In yet another sign of Saudi Arabia’s efforts to deliver economic growth, Riyadh Air, the Kingdom’s new national carrier, recently announced plans to launch passenger flights by the end of 2025. Riyadh Air aspires to compete with global giants such as Emirates and Qatar Airways, aiming to connect to the top 100 destinations worldwide by 2030. The move signals Saudi Arabia’s ambition to become a key global aviation and logistics hub, reinforcing the Kingdom’s broader Vision 2030 goals.
In parallel, the Saudi government continues to intensify efforts to diversify the economy and stimulate foreign direct investment (FDI). As part of these initiatives, a new Investment Law became effective in February 2025, and is now followed by the issuance of Implementing Regulations by the Ministry of Investment of Saudi Arabia (MISA), published in the Official Gazette on April 25, 2025. These regulatory developments aim to liberalise the investment environment, enhance transparency, and provide greater legal certainty to foreign investors, aligning Saudi Arabia’s legal framework with international standards.
Saudi Arabia seeks to triple FDI inflows by 2030 to approximately $100 billion. To achieve this, MISA conducted a comprehensive study of international best practices, benchmarking against countries such as Germany, Indonesia, Singapore, Turkey, the UAE, and the US, with the aim of identifying methodologies to improve the investment climate and regulatory framework.
The new Implementing Regulations provide detailed guidance to operationalise the Investment Law’s reforms. It clarifies eligibility requirements, licensing processes, and compliance obligations, while emphasising a pro-business approach to regulatory supervision. MISA plays a pivotal role in this transformation.
Here are the key changes introduced by the Investment Law and its Implementing Regulations:
Licensing reforms: Licensing requirements have now been lifted and replaced with a simplified registration process with MISA facilitating quicker establishment for foreign businesses.
Foreign investment in excluded activities: MISA has identified activities that are restricted or excluded based on national security requirements. Investment in these areas will be restricted and MISA will include these activities in its new Investor Manual. It is anticipated that these activities will be updated from time to time and investors may apply to carry on such activities as stipulated under Article 16 of the Implementing Regulations. Such application will be reviewed by a dedicated committee within MISA to determine whether or not approval will be granted.
National register of investors: MISA will establish a national register to record and manage information related to investors and their activities. This register will be regularly updated and maintained with strict confidentiality.
National treatment: Foreign investors are now entitled to the same treatment as Saudi investors across most sectors, promoting competitive equality.
Enhanced investor protections: Clear safeguards have been introduced against expropriation without adequate compensation. Investors are entitled to transfer profits, proceeds, and capital in and out of the Kingdom without undue delay.
Protection of intellectual property: The regulation strengthens protections for investors’ intellectual property rights and trade secrets.
Dispute resolution: In line with the new Companies Law which gave enhanced statutory protections to shareholders’ agreements and the right of choosing alternative methods of dispute resolution, the new Investment Law reaffirms this concept that investors have the right to resolve disputes through arbitration, mediation, or reconciliation, or through competent Saudi courts, in accordance with international best practices.
Grievance mechanisms and penalties: The Implementing Regulations sets up a new detailed process for investors to make complaints to MISA and affirms that complaints made do not deteriorate from the investors’ rights to challenge MISA decisions before the competent courts. However, it should also be noted that penalties for violations of the Investment Law can reach up to SAR 300,000 for any one fine and may be increased for repeat violators.
Sectoral liberalisation: Foreign ownership restrictions have been eased in sectors such as education, healthcare, and logistics, opening broader opportunities for international investors.
Finally, Saudi Arabia’s efforts also aim to address the recent 19% decline in recorded FDI inflows compared to the previous year. This downturn was attributed to lower global liquidity and tighter monetary conditions impacting investment flows worldwide. Nevertheless, Saudi Arabia remains committed to its Vision 2030 goals, to achieve the FDI target by 2030, and to increase the private sector’s contribution to GDP from 40% to 65%.
With the implementation of the new Investment Law and Implementing Regulations, Saudi Arabia signals its continued commitment and readiness to navigate global challenges, attract international investors, and continue building a competitive, diversified, and sustainable economy, backed by strong government support and a clear long-term vision for growth.
By Matteo Grassani, group general counsel at Zahid Group, and Hassan Zawawi, partner at AlZawawi Law Firm.
