Saudi reform momentum creating new trade opportunities

Vision 2030 is about creating a more vibrant and diversified economy – actively developing new growth drivers across a broad range of non-oil sectors, from agriculture & food processing to tourism, life sciences to ICT. This diversification creates a wealth of trade opportunities for global investors and businesses.

But for this to be realised, Saudi policymakers recognise that attracting foreign interest and investment requires creating a more welcoming and business-friendly environment. To that end, the Kingdom is undertaking a series of legal, market, and social reforms designed to align its regulatory and business practices with international standards, while fostering a more socially liberal environment to entice foreign businesses and talent.

Understanding the reform strategies reframing trade

The pace of reform in Saudi Arabia has been swift and decisive, with the Kingdom rapidly implementing new regulatory frameworks to meet or even exceed international standards. One of the most striking changes has been in the female workforce. Following reforms to the labour laws that removed or reduced several barriers for women in the workplace, participation more than doubled from 17.4% to 36% between 2017-2023.

Four of the most significant reforms to impact foreign investors are:

1. The New Companies Law: Coming into force January 2023, this comprehensive law governs all forms of entities, whether commercial, non-profit, or family-operated. It establishes a "best international practice" benchmark, providing clarity and consistency for businesses of all sizes.
2. The Bankruptcy Law: Introduced in 2018, this law addresses a previous impediment to companies and institutions doing business in Saudi by providing a modern and fit-for-purpose insolvency regime. It offers greater certainty to investors by allowing for the rescue of insolvent businesses, ensuring fair consideration of creditors' rights, and extending its reach to non-Saudi investors with assets, or those that operate in the Kingdom through a licensed entity.
3. Special Economic Zones (SEZs): These zones, spanning a wide range of industries, offer attractive incentives to businesses, including tax breaks, a streamlined application process, and the ability to hire foreign talent for the first five years of operation. SEZs are designed to attract targeted investments and foster innovation.
4. Saudi Arabian General Investment Authority (SAGIA): Changed its status so it is now a full-fledged Ministry of Investment (MISA) headed by a dedicated Minister, ensuring that investment promotion is a focus at the cabinet-level and driving co-ordination in policy making and strategic implementation.

Along with these specific measures, Saudi policymakers are looking to further modernise trade laws, digitise trade processes, increase liquidity and trading in Gulf capital markets, and float some state-owned assets on local stock exchanges.

All these reforms are part of a broader ambition to become a global trade and logistics hub. The Kingdom is investing an estimated $133 billion into its logistics infrastructure and expanding its rail network, linking Saudi’s Red Sea and Arabian Gulf ports, as it seeks to acting as a conduit between some of the fastest-growing markets in Asia and Africa. Riyadh Airport is also being transformed into a massive aviation hub, with six parallel runways, a ‘Special Integrated Logistics Zone’ and the base of recently established airline, Riyadh Air.

A business environment to match the ambition

The key takeaway from our Saudi Trade Corridor Outlook is clear: Saudi Arabia is open for business and eager to collaborate with global partners.  

The country has hugely ambitious trade targets, including attracting 20 times the current foreign direct investment level, achieving $238 billion in industrial exports by 2035, and generating $12 billion in non-oil revenues by 2030.

To meet these, it is strategically creating a conducive ecosystem for international businesses to thrive. And with that, comes plenty of opportunity for corporates and investors alike.