Saudi Arabia will significantly open up wholesale and retail businesses to foreign investment with a relaxation of foreign ownership laws. The move, introduced by the Saudi Arabian General Investment Authority (Sagia), is part of a wider effort to diversify the country’s economy away from its current reliance on petroleum and petroleum products, which make up 90% of its exports.

Currently, Saudi Arabia allows a maximum of 75% foreign ownership in wholesale and retail businesses. This means companies entering Saudi Arabia are required to have a Saudi partner who owns and profits from 25% of the company. The recently announced FDI laws, which have yet to be implemented, will allow 100% foreign ownership for companies in this sector.

Advertisement

Saudi Arabia’s efforts to encourage more investment into the country and diversify its economy are in part a result of the prolonged decline in global oil prices. Sagia hopes that with its new set of relaxed investment laws, expected to go into force in 2016, the country will see increased investment into its retail sector, more jobs for Saudi citizens, the introduction of new technologies and a boost in economic growth.

In addition to relaxing FDI regulations, Saudi Arabia is actively trying to promote itself as a Middle Eastern financial centre. “As Saudi Arabia diversifies its economy to reduce its dependence on the oil and gas sector, the banking and financial markets are stepping up to attract significant investment into the country,” said Paul Philipp Hermann, managing director of online property platform Lamudi Global. “The King Abdullah Financial District is currently under construction in Riyadh, which will provide more than 3 million square metres of mixed-use space. This is expected to boost the local economy, offering local and international financial institutions, bodies and banks a home in Saudi Arabia.”

The opening of the Saudi Arabian stock exchange, worth about $570bn, to foreign investors in June 2015 is also expected to fuel growth, although only the largest financial institutions – banks, brokers and fund managers – can access it.