Activities Excluded from Foreign Investment in Saudi Arabia

Activities Excluded from Foreign Investment

Saudi Arabia stands at the forefront of global investment, welcoming international capital into a rapidly evolving economy.

Yet alongside this openness, regulators have defined a clear framework that includes specific activities excluded from foreign investment to safeguard national and sovereign interests.

In this guide by Habitare Real Estate, we explore the activities excluded from foreign investment, outline the key features of the updated Investment Law, and explain compliance requirements and potential penalties.
For a broader view of opportunities in the Kingdom.

Key Features of the Updated Investment Law in Saudi Arabia

Saudi Arabia’s Ministry of Investment issued Resolution No. 1086, introducing the Executive Regulations of the updated Investment Law. The regulation was officially published on 25 April 2025.

Key highlights include:

1. The new law applies equally to local and foreign investors, unlike the previous framework which focused solely on foreign investment.
2. Capital is now defined more comprehensively, covering shares, equity stakes, contractual rights, tangible and intangible assets, intellectual property, licenses, and permits.
3. A flexible registration system has replaced traditional licensing procedures, reducing bureaucracy and accelerating market entry.
4. Investment incentives may be granted in accordance with regulatory controls.
5. Investors may resort to arbitration, mediation, or amicable settlement for dispute resolution.
6. A unified investor registry has been introduced for both local and foreign investors.
7. A one stop service center has been launched to streamline registration, licensing, and company formation.

Conditions Before Entering Activities Excluded from Foreign Investment

Foreign investors must meet specific requirements before operating in the Kingdom, particularly when evaluating activities excluded from foreign investment.

Key conditions include:

• A clean criminal record inside and outside Saudi Arabia.
• Selecting an activity that is not listed among prohibited activities for foreign investors.
• Compliance with approved Saudi product and production standards.
• Demonstrating that the investment contributes to national strategic objectives, such as job creation for Saudi nationals.

Sectors Open to Foreign Capital

Saudi Arabia actively attracts international investors across strategic sectors that support Vision driven economic diversification, including:

• Real estate development and urban projects
• Industrial and agricultural sectors
• Mining and mineral extraction
• Healthcare services
• Energy and water utilities
• Chemical based industries
• Tourism, culture, and entertainment
• Digital technology and innovation

What Are the Activities Excluded from Foreign Investment?

Despite broad liberalization, a defined list of activities excluded from foreign investment remains in place. These activities may require exceptional approvals or may be fully restricted to non-Saudi investors.

The Ministry of Investment updates this list periodically to ensure transparency. The most recent update includes:

First: Industrial Sector

1. Exploration and production of petroleum materials, excluding certain internationally classified mining services numbered 883 and 5115.

Second: Services Sector

2. Catering services for military sectors.
3. Hajj related tour guiding services.
4. Private recruitment services.
5. Investigation and security services.
6. Commission based commercial agency activities classified internationally under number 621.
7. Fishing of live aquatic resources.

If a foreign investor wishes to engage in an activity excluded from foreign investment, a formal request must be submitted to the Ministry. The application is then reviewed by the competent authority in line with public interest considerations.

See Also: The Best Real Estate Investment in Saudi Arabia

Penalties for Violating the Investment Law

The updated Investment Law sets out a structured mechanism to address violations.

• For minor breaches, the Ministry notifies the investor and grants a correction period.
  • For serious or repeated violations, penalties may include:

1. Official warning
2. Fine of up to SAR 300,000
3. Increased fines for repeat offenses
4. Cancellation of registration

A specialized committee of no fewer than three members, including a legal expert, reviews violations and determines penalties based on severity, repetition, and company size.

Conclusion

Saudi Arabia’s modern investment framework achieves a refined balance. It opens its doors widely to international capital while preserving oversight over strategically sensitive sectors through a defined list of activities excluded from foreign investment.

For international investors, understanding this framework is not a limitation but a pathway to clarity, security, and long-term confidence.

If you would like tailored guidance on permitted sectors, regulatory approvals, or even the process of applying for special authorization within an activity excluded from foreign investment, contact Habitare Real Estate today.
Let us help you navigate the Saudi market with confidence and discretion.

Edited by: Habitare Real Estate^©

Sources:

• Unified Work Document for Investor Services Sector
• Investment Law

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