Saudi Arabia’s newly enacted Foreign Investment Law, effective as of February 2025, represents a transformative shift in the Kingdom’s economic policy, aligning with its Vision 2030 objectives to diversify the economy and reduce reliance on hydrocarbon revenues. 

The law abolishes the 2000 MISA (formerly SAGIA) foreign investment license, and replaces it with a streamlined registration process, to be managed by one-stop “service centers” under the Ministry of Investment​ to liberalize the investment landscape, enhance investor protections, and streamline regulatory processes.

By mandating equal treatment for foreign and domestic investors, eliminating bureaucratic licensing requirements, and expanding access to previously restricted sectors, the legislation aims to position Saudi Arabia as a global investment hub. 

This report examines the structural, legal, and economic implications of these changes, contextualizing them within the broader framework of Saudi Arabia’s strategic modernization efforts.

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The 2025 Investment Law marks a decisive break from the previous regulatory regime, which was criticized for its complexity, opacity, and preferential treatment of domestic entities. Enacted through Royal Decree and supported by Implementing Regulations, the law consolidates disparate statutes into a unified framework applicable to both foreign and local investors, including those operating in special economic zones (SEZs).
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The law aims to improve the investment environment in the Kingdom, enhance its competitiveness, and develop the foreign investment law to achieve the objectives of the National Investment Strategy aimed at achieving the aspirations of the Kingdom's Vision (2030).

The law’s preamble explicitly ties its provisions to international best practices, emphasizing transparency, non-discrimination, and the rule of law. By replacing the Ministry of Investment’s (MISA) licensing system with a standardized registration process, the legislation reduces bureaucratic barriers, accelerates market entry, and aligns Saudi Arabia with global norms observed in other jurisdictions. The law covers:

• Streamlined Registration and Licensing Reforms
• Equal Treatment Between Domestic and Foreign Investors.
• Easing Regulatory Restrictions.
• Investor Protections and Rights.
• Grant of Investment Incentives.
• Dispute Resolution Mechanisms

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1. Streamlined Registration and Licensing Reforms

The law eliminates the Foreign Investment License (previously administered by MISA), replacing it with a simplified registration system. Investors must now submit basic corporate and financial details to the Ministry of Investment, a process designed to reduce approval times from months to days. This shift reflects a broader regulatory trend toward digitization and decentralization, with dedicated service centers established to expedite documentation and compliance checks.‍‍

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2. Equal Treatment and Non-Discrimination Principles

The law explicitly applies to both domestic and foreign investors, giving them the same rights, obligations, and protections​. This parity, a marked change from the old regime, means foreign companies will be treated “equally vis-à-vis” local peers under similar conditions​. In practice, this supports 100% foreign ownership in all permitted sectors and eliminates historic biases in favor of Saudi entities.‍

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3. Sectoral Liberalization and Ownership Rights

Foreign investors may now hold 100% ownership in most sectors, excluding activities deemed critical to national security or cultural heritage. The Implementing Regulations delineate “prohibited” and “restricted” categories, with the former requiring approval from the FDI Ministerial Committee and the latter subject to conditions set by sectoral regulators1. For example, renewable energy projects in SEZs face fewer restrictions than those in protected areas, incentivizing greenfield investments in strategic locations.

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4. Investor Protections and Rights

• Safeguards Against Expropriation
  The law prohibits asset expropriation except for public interest purposes, mandating fair market compensation determined by judicial authorities. This provision aligns with bilateral investment treaties (BITs) and multilateral agreements, reinforcing Saudi Arabia’s commitment to international law.
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• Capital Repatriation and Currency Transfers
  Investors are guaranteed unrestricted rights to transfer profits, dividends, and capital abroad, addressing a longstanding concern under the previous regime. SAMA has issued guidelines to facilitate currency conversions, eliminating caps on foreign exchange transactions. These measures aim to alleviate liquidity risks for multinational corporations, particularly in capital-intensive sectors like infrastructure and energy.
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• Intellectual Property and Trade Secrets
  The law incorporates robust IP protections, requiring courts to enforce patents, trademarks, and copyrights in accordance with World Trade Organization (WTO) standards.

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5. Dispute Resolution Mechanisms

• Arbitration and Mediation Frameworks
  Recognizing the inefficiencies of traditional litigation, the law promotes alternative dispute resolution (ADR) through arbitration and mediation. Parties may select international arbitral institutions, such as the ICC or LCIA, provided awards comply with Saudi public policy. The Implementing Regulations outline procedures for enforcing foreign judgments, reducing ambiguities that previously deterred investors.
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• Judicial Reforms and Commercial Courts
  Parallel reforms to the judicial system have established specialized commercial courts in Riyadh, Jeddah, and Dammam. These courts prioritize investment-related cases, with mandates to resolve disputes within six months, a significant improvement over the multi-year delays common under the previous system.

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6. Transparent Incentives

The new law allows the government to grant investment incentives (tax breaks, customs exemptions, etc.) under transparent, objective criteria​.  Specific incentives will be detailed in implementing regulations, but the framework promises advanced clarity on eligibility for benefits.

