Net foreign direct investment (FDI) in Saudi Arabia surged to a total of $19.3 billion in 2021, a more than two-fold increase year-on-year, thanks mainly to the Aramco pipeline deal in the second quarter that contributed $12.4 billion, according to new data released by Invest Saudi.

The Kingdom's Investment Ministry issued more than 3,300 new foreign investment licenses in the second half of 2021, a more than threefold increase from the same period in 2020, investment report said.

“A more favourable economic backdrop combined with the government’s ongoing diversification efforts have made the kingdom an attractive prospect for foreign investors,” the report said.

The wholesale and retail sector grabbed the bulk of the new license issuances (1,481) while the manufacturing and construction sectors claimed the second-and third-highest number of new licenses in H2.

The ministry said the infrastructure deal closed by Aramco with a consortium of global investors contributed significantly to the surge in FDI last year. Consisting of investors from North America, Asia, and the Middle East, the consortium acquired a 49% stake in Aramco Oil Pipelines Company.

Under a new National Investment Strategy launched last year, the Saudi government has set a cumulative FDI target of $1.7 trillion by 2020. The strategy outlines several measures, including creating special economic zones and sector-focused investor incentives to attract global business and talent.

The increase in the number of investment licenses issued was also due to the rise in number of companies setting up their regional headquarters within the kingdom. The Saudi government last year told foreign firms they would risk losing out on government contracts by 2024 if their regional bases were outside the kingdom.

(Reporting by Brinda Darasha; editing by Daniel Luiz)