More Saudi sectors opened to foreign investment

Saudi Arabia’s Cabinet has approved changes to the kingdom’s foreign investment rules covering the service sector.

The amendments, approved on Tuesday, will see recruitment, audio and video, road transport and real estate brokerage services removed from a list of activities unavailable to foreign entities.

This is expected to mean that foreign firms can obtain investment licences for operations covering the four areas.

The Saudi Arabian General Investment Authority (SAGIA) has moved to lift restrictions on foreign ownership in a number of sectors to support the kingdom’s Vision 2030 reforms.

Earlier this year, the organisation said it would extend the duration of foreign investment licences and streamline the process to obtain them.

This came after FDI inflows hit a 14-year low last year, falling from $7.5bn to $1.4bn.

The ‘negative list’ maintained by SAGIA included 19 service activities prior to Tuesday’s amendment, according to a risk report by French bank Société Générale. Sectors still barred to foreigners include real estate investment in the holy cities of Makkah and Madinah, printing and publishing and upstream petroleum.

In recent weeks, Saudi Arabia’s foreign investment prospects have been hit after the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul sparked an international outcry.

The kingdom said on Saturday that Khashoggi’s death was caused by a Saudi security team, which conducted a “rogue operation”.

Reuters reported on Tuesday that the kingdom’s Public Investment Fund (PIF) was indirectly supporting local stocks after foreign investors sold $1.07bn last week in response to controversy around Khashoggi’s disappearance.

Western officials and business leaders responded to the incident by withdrawing from a PIF-organised investment conference, which began on Tuesday.