100% Ownership to Foreign Investors in Saudi Arabia’s Retail Sector
As per the recent orders of King Salman, the Saudi Arabian General Investment Authority has outlaid a great turning point breaking the barriers for Foreign Investors SAGIA is now planning to pump in more high-level Foreign investors by providing them 100 % ownership in retail sectors and introducing new technology and maintaining economic growth and to make Saudi Arabia an international centre for the distribution, sale and re-export of products. The world’s top oil exporter embarks on a new drive to attract investment and diversify its economy.
According to the figures from United Nations Conference on Trade and Development report the FDI in Saudi Arabia dropped to $9.3 billion in 2013 from $12.2 billion in 2012. This is also another factor were the kingdom considers to bring the reformation in FDI rules. Currently SAGIA is inviting applications from Foreign Investors via SAIGIA’s website.
The existing laws limit a foreign investor to have only up to 75% ownership in retail and a Saudi partner not less than 25%. Now a Foreign Investor will have 100 % ownership in retail sectors.
The reform adding that the changes would be subject to conditions, which would be revealed at a later stage.
Certain conditions SAGIA highlighted was:
- A foreign company wishing to invest in the Saudi market must ensure that it should satisfy SAGIA with specific manufacturing time programs and plans for introducing new technology.
- If the retail sellers have tie-up with more than one manufacturer or producer, they cannot own 100 % ownership.
- SAGIA may impose a higher percentage of Saudization on the private sector workforce on these retail companies.
- The agency is streamlining its investment rules and visa regulations for investors and it is expected that the amendment may come into force this year.
- Banking sub-sectors such as services for individuals and smaller companies will have great impact and U.S. banks entering the kingdom could have a market share of $150 billion in the next 5 to 10 years.