Saudi Arabia Update: KSA Infrastructure Boom Means Big Business for Investors

After the Covid-19 pandemic’s destabilizing impact on market conditions, Saudi Arabia is finally experiencing an economic resurgence. A Mordor Intelligence report suggests that the country will benefit from dramatic infrastructure growth at a CAGR of approximately 6% to 2026, and the launch of the new National Infrastructure Fund (NIF) certainly supports this prediction.

Due to factors such as vast population growth, extensive urbanisation, an increase in religious tourism, economic diversification and the streamlining of business processes, investment potential in KSA has reached new heights.

Now, with a trillion-dollar pipeline of projects leading to significant transformations in national infrastructure, KSA investment opportunities are both diverse and exciting, to say the least. Vision 2030’s foreign investment objectives were designed to boost infrastructure growth in Saudi Arabia, and so far, its goals are right on track.

Infrastructure projects in Saudi Arabia span various sectors

Saudi Arabia is renowned for being an oil-based economy, with the world’s largest crude oil reserves. In a bid to move beyond economic reliance on the oil industry, the KSA construction sector is generating opportunities in both residential and non-residential projects, as well as transport infrastructure. Healthcare infrastructure is set to receive $66.67 billion in investment, and the energy sector will be subject to a high-speed digital upgrade. Construction is also underway on a number of schools, hospitals and industrial hubs across the Kingdom.

Other sectors receiving investment are chemical, mining and metals, information technology, industrial and manufacturing; there are also countless opportunities to invest in real estate, hospitality, clean energy, tourism and smart cities.

The advanced infrastructure plans in KSA are driving increased global attention to the country, thus bringing a welcome boost to the leisure, tourism and entertainment industries. Similarly, the lucrative opportunities emerging across this wide range of sectors are extremely promising for investors in Saudi Arabian infrastructure projects.

Current KSA Infrastructure investment opportunities

One current investment opportunity is the entertainment mega project known as the Qiddiya project, which was launched in 2019 with a first phase completion date of 2022. This Public Investment Fund project is located approximately 45km from Riyadh, and aims to become ‘the capital of entertainment, sports and arts.’ After an original injection of $8 billion, the project requires further investment to reach its goal of accommodating 17 million annual visitors by 2035.

Another promising investment opportunity in Saudi Arabia is the Saudi Green Initiative, which offers international investment opportunities in the sustainability sector. The first wave of over 60 initiatives represented more than SAR 700b investment in the growth of sustainable living.

The legal requirements for KSA investors

There are, as can be expected, various legal elements for investors and construction businesses to consider when investing in KSA infrastructure projects. In order to remain protected while leveraging such new opportunities, it is prudent to be aware of the national requirements you will be asked to adhere to.

The following procedures must be undertaken to enable business activities in Saudi Arabia:

• Acquire an investment license from the Saudi Arabian General Investment Authority (SAGIA)
• Open an account with a local KSA bank to deposit your initial capital
• Obtain a commercial registration (CR) from the Ministry of Commerce and Industry (MOCI)
• Register with the Chamber of Commerce
• Register with the Customs department
• Acquire a municipality license
• Register with the Ministry of Labour
• Register with the General Organisation for Social Insurance (GOSI)
• Register with the General Authority of Zakat and Tax (GAZ)

Note that since the official language is Arabic, an official translator must translate into this language before you submit it to the appropriate Government authority.

Although this is an extensive process, it may help to know that the Foreign Investment Act (FIA), a framework that permits non-Saudis to invest in KSA, aims to ensure equal treatment of all non-Saudi companies. In Article 5 of the Implementing Regulations for the Foreign Investment Law, it states that a foreign venture “shall enjoy all the benefits, incentives and guarantees enjoyed by a national project”.

With it is evident that KSA is soon to be a worldwide hub for logistics and investment.

By Hammad & Al-Mehdar, Saudi Arabia, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact saudiarabia@transatlanticlaw.com

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