Is Saudi Arabia’s Legal Environment Conducive to Attracting Foreign Direct Investment in Non-Oil Sectors? Challenges and Implications

Abstract

Foreign direct investment (FDI) through time has been one of the most important core drivers of economic growth around the world. Numerous countries around the world if not all aim to enhance their economic competitiveness and increase the size or number of opportunities to attract FDI to the business market. However, this drove Saudi Arabia to adopt, reflect and respond appropriately to the global competition challenges through investing in non-oil sectors. Consequently, the Saudi Arabia government has encouraged foreign companies to invest in the country in the diverse business, including the oil and non-oil sectors, mainly it has created the Economic Vision 2030 initiative for this purpose. Surprisingly, since 2019 there has been a noticeable drop in amount of FDI entering the country because of the various challenges related to the legal and economic climate. Saudi Arabia may find it extremely difficult to succeed in the implementation of its Economic Vision 2030, which needs a well-structured plan that adapts and apply appropriate solutions and adequate planning procedures to combat these obstacles to economic growth and revenue diversification. Therefore, it is necessary to identify the major causes of this declining pattern of FDI and implement appropriate methods to enhance FDI inflows. In this regard, the study had two main concerns: firstly, to investigate whether Saudi Arabia’s legal environment is conducive to attract FDI, particularly in non-oil sectors; secondly, to examine the main factors adversely affecting the motivation of FDI to invest in Saudi Arabia by looking at statistics and legal proceedings.