Saudi Arabia’s New Investment Law: Molding the Future of Vision 2030 By: James Wubben
On August 11, 2024, Saudi Arabia’s Ministry of Investment (MISA) revealed its 2024 Investment Law.[1] This new law is set to take effect in February 2025 and effectively repeal its predecessor, the Foreign Investment Law,[2]which imposed stricter regulations on foreign investors. The 2024 Investment Law marks a significant change in the country’s business landscape as it is designed to encourage both foreign and local investors.[3] Other key aspects of the 2024 Investment Law include (1) elimination of investment licenses, (2) equal treatment of investors, (3) incentives for investors, and (4) alternative dispute resolution.[4]
Under the 2024 Investment Law, the regulations apply to both Saudi Citizens and foreign investors alike.[5] This is a noteworthy deviation from previous Saudi investing law that was often restrictive of foreign investors; the 2024 Investment Law aims for equal treatment regardless of an investor’s citizenship status.[6] Additionally, the law introduces new registration mechanisms for investors, replacing the previous requirement of obtain a foreign investment license.[7]However, the MISA’s approval is still required if a foreign investor intends to take part in activities related to the Negative List.[8] [9]
Further, the 2024 Investment emphasizes key investor rights, such as protection from expropriation, fair and equitable treatment, the freedom to manage investments, and the ability to transfer funds freely within or outside the Kingdom of Saudi Arabia.[10] Foreign investors are now safeguarded against confiscation or expropriation, except under certain legal circumstances, with compensation provided in cases of public interest.[11] They also have the right to transfer investment proceeds and profits without delay, using any recognized currency.[12] Furthermore, investors are allowed to manage their investments, own necessary property, and are assured protection of their intellectual property and trade secrets.[13] The 2024 Investment Law appears crucial for foreign investors as it seeks to provide a predictable, safe, and secure environment by protecting them from arbitrary expropriation, allowing unrestricted fund transfers, and ensuring fair treatment and management of their investments.[14] This stability and protection encourage greater foreign investment in Saudi Arabia.[15]
Also, the New Investment Law allows for the potential provision of investment incentives, which will be determined based on clearly defined, objective criteria.[16] These criteria and evaluation procedures will be outlined in future regulations that have yet to be published.[17] Based on previous practices and global trends, these incentives could include: (1) tax relief, (2) financial grants/subsidies, and/or (3) investment guarantees (protection from risks).[18]
As to penalties, the 2024 Investment Law classifies violations into material and non-material categories.[19] For non-material violations, such as issues with licensing or engaging in excluded activities, investors are given a chance to correct the problem within a specified period of time.[20] Failure to do so, or committing a material violation, may lead to penalties including warnings, fines up to SAR 300,000 ($80,000), which can be doubled for repeated offenses, or license cancellation.[21] The Implementing Regulations (which have not been published yet) will outline the specifics of material violations and the enforcement procedures, with a committee appointed by the Minister of Investment responsible for citing and penalizing violations.[22] Investors will have the right to appeal MISA’s decision within 30 days of notification.[23]
With the implementation of the 2024 Investment Law, it is important to analyze how it fits into Saudi Arabia’s Vision 2030 project.[24] Saudi Arabia’s Vision 2030 is an ambitious strategic plan launched in 2016 to diversify the country’s economy away from its oil dependency and foster sustainable development.[25] It aims to transform the economic landscape by investing in sectors such as tourism, technology, and manufacturing, while also enhancing the role of the Public Investment Fund (PIF) to attract global investments.[26] Vision 2030 includes initiatives to improve infrastructure, develop human capital, and create a more vibrant and efficient business environment, with the overarching goal of positioning Saudi Arabia as a leading global economic player by 2030.[27]