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These legal reforms come at a time of surging foreign investment in Saudi Arabia. Under Vision 2030, the Kingdom aims to raise FDI inflows to unprecedented levels. The National Investment Strategy (NIS) targets some $100bn of FDI by 2030 (roughly 6% of GDP)​, up from about 2–3% today. Vision 2030 specifically calls for increasing the ratio of FDI in GDP from the 2016 level (~3.8%) to 5.7% by 2030​. Achieving these goals will require reforms like the new investment law.

Recent data show sharp momentum. In 2022, the volume of FDI inflow doubled compared to 2015, before the launch of Saudi Vision 2030, reaching SAR 123bn, exceeding the NIS target of SAR 61bn by 102%. The FDI inflow reached 3% of GDP, exceeding the target of 2% for the same year.

In 2023, Saudi Arabia attracted SAR 96bn of FDI, exceeding the NIS target of SAR 83bn, and equivalent to 2.4% of the country's nominal GDP. Inflows were up 50% over 2022 figures, after excluding a one-off Aramco pipeline deal valued at SAR 55bn in 2022.

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Key sectors drawing FDI were Manufacturing, which achieved the largest contribution to the total FDI stock at the end of 2023, with a value of SAR 259bn, accounting for 29% of the total stocks. Followed by Wholesale and Retail Trade, with a stock of SAR 135bn, contributing 15%. Finance & Insurance came next, recording a stock of SAR 112bn, contributing 12%. Followed by Transportation & Storage, Construction & Real Estate.

Saudi Arabia’s efforts to diversify FDI inflows are not just sectoral but also geographically distributed across its 13 administrative regions. Historically, Riyadh, Makkah, and the Eastern Province have dominated foreign investment activity due to their economic scale, infrastructure, and concentration of major industries. However, Vision 2030 initiatives have aimed to decentralize investment and promote regional opportunities.

According to the latest Ministry of Investment data, Riyadh remains the leading destination for foreign capital, attracting approximately SAR 32.9mn of total FDI inflows in 2023. The capital's role as the political and commercial hub, combined with mega projects continues to make it a magnet for real estate, financial services, and tech investments.

The Eastern Province, historically the center of Saudi Arabia’s oil industry, drew around SAR 28.4mn of 2023’s inflows. Al Madinah Region is benefitting from religious tourism investments linked to Madinah Vision 2030 projects, attracting SAR 23.1mn of FDI inflows.

‍Makkah Province, home to Jeddah’s commercial ports and growing logistics hubs, accounted for about SAR 11.2mn of FDI. Major expansions in tourism (especially with Jeddah’s Red Sea projects and Umrah-related services) are fueling growth, with foreign investors targeting hospitality, transportation, and retail sectors.

Foreign direct investment (FDI) from G20 countries plays a pivotal role in Saudi Arabia’s economic transformation, reinforcing the Kingdom’s position as a regional and global investment hub. In recent years, Saudi Arabia has intensified its diplomatic and economic engagements with G20 partners, leading to a surge in cross-border investment activities.

According to data from the Ministry of Investment and the Saudi Central Bank (SAMA), G20 nations collectively account for over 70% of Saudi Arabia’s total FDI stock. This concentration reflects the Kingdom’s strategic push to attract capital from the world’s largest and most advanced economies.

Among G20 countries, the United States remains the leading source of foreign investment, particularly in sectors such as technology, energy, healthcare, and financial services. China ranks as a significant and rapidly growing investor particularly in renewable energy, infrastructure, and industrial manufacturing.

‍France, Germany, and the United Kingdom are also key contributors, focusing on sectors aligned with sustainability and innovation, such as green energy, transport, smart cities, and tourism.

This trend reflects two major dynamics:

• Diversification of Investor Base: While the United States and Europe remain dominant, Asia’s role is expanding, ensuring Saudi Arabia’s investment sources are geographically diversified and resilient to regional economic fluctuations.
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• Sectoral Realignment: G20 investments are increasingly aligned with Saudi Arabia’s new economic priorities, clean energy, digital transformation, healthcare, tourism, and industrial development, moving beyond traditional oil and gas sectors.

In sum, the new foreign investment law is a cornerstone of Saudi Arabia’s strategy to accelerate FDI and achieve Vision 2030 ambitions. By assuring international investors of openness, equality, and predictability, and by eliminating outdated licensing barriers, Saudi Arabia signals it is serious about competing for global capital. Multilateral organizations and investors alike view these reforms as positive.
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While current FDI levels are still evolving, the momentum is undeniable. With Vision 2030 serving as a guiding blueprint, the Kingdom is well-positioned to significantly exceed its investment targets in the coming years. The new law sends a clear and confident message to the world: Saudi Arabia is open for business, on modern terms, with competitive incentives, and a commitment to long-term growth and partnership.

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Resources:

[1]. Ministry of Investment. Foreign Direct Investment Bulletin 2023.
https://misa.gov.sa/app/uploads/2024/11/Annual-Foreign-Direct-Investment-Bulletin-2023.pdf

[2]. Ministry of Investment. Updated Investment Law.
https://misa.gov.sa/app/uploads/2024/08/Saudi-Investment-Law-Profile-En.pdf‍

[3]. Ministry of Investment. Performance of Main Economic- Leading Indicators: KSA