Foreign Direct Investment Reforms in Saudi Arabia under Vision 2030: Institutional Transformation and Strategic Competition with the UAE

Abstract

This paper examines how the Vision 2030 reforms contributed to the long-term improvement of foreign direct investment (FDI) in Saudi Arabia and assesses whether these developments have positioned the Kingdom to rival the United Arab Emirates (UAE) as a preferred regional investment destination. Three objectives guide the analysis: (1) examining Saudi Arabia’s FDI regime before and after Vision 2030; (2) evaluating the impact of the reforms; and (3) comparing the FDI environments of Saudi Arabia and the UAE. The findings demonstrate that pre-2016 efforts to attract FDI were hindered by inadequate investors’ protections and poor regulatory transparency. However, Vision 2030 introduced accountability measures, institutional changes and, most notably reforms in the Saudi law. This law resolved core investor concerns by introducing robust dispute resolution provisions, transparent industry guidelines, and enhanced legal safeguards. The reforms significantly improved investors’ confidence, facilitated their market access, and contributed to a rise in FDI, particularly in non- oil sectors such as technology and tourism. While the UAE remains preferable to international investors, Saudi Arabia’s centralised approach is closing the gap through aggressive domestic reform Although differences remain, Saudi Arabia regulatory transformation marks a critical step in its ambition to become a leading regional FDI hub. The paper concludes that Saudi Arabia has not only met its internal reform goals but is increasingly positioned to challenge the UAE's dominance in attracting foreign investment.