False Report on the Saudi Economy, Appears on Wall Street Journal, Refuted by Prominent Investment Expert

Wall Street Journal, the well-known US business daily, has recently published a report that bore many inaccuracies about the Saudi economy, and the situation of foreign investment, in the kingdom, as well.

The report indicated that Uber Technologies, General Electric, Bristol-Myers Squibb, Gilad Sciences and several other foreign companies, are in the process, claiming that as Saudi Arabia has been subjected to surprising tax assessments, often amount to tens of millions of dollars.

Here, the investment expert Bassam A. Nour, head of alternative investments, at Diriyah Financial, refuted this false information, in a rejoinder, as he indicated that the report that appeared in the well-known American newspaper has committed a logical fallacy, when it linked the decline in foreign direct investment, in the Kingdom for one year to several things, including taxes on foreign companies, intellectual property and benefits it is not paid.

Nour confirmed through tweets on his official account on Twitter that the report mentioned the resentment of some foreign companies from taxes and fines, forgotten that imposing tax is the right of a state and that it imposes it on local and foreign companies, equally.

In case a foreign firm does not pay the tax or was lenient in understanding its regulations, does it make sense for the state to “forgive” it? He puts forward such a broad question, challenging the report.

The head of investments in Diriyah Financial added that the newspaper ignored the fact that it is not possible to gauge the success of any country, in attracting foreign investments, within a single year or two.

For example, from 2018 to 2019, foreign direct investment, in Germany, has fallen by about half, however, the newspapers did not report that foreign investment has decreased due to taxes, intellectual property and unpaid benefits.

Nour indicated in his tweets that foreign direct investment fluctuates naturally, and in 2020 and 2021, the world has went through the Coronavirus pandemic’s crisis.

Subsequently, it is natural for foreign investment in a country, whomsoever, to decline.

We are still an oil-producing-exporting country, he pointed out, and we remember well what happened to the price of oil in mid-2020.

How can an investor come when oil prices are dropping, that way?

This comes in response to what the newspaper indicated as a result of tax assessments and other things, related to foreign investment remaining significantly low, while some companies are reducing their operations or delaying the promised expansion plans.

The American newspaper reported that foreign direct investment, in the Kingdom of Saudi Arabia reached $5.4 billion in 2020, less than half the level it was a decade ago, and much less than the $19 billion the country was targeting, adding that Riyadh was on track to reach more than $6 billion, in 2021 based on such a conclusion, it is clear that it  does not consider or preferred to ignore, outright the sale of a $12.4 billion worth stake, in a Saudi pipeline company to foreign investors.

The tweets of the head of Alternative Investments at Diriyah Financial, in response to the Wall Street Journal report, cited the previously announced European Union taxes and fines of as much as $15 billion on Apple, due to the company’s tax evasion.

Did this lead to Apple’s flight from Europe? Pointing out that US courts are full of sales tax cases, that technology companies, including a heavy weight such Amazon, have evaded.

He stressed that among the misinformation, the newspaper said that the sudden increase of the value-added tax to 15% had harmed foreign investments, which is not true, as the burden of the tax falls on individuals (who live in Saudi Arabia) and not on companies, because companies take tax from individuals and supply it to the government, and if the company’s expenses are higher than its revenues, it can recover the difference from the government.

If the company’s documents are sound, clear and running in accordance with the rules, then the redemption period does not exceed one month.

Here, he added an astonishing comment, which reads: (Of course, all of which were not mentioned, in the obnoxious and malevolent article).

The American newspaper said that the judicial system, in the Kingdom, has led to the reluctance of foreign companies, and here the investment expert responded that it is not clear what is the criterion on which the article relied in determining the efficiency of the Saudi judicial system.

If the comparison was struck with developed countries, that is not fair.

If it is with the emerging countries, the Kingdom is better than India, Brazil and others, in terms of the taxation or even the judicial system.

Saudi judicial system is constantly changing and for the better.

For example, the introduction of the corporate bankruptcy system led to the successful conclusion of the largest bankruptcy case, in the region, which is, namely, the Al-Gosaibi case.

Foreign banks and investment funds are among the biggest beneficiaries of ending this case.

But the report appeared on the newspaper did not mention it.

Wall Street Journal has claimed that America had put Saudi Arabia on the list of countries under surveillance, in relation to intellectual property rights.

Here, Bassam refutes this, citing the US government report saying that the US government appreciates the Kingdom’s efforts, to the contrast, in combating piracy and limiting intellectual