Viewpoint: Fahad Abuhimed

The past year has seen an unprecedented wave of regulatory and legal reform within Saudi Arabia. While these reforms were expected following the unveiling of the National Transformation Programme and Vision 2030 by Crown Prince Mohammed bin Salman Al Saud in early 2016, it is the pace at which these changes are coming to fruition that is surprising many commentators. All ministries and regulatory bodies have continued to commit significant resources and manpower to deliver on their respective targets, aligned with Vision 2030.

A key elements of Vision 2030 is the push towards increasing the private sector’s share of GDP. The government has established a General Authority for Small and Medium Enterprises tasked with reviewing existing laws and regulations with a view to removing obstacles that could stifle small and medium-sized enterprise (SME) growth and facilitate access to funding. Understanding the challenges faced by the private sector in accessing expertise with limited resources, the government has set aside SR200bn ($53.3bn) to provide the necessary support. The draft of the new Procurement Law has been released for public consultation, and there is clear evidence of support for the sector and for local content. The draft of the new Insolvency Law has also been released for public consultation; its objective is to preserve the value of enterprises by giving companies that face financial difficulties opportunities to reschedule debts or undergo financial restructuring. Sources of funding will also be more accessible as SMEs can now list on Nomu, the new parallel market established by the Saudi Stock Exchange.

The capital market regime has also seen a number of significant changes. Besides the establishment of the parallel market, settlement of trades has moved from a T+0 to a T+2 regime, providing more time for investors to properly scrutinise deals and allowing securities borrowing and lending as well as short-selling, regulations for which were also released at the same time. Additionally, new mergers and acquisitions regulations were also released in 2017. One of the most noticeable developments has been the drive towards privatisation. The National Centre for Privatisation (NCP) has been established and tasked with formulating regulations to create an efficient privatisation framework and to prepare government entities that are identified for privatisation. The privatisation of various sectors and of government-owned entities is a key element of Vision 2030 and the NCP is making great strides in creating the necessary infrastructure to support this project.

The market reforms are not going unnoticed, and there has been regular and extensive coverage in the international press. Law firms have seen a significant increase in work from the ministries, regulators and corporate and financial institutions, both Saudi and international. There is a noticeable increase in the appetite of large foreign conglomerates to invest in the Kingdom, and the changing legal and regulatory environment – coupled with the large pool of talented Saudi graduates entering the market each year and increased transparency – will provide a greater degree of comfort for international investors with both medium and long-term plans for Saudi Arabia.

Vision 2030 is clearly an ambitious project, but it is also a clear statement of intent from a nation with a sizeable and ambitious young population. The announcement of mega-projects such as the Red Sea Project, the Qiddiya Project and Neom are testament to this ambition. The pillars that will support the achievement of these goals are being put in place and are supported by the leadership and the general public. The Future Investment Initiative held in Riyadh in October 2017 demonstrated the potential of the Kingdom to attract international investment. I have no doubt that there will be challenges along the way, but I am also confident that the Kingdom is well on its way to achieving its goals. Saudi Arabia is open for business and, as a G20 economy, it is taking its rightful place among the top trading nations and economies of the world.