Inflows of foreign direct investment  into Saudi Arabia have increased by 7 per cent for a second consecutive year to reach $4.6 billion, more than three times the level recorded in 2017, said United Nations Conference on Trade and Development (UNCTAD) in a new report.

The findings of  UNCTAD’s latest World Investment Report reflect the upward trend identified in Invest Saudi’s latest investor license figures published last month, which revealed the Kingdom saw a 19 per cent increase in the number of licenses granted in the first three months of 2020 compared to the same period last year.

UNCTAD publishes its World Investment Report on an annual basis and analyses trends in foreign direct investment across the world, at the regional and country levels.

The report also highlighted that Saudi Arabia was among the top destinations for foreign direct investment in the West Asia region and accounted for a majority of regional inflows last year, before the current economic downturn caused by the Covid-19 pandemic began to make an impact.

The report identified the Kingdom’s improvements to its business environment as a key driver of this annual growth, highlighting a number of the economic reforms that were introduced throughout last year as being beneficial to improving the overall ease of doing business.

Dr Ayedh Al-Otaibi, Deputy for Investment Climate at Saudi Arabia’s Ministry of Investment (MISA), said: “UNCTAD’s latest World Investment Report is a global marker of the development of foreign direct investment across the world. We are delighted to see in this latest edition that Saudi Arabia’s efforts to distinguish itself as a global investment destination of choice by implementing an extensive program of pro-business reforms has resulted in yet another positive uptick in the amount of FDI coming into the Kingdom in 2019.

“Saudi Arabia continued to see this encouraging pattern of growth in the first quarter of 2020, with strong month-by-month increases in the number of international companies setting up in the Kingdom recorded in January and February. However, as the economic effects of Covid-19 began to be felt in March, we found that growth began to slow.”

In line with this national FDI growth trend identified by Invest Saudi in the first three months of 2020, UNCTAD has forecast that the global health crisis caused by Covid-19 will continue to have an unprecedented impact on international FDI flows, predicting that an overall decline of 40 per cent is expected between 2020 and 2021.

The report emphasizes that investment has a key role to play in countering the long-term developmental impact of the pandemic on national economies.

The UN trade body also carried out an assessment into national economic responses to Covid-19 and identified specific policy recommendations and best practices by investment promotion agencies (IPA). The Ministry of Investment of Saudi Arabia’s Covid-19 Response Center (MCRC) was highlighted as an example of global best practice among IPA efforts to mitigate the financial impact of the pandemic on the private sector.

“The MCRC has so far processed more than 575 license issuances and renewals, carried out more than 2,030 supporting e-services for investors and businesses, and made more than 13,300 outbound calls to investors enquiring about their specific challenges and which types of support they require. We have also been able to direct them to the specific Saudi government agencies that can further assist them,” Al-Otaibi added.