. At the level of the authority, a new regulation was issued for the Saudi Investment Marketing Authority, aimed at improving investment attraction mechanisms and enhancing coordination among government entities. The new regulation stipulated the separation of investment promotion tasks from managing the government investment portfolio, increasing the authority's independence, and expanding its powers to grant preferential advantages to distinguished investors.

The authority participated in major international conferences and signed memorandums of understanding with Asian and European countries, such as China and India, to enhance investment cooperation and exchange experiences. The advantages of the KSVIP program were also expanded to include new sectors, and free consulting services and administrative support were provided to investors. Among the important developments was the abolition of the local sponsor requirement for foreign investors and the facilitation of obtaining permanent residency, enhancing the flexibility and mobility of investors in the Saudi market.

The authority announced in its recent statistics that it has issued more than 20,000 investment licenses since its establishment, with investment values exceeding 250 billion riyals from more than 130 countries worldwide. This reflects the attractiveness of the Kingdom and the increasing international cooperation.

In the cement sector, Hail Cement Company witnessed an update to its production lines to increase operational capacity and continued to distribute attractive dividends to shareholders. The company also announced its interest in adopting environmentally friendly technologies and using alternative fuels to reduce emissions. The average price of a ton of cement remained stable or slightly increased in 2024, supported by the continuation of major government projects and high construction rates.

These developments reflect the dynamism of the Saudi economy and the continued efforts of the Investment Authority in leading economic transformation towards greater diversification and sustainability.