The Ministry of Investment of Saudi Arabia (MISA) announced on Wednesday that 348 new international companies were granted investor licenses during the first quarter of 2020.
Figures showed a 19 percent annual increase compared to the same period in 2019, and a 20 percent quarter-on-quarter increase from the final three months of 2019, the ministry said in a press release.
However, month-to-month growth began to slow in March as global markets reacted to the impact of the COVID-19 pandemic.
The ministry charted Saudi Arabia’s response to the Coronavirus pandemic, and its global response as the holder of the G20 presidency, in its “Investment Highlights Spring 2020” report that provides an overview of the Kingdom’s investment environment in the first quarter of this year.
The report places focus on the measures introduced across the government to support the business community and how local and international investors are “playing a leading role in navigating the pandemic’s economic and societal challenges,” the statement said.
“The first quarter of 2020 was Saudi Arabia’s strongest period for investor interest in 10 years. However, the economic effects of COVID-19 began to be felt worldwide towards the end of this period, and this becomes evident when we compare the rate of new investment on a month-by-month basis,” Khalid Al-Falih, Minister of MISA said.
COVID_19 affects Saudi Arabia’s businesses
The minister said January and February saw strong momentum, but growth began to slow in March.
“As we look toward a post-COVID-19 future, this is a reassuring show of confidence from the world’s investors in the Kingdom’s long-term prospects as an attractive investment destination,” Al-Falih added.
Major sources of new foreign investment at the beginning of 2020 continued to represent a diverse range of global markets and sectors, the ministry said.
Growth came from American and British partners with 37 US companies and 32 UK companies awarded licenses in Q1 2020. Quarter-to-quarter sector growth was also seen across a selection of emerging industries, such as ICT, retail and e-commerce, and tourism, culture and entertainment.
“Investors are the most important enablers of Saudi Arabia’s ongoing transformation through Vision 2030, and in recognition of this MISA has been tasked with safeguarding the stability and security of the Kingdom’s full investment ecosystem,” Al-Falih said, adding that this is the central aim of Saudi Arabia’s COVID-19 business continuity initiatives.
“By acting swiftly, MISA has been able to have a direct impact through our COVID-19 Response Center (MCRC). We have spoken to investors about how and where they need support and taken their queries directly to our government partners, ensuring that the regulations needed for companies across vital sectors to continue to operate are put in place,” he said.
Saudi government entities have implemented stimulus packages and funding relief programs for the private sector worth $45 billion, aimed at helping local and international businesses, and citizens and residents. The ministry said this was to mitigate both the immediate and long-term impacts of COVID-19.
Measures range from tax exemptions and discounts or postponements on utilities, energy and labour costs to a wide selection of loans and income support.
Several deals signed since the beginning of the pandemic indicate that the global business community remains positive about the long-term potential and resilience of Saudi Arabia as an investment destination, the ministry said.
New agreements include a joint-venture partnership between a Saudi company and South Korean petrochemicals firm and the announcement of a new shipping line connecting Saudi Arabia to East Africa.
“Saudi Arabia remains open for business. Investing in the global investor community, as they have invested in us, is at the forefront of how MISA is adapting our policies and regulations to support business continuity for local and international businesses as part of a unified national response to the pandemic,” Al-Falih said.
The minister said Saudi Arabia continues to develop investment opportunities in partnership with local businesses, with over 100 launched this week under the National Investment Promotion arm, Invest Saudi.
“We are confident that businesses will keep coming to the Kingdom as investor activity gains momentum and adapts to the post-COVID-19 era,” he said.