2001 News Story

SEC approves list of exclusions to foreign investment

The Supreme Economic Council (SEC) met today under the chairmanship of Deputy Prime Minister and Commander of the National Guard Crown Prince Abdullah bin Abdulaziz, and passed the following resolutions:

A) In implementation of cabinet resolution 257 dated February 5, 2001, stipulating that the Supreme Economic Council assume the responsibility of supervising the privatization program and following up its implementation, SEC resolved to form a committee of some of its members plus two members of the consultative commission for economic affairs to carry out the works and tasks necessary for the performance of its responsibilities and the exercise of its jurisdiction concerning privatization. The committee will be chaired by Minister of State and cabinet member Dr. Muhammad bin Abdulaziz Al-Ashaikh, with as members the Ministers of Commerce, of Finance and National Economy, and of Planning, plus Minister of State and cabinet member Dr. Metlab bin Abdullah Al-Nafisa, Dr. Khalid bin Muhammad Al-Faiz and Mr. Muhammad bin Abdullah bin Adwan.

B) The council took note of the controls governing the participation of the private sector in implementing governmental projects according to the system of build, operate and transfer (BOT) and directed that these rules be included in the privatization strategy.

C) The council approved the list, submitted by the Governor of the Saudi Arabian General Investment Authority (SAGIA), of categories of activities excluded from foreign investment according to the stipulations in Article (3) of the foreign investment regulations issued by royal decree dated April 11, 2000. The issuance of this list reflects the government's efforts aimed at developing the national economy, providing productive job opportunities, diversifying the economic base, developing investment channels and increasing investment of both domestic and foreign capital in the nation's economy. HEC made the following specific decisions:
i) Without prejudice to the stipulations in Article (2) of the foreign investment regulations, the categories of activities that are excluded from foreign investment shall be approved as listed.
ii) This list shall be revised annually with the aim of opening up some sectors for investment when their own regulations are issued.

D) The categories of activities excluded from foreign investment cover the following areas:
i) In the sector of industry:
1) Exploration for and production of petroleum and petroleum products, except for services related to mining that are internationally classified as numbers 883 and 511-5.
2) Manufacture of military equipment, machinery and uniforms.
3) Manufacture of explosives for civilian use.
ii) In the sector of services:
1) Provision of rations for the armed forces.
2) Investigative and security work.
3) Insurance services.
4) Real estate investment in Makkah and Madinah.
5) Tourist guidance services related to Hajj and Umrah pilgrimages.
6) Manpower agencies and those dealing with recruitment from overseas.
7) Real estate brokerage.
8) Printing and publication.
9) Distribution, both wholesale and retail, including medical retail such as private pharmacies that are internationally classified as numbers 631, 632, 611-1, 611-3 and 612-1; and commercial agencies, with the exception of concession rights services that are internationally classified as number 892-9 provided that foreign ownership does not exceed 49 percent and that the one condition is satisfied concerning economic need, which limits the concession to one for each province.
10) Audio-visual services.
11) Education services at elementary, secondary and adult levels.
12) Telecommunications services.
13) Land and air transport.
14) Delivery and distribution of electric power within the general grid.
15) Space transport services.
16) Delivery of products through pipelines.
17) Services provided by midwives, nurses, physiotherapists and paramedics, that are internationally classified as number 931-91.
18) Services related to fisheries.
19) Poison centers, blood banks, and quarantine facilities.