Saudi Arabia upgraded to "Emerging Market"

Morgan Stanley Capital International (MSCI) announced it will grant an upgrade to Saudi Arabia by adding it to the MSCI Emerging Markets Index (the Index). The Tadawul is up 15 per cent by 30 June – vastly outperforming the S&P 500 Index's 1 per cent return. The Saudi market's rise is driven largely by the government's 2015 decision to open it up to foreign investors, as well as the ongoing move towards privatization of government enterprise, the highly-publicized anti-corruption campaign and the still-pending Aramco IPO.

The Index captures around 85 per cent of the free-floated market capitalization of 24 emerging economies and currently covers a total of 845 companies with total market cap of US$5.3 trillion. – 30 June 2018

Uber and Careem discuss merger

Rival ride-sharing apps Uber Technologies, Inc. and Careem Networks FZ are reportedly in talks to merge as Uber prepares for its 2019 IPO. Dubai-based Careem has its biggest market in the Kingdom and is currently in talks with investors to raise US$500 million, potentially valuing the ride-hailing company at about US$1.5 billion. This could result in a decrease in unemployment, as Uber has sought to capitalize on the recent removal of the driving ban by hiring Saudi female drivers.

In 2016, Saudi Arabia's sovereign wealth fund acquired a US$3.5 billion stake in Uber, while billionaire Prince Alwaleed bin Talal and Saudi Telecom Co. are investors in Careem.

Bloomberg – 4 July 2018


Draft law privatization law issued

The Kingdom's National Centre for Privatization (the NCP) has issued a draft of its new Private Sector Participation Law (the PSP Law). The draft PSP Law states "its overarching objective is to strengthen the role of the private sector by unlocking state-owned assets for investment''. To that end, the draft contemplates numerous deviations from existing laws and standards including the following:

  1. Lifting the longstanding requirement that contracts must be concluded in Arabic;
  2. Permitting parties to agree to arbitration as a dispute resolution mechanism and exemption from provisions of the Saudi Law of the Board of Grievances;
  3. Permitting non-Saudis to own real estate in the Kingdom outside Makkah and Madinah and leasing of property inside Makkah and Madinah for the term of the contract;
  4. Permitting special exemptions from the Nitaqat (Saudization) regime;
  5. Permitting exemptions to certain portions of the Saudi Companies Law regarding capitalization requirements;
  6. Non-application of the Saudi Competition Law and Government Tenders And Procurement Law;
  7. Permitting attachment of state-owned properties; and
  8. Permitting non-Saudi ownership of healthcare institutions and schools during the period of the contract.

National Centre for Privatization – 8 July 2018

New Saudi Bankruptcy Law

Saudi Arabia's outdated bankruptcy regulations are some of the oldest laws on the Kingdom's books. The new Bankruptcy law – approved by Royal Decree in February 2018—is part of a drive to modernize the Saudi legal system, and is aimed at increasing investor confidence and boosting the Kingdom's rankings in global economic indicators. 

According to Majid Al Rasheed, the secretary of the Saudi bankruptcy committee at the Ministry of Trade and Investment, the new bankruptcy system is set to go into effect at the end of August 2018.

Global Legal Post – 17 July 2018

New Labor Courts

The Ministry of Justice (MOJ) has announced that new Labor Courts are set to launch in early 2019. At the conclusion of Q1 2018, estimates put the Kingdom's workforce at 10 million expatriates and 3 million Saudis. These numbers are hoped to increase with the ongoing mega-projects across the Kingdom, despite the fact that, during this same period in 2018, 234,000 expats left the Kingdom, which failed to decrease the unemployment rate among Saudis, which remained stagnant at 12.9 per cent.

The MOJ hopes that the new courts will boost investment opportunities, as well as increase the efficiency and effectiveness of labor judiciary by connecting the courts to government entities that deal with labor.

Arab News – 24 July 2018; Saudi Gazette – 9 July 2018


Saudi tourism business progressing

Crown Prince Mohammed Bin Salman and chairman of the Diriyah Gate Development Authority (DGDA) has named Gerard "Jerry" Inzerillo as CEO of the DGDA. Inzerillo will oversee the restoration of Diriyah and the development of new museums, academic institutions, resorts, restaurants, health facilities and high-end retail in a 7.1 million square meter development on the west side of Riyadh. Diriyah, a UNESCO registered site, is the birthplace of the first, second and current Kingdom of Saudi Arabia.

The hire of Inzerillo comes on the heels of the announcement by the Saudi Commission for Tourism & National Heritage (SCTNH), in April 2018, that it will begin to issue tourism visas to the Kingdom (whose tourism industry has historically relied upon religious pilgrims) as part of Vision 2030's goal of diversifying the country's economy.

Arabian Business – 25 July 2018

Wind energy in the Kingdom

In collaboration with the University of Notre Dame, researchers from the King Abdullah University of Science and Technology (KAUST), have found that wind energy has "considerable potential" in the Kingdom. Saudi Arabia has long depended on fossil fuels for energy, but a rise in industrial development, urbanization and population growth has raised the demand for renewable alternative sources of energy.

The research coincides with an announcement that Saudi Arabia's Renewable Energy Project Development Office and the Ministry of Energy, Industry and Mineral Resources had received bids of between US$21.30 and US$33.86/MWh (megawatt hour) for the 400-MW Dumat Al Jandal wind farm. The Ministry of Energy is currently evaluating four bids for the US$500 million project from pre-qualified consortiums.

Clean Technica – 24 July 2018

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