The Saudi Supreme Economic Council (SEC) has approved a privatization strategy directed at advancing Saudi Arabia's privatization drive and expanding the role of the private sector and foreign investors in the Kingdom. The strategy announced in June 2002 outlines those sectors open to domestic and foreign investment as well as the regulations and administrative procedures. The sectors addressed by the SEC were postal services, desalination, railways, and petroleum and energy support services. The strategy calls for the selling of government stock holdings in Saudi companies. Privatization of services will either be on the basis of build-operate-transfer or build-operate-own.

In early November 2002, the Saudi Cabinet approved a list of 20 public enterprise and sectors recommended by the Supreme Economic Council (SEC) that shall be privatized. Saudi Arabia will liberalize these sector and allowed private as well as foreign investment to enter these market which include Telecommunications, Civil Aviation, Port Services, Highway Construction and Maintenance, Municipal Services, Saudi Employment Services, Grain Silos, Flour Mills, Metallurgy and Fertilizer Industries etc.

Also, In 2002, the Saudi Arabian Council of Ministers has approved a health bill establishing the health service council (HUSK) headed by the minister of health to prepare the strategy for the health care system.

In addition, the bill call for privatization of some state hospitals and the imposition of mandatory health insurance.

Business undertakings involving foreign capital are regulated by Foreign Investment Regulations which were issued in April 2000 as part of the government’s ongoing drive to liberalize its foreign investment policy.

Under these Regulations, the General Investment Authority (GIA) is authorized to issue licenses for any temporary or permanent foreign investment in the Kingdom within 30 days.

A foreign investor is allowed to obtain more than one license for various business activities. Projects licensed under these Regulations enjoy all the privileges, incentives and guarantees available to a national project.

A business entity licensed under these Regulations is allowed to own real estate required for carrying out its business operations or for providing housing facilities to its employees. Moreover, the sponsorship of the foreign investor and his non-Saudi personnel is entrusted to the business entity licensed under these Regulations.

The establishment of business presence in the Kingdom by a foreign company or an individual whether in the form of a wholly owned subsidiary company, a Saudi Limited Liability Company, partnership etc; requires an investment license under the Foreign Investment Regulations from the General Investment Authority (GIA).

Provided all documentation is complete at the time of submission of the application, the GIA is required to evaluate the investment request and give its decision within 30 days. If this period elapses without a decision by the GIA, it is obliged to issue the required license to the investor.

If an application is turned down by the GIA within the 30 day period, it must give reasons for its decision. The applicant has the right to appeal against the GIA’s decision.

In order to ensure that the licensing process is made efficient, the GIA has set up an Investors’ Service Center (ISC) as a one window operation to eradicate all bureaucratic red-tape.

All applications for new licenses or for modification of existing ones are now processed through the ISC. In addition the ISC provides the following services to potential investors:

Provides information to potential investors on the investment opportunities in the Kingdom as well as guidance on applicable rules and regulations, such as Foreign Investment Regulations, Corporate Law, Labour Law, Income Tax Regulations etc.

For more information about these laws, please see the following unofficial translation of the laws.

Incentives provided to encourage foreign investment in approved industrial and non industrial projects includes the following :

Loans and equity participation on favorable terms.

Provision of land at favorable rents for industrial projects, and low charges for water and electricity services and other utilities and fuels.