The 2024 Investment Law is another crucial step towards accomplishing the goals of Vision 2030.[28] Vision 2030 seeks to diversify the Saudi economy by attracting significant foreign investment; the 2024 Investment Law, with its emphasis on equal treatment, protection against expropriation, and the freedom to manage investments, creates a stable and appealing environment for investors.[29] Another one of Vision 2030’s primary objectives is to reduce the country’s dependence on oil by developing other sectors like technology, tourism, and manufacturing; the 2024 Investment Law supports this by ensuring that these areas are protected and fairly treated, promoting growth across various industries.[30]The 2024 Investment Law also enhances regulatory transparency and enforcement by detailing penalties and providing a clear appeals process; this aligns with Vision 2030’s goal of improving the business climate and making Saudi Arabia a more competitive and efficient place to invest.[31] Finally, the 2024 Investment Law’s provisions for fund transfers and protection of intellectual property support large-scale infrastructure and development projects central to Vision 2030’s objectives; it provides the confidence needed for investors to commit to long-term projects.[32]
In conclusion, the 2024 Investment Law represents a significant step forward in Saudi Arabia’s efforts to create a more attractive and secure investment environment; by providing equal treatment for both local and foreign investors, safeguarding against expropriation, and facilitating the free transfer of funds, the law addresses key concerns that could impact investment decisions.[33] Its alignment with Vision 2030 underscores a broader commitment to economic diversification and growth.[34] The anticipated success of the law will likely hinge on the effective implementation of its provisions and the development of detailed Implementing Regulations.[35] If executed as planned, the 2024 Investment Law has the potential to enhance investor confidence, stimulate economic activity across various sectors, and contribute meaningfully to Saudi Arabia’s long-term economic objectives.[36]
[1] Royal Decree No. (M/19) dated 16/01/1446H, https://misa.gov.sa/app/uploads/2024/08/Saudi-Investment-Law-Profile-En.pdf.
[2] Royal Decree No. (M/1) dated 5/1/1421H (corresponding to April 10, 2000G)
[3] Waad Alkurini, Saudi Arabia: New Investment Law, White & Case (Aug. 30, 2024), https://www.whitecase.com/insight-alert/saudi-arabia-new-investment-law.
[4] Id.
[5] Salma Alheraiqi, Saudi Arabia’s New Investment Law, JD Supra, (Sept. 10, 2024), https://www.jdsupra.com/legalnews/saudi-arabia-s-new-investment-law-2022551/.
[6] Id.
[7] Id.
[8] The Negative List refers to specific sectors and economic activities that are restricted or closed to foreign investment. These activities are reserved primarily for Saudi nationals, and foreign investors are generally prohibited from participating in them unless they receive special approval from the Ministry of Investment (MISA). One example of a sector on the Negative List would be oil exploration and drilling
[9] Alkurini, supra note 3.
[10] Alkurini, supra note 3.
[11] Alkurini, supra note 3.
[12] Alkurini, supra note 3.
[13] Alkurini, supra note 3.
[14] Alkurini, supra note 3.
[15] Alkurini, supra note 3.
[16] Alkurini, supra note 3.
[17] Alkurini, supra note 3.
[18] Alkurini, supra note 3.
[19] Alheraiqi, supra note 5.
[20] Alheraiqi, supra note 5.
[21] Alheraiqi, supra note 5.
[22] Alheraiqi, supra note 5.
[23] Alheraiqi, supra note 5.
[24] Vision 2030, https://www.vision2030.gov.sa/media/rc0b5oy1/saudi_vision203.pdf (last visited Mar. 26, 2025).
[25] Vision 2030, The Embassy of the Kingdom of Saudi Arabia, https://www.saudiembassy.net/vision-2030 (last visited Mar. 26, 2025).
[26] Id.
[27] Id.
[28] Id.
[29] Alkurini, supra note 3.
[30] Alkurini, supra note 3.
[31] Alkurini, supra note 3.
[32] Alkurini, supra note 3.
[33] Alkurini, supra note 3.
[34] Alkurini, supra note 3.
[35] Alheraiqi, supra note 5.
[36] Alheraiqi, supra note 5.