IT is clear that Saudi Arabia is moving to diversify its sources of income and decrease its current great reliance on oil revenues. Fluctuating oil prices have been the main catalyst. The approach is clear in the royal directive to allow 100 percent foreign owned retail and wholesale companies to work in the Kingdom. The foreign companies investing in the above mentioned activity were previously allowed to invest, but with ownership not exceeding 75 percent. Under those rules, we did not witness an end to monopolies or any drop in prices of commodities. We also did not see any large interest in investing in these areas in the Kingdom. I do not believe that the situation will change a lot after the latest royal directive due to a number of reasons. Most important of these is those in charge of foreign investment, that is the Saudi Arabian General Investment Authority (SAGIA). Since the issuance of the foreign investment regulation in 2000 and SAGIA's handling of activities since then, it granted licenses to foreign investors, whether with real investments or with an express intention to immigrate to the Kingdom so as to be in proximity to the Two Holy Mosques. SAGIA was happy to issue them licenses. However, when a new governor for SAGIA was appointed more than three years ago, he had another approach: attract big investment only and turn away all others. To achieve this, SAGIA issued new conditions for renewing existing licenses and issuing new ones. Some of these conditions were impossible to fulfill. It then started issuing new conditions from time to time, to the extent that foreign investors wondered what SAGIA really wanted. At a certain point, many believed that SAGIA itself did not know what it wanted. The result was that many foreign investors left Saudi Arabia with no intention to return. Eventually, SAGIA started boasting about the number of cancelled licenses at the the end of every year. This was after it used to boast at the end of every year about the number of licenses issued! Many people applauded SAGIA's ‘massacre' of existing foreign investments under the pretext that these investments were competing against small and medium firms. It said that young Saudis deserve these investments more than the foreigners. It is true that some foreign investments were stalled and the investors lost big amounts in the Saudi market because of SAGIA's actions. It was SAGIA that granted them licenses earlier and allowed them to invest in the Kingdom while knowing the volume of their investments. Generally speaking, the "massacre" of foreign investments carried out by SAGIA did not only evict small and medium investments, but it damaged the investment climate in the Kingdom in general. It resulted in creating a fear psychosis in big companies, because they were sure that SAGIA would wake up some day and start carrying out a new massacre. Earlier, the state was not in need of foreign investments due to high oil prices. Therefore, the state closed its eyes over SAGIA's actions. But the urgent question now is: What will SAGIA do to restore its credibility with those foreign investors that it turned away earlier and we are in need of now?
