The Ministry of Investment of Saudi Arabia (MISA) announced Wednesday that 348 new international companies were granted investor licenses during the first quarter of 2020.
This marks a 19% annual increase compared to the same period in 2019, and a 20% quarter-on-quarter increase from the final three months of 2019. Month-to-month growth began to slow in March as global markets reacted to the impact of the COVID-19 pandemic.
MISA released the figures as part of its new Investment Highlights Spring 2020 report, which provides an overview of the development of the Kingdom's investment environment in the first quarter of this year.
The period coincides with the elevation of the General Investment Authority (SAGIA) — the entity previously responsible for attracting inward investment — to a full-scale dedicated investment ministry.
In this special edition of the quarterly report, the ministry also charts Saudi Arabia's national response to the coronavirus pandemic, alongside the Kingdom's global response as the holder of the G20 presidency.
The report places focus on the measures introduced across the government to support business community and how Saudi Arabia's local and international investors are playing a leading role in navigating the pandemic's economic and societal challenges.
Eng. Khalid Al Falih, minister of investment, said: "The first quarter of 2020 was Saudi Arabia's strongest period for investor interest in ten 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.
"January and February saw strong momentum, but growth began to slow in March with 101 new licenses compared to 126 and 121 granted in the first two months of the quarter respectively.
"Despite the cautious nature of economic activity, we can see that 73% of all new investments in Q1 2020 were for full foreign ownership and 27% were joint ventures with local Saudi partners.
"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."
Major sources of new foreign investment at the beginning of 2020 continued to represent a diverse range of global markets and sectors. As in 2019, growth came from long-standing strategic partners such as the United States and United Kingdom, with 37 US companies and 32 UK companies awarded licenses in Q1 2020.
Alongside, India, Lebanon, and Egypt were among the five leading countries for new international companies. 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.
The Minister continued: "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.
"This is the central aim of our 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."
Saudi government entities have implemented numerous stimulus packages and funding relief programs for the private sector worth $45 billion, aimed at helping the Kingdom's local and international businesses, and citizens and residents, to mitigate both the immediate and long-term impacts of COVID-19.
Tailored support is accessible to companies and individuals across a variety of industries and scales, from SMEs through to multinationals. Measures range from tax exemptions and discounts or postponements on utilities, energy and labor 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.
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.