In a landmark ruling in Saudi Arabia, the Saudi Council of Ministers approved a new Foreign Investment Law on April 10th, significantly revising the way foreign investment has been conducted in the Kingdom for more than 20 years. Following the recommendation of the Supreme Economic Council and the Majlis Al-Shura, King Fahd issued a Royal Decree approving the law. Up to now most Middle Eastern countries (including Saudi Arabia, Jordan, Oman, United Arab Emirates and Egypt) limited a foreign partner to owning a maximum of 49 percent of a local company.
In a dramatic change from the previous investment law, the new Saudi Foreign Investment Law allows foreigners 100-percent ownership of projects, as well as the property required for the project itself or for housing company personnel, while enabling them to retain the same incentives given to national companies. For example, projects that are 100 percent foreign-owned will be eligible for loans from the Saudi Industrial Development Fund. Investors will also be able to hold investment licenses in more than one type of activity. The new law has brought significant changes to the previous sponsorship regulations. Foreign investors and their non-Saudi employees will be sponsored under the new licensed firm.
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