BlogHow FDI Reforms in Saudi Arabia Make Business Setup Easier for Foreigners

Saudi Arabia has implemented significant FDI reforms, including the new investment law effective from 7th February 2025, to attract foreign direct investment.  The new Law offers equal treatment to local and foreign investors, simplified registration, and better investor protections.These FDI reforms in Saudi Arabia are simplifying the process of doing business for foreign investors.

In the wake of its Vision 2030, Saudi Arabia has transformed itself into a global hotspot for foreign investment by liberalizing the rules and regulations regarding investment by foreigners and locals. The country offered 100% foreign ownership rights for foreigners, tax breaks, custom duty exemptions, and streamlined licensing processes.

It will enable foreigners to invest in Saudi Arabia easily as it aims to develop and enhance the competitiveness of the investment environment in the Kingdom, contribute to economic development, and create job opportunities by providing an attractive investment climate as per relevant laws.

Key FDI Reforms in Saudi Arabia

1. New Investment Law (Effective 2025): The New Investment Law replaces the previous licensing system with a streamlined national registry, eliminating the need for foreign investment licenses. This reform ensures equal treatment for both local and foreign investors, simplifying the investment process.
2. Equal Treatment for Investors: The new legal framework guarantees equal rights and protections for foreign and domestic investors, including safeguards against expropriation and the freedom to transfer and repatriate capital.
3. Simplified Registration Process: Instead of the traditional licensing requirements, foreign investors can now register their businesses more efficiently, reducing bureaucratic hurdles and expediting market entry.
4. Investment Incentives: The new law allows for the provision of investment incentives based on specific, objective, and pre-announced criteria, aiming to attract and retain foreign investors.
5. Dispute Resolution Mechanisms: Investors are granted the right to resolve disputes through competent local courts or alternative dispute resolution methods such as arbitration and mediation, enhancing legal certainty.
6. Access to Strategic Sectors: Foreign investors are now permitted to invest in listed companies owning real estate in Mecca and Medina, with certain restrictions, opening up previously limited sectors.
7. Regional Headquarters Program: To qualify for government contracts, foreign companies are encouraged to establish regional headquarters in Saudi Arabia, promoting local presence and economic integration.
8. Unified National Business Registration

• One centralized commercial registration system for the whole Kingdom.
• Removes the need for separate regional registrations.
• Annual confirmation replaces renewals, reducing administrative burden.

9. New Trade Name Law

• Allows trade names in Arabic, English, or both.
• Names can include letters, numbers, or a mix—better for international branding.
• Trade names can now be reserved and transferred, offering more flexibility.
• Stronger protection against unauthorized use and brand misuse.

The Reason Behind Saudi Arabia’s FDI Reforms

Saudi Arabia introduced these FDI reforms as part of its broader strategy to transform the national economy and align with Vision 2030. These reforms are not just about attracting foreign capital — they are designed to ensure that foreign direct investment actively supports the Kingdom’s strategic objectives, including:

• Economic diversification beyond oil,

• Job creation for Saudi nationals,

• Transfer of technology and expertise,

• Sustainable development

• National security and regulatory compliance.

By establishing clear standards and aligning foreign direct investment with long-term national goals, Saudi Arabia aims to create a business environment that is both investor-friendly and aligned with its development vision. But it’s also essential for investors to stay informed and compliant with evolving FDI regulations to fully benefit from these opportunities.

Main features of Saudi foreign investment law

One of the major reason for Saudi Arabia’s high FDI ranking is the new Foreign Investment Law, aimed at making it easier and more secure for foreign investors to do business in the Kingdom. Under the new investment law, several of the present stipulations regarding investment have been further liberalized to attract more foreign direct investment. They are:

1. Replacement of MISA license: Obtaining a MISA (Ministry of Investment Saudi Arabia) license was necessary for a foreign company to operate in Saudi Arabia. Under the New Law, the investors must only register with the Ministry of Investment through an updated, streamlined process.
2. Applicability extended:  The new Law applies to both foreign and domestic investors, whether natural or legal persons, including those operating in special economic zones.
3. Protection of Investors’ Rights: The new Law guarantees protection from expropriation, fair treatment, freedom to manage investments, and the ability to transfer funds. The Law ensures that assets cannot be confiscated or expropriated without legal procedures and fair compensation.
4. Freedom to invest expanded:  Foreign investors can now invest in any sector except for excluded activities. MISA reserves the right to suspend investments for national security reasons. Investors can, however, seek approval for investment under the excluded activities.
5. Investment Incentives made more transparent: A framework for granting investment incentives based on transparent and objective eligibility criteria has been introduced.
6. New Alternative Dispute Resolution: Disputes can now be resolved through alternative methods such as arbitration and mediation while retaining the right to pursue cases through competent courts.
7. New penalties: The Law categorizes violations as either material or non-material. The investors are required to correct non-material breaches within a set time frame. Failing to do so or committing material violations can lead to penalties, including fines or license revocation. The investors may, however, appeal the MISA decision within 30 days.

How can the Helpline Group in Saudi Arabia help?

Helpline Group, backed by a strong and experienced team, brings over 25 years of expertise in business setup in Saudi Arabia, offering a seamless, hassle-free experience for clients, including foreigners. Our seasoned professionals possess in-depth knowledge of the latest rules and regulations, ensuring compliance and efficiency.

By selecting us as your trusted business partner, we will keep you informed of the provisions of the New Investment Law of Saudi Arabia and the key FDI reforms, making it easier for foreign investment in Saudi Arabia. With a global presence and a tailored approach, we ensure that your Company Formation is handled with precision and professionalism, making us your reliable ally in achieving success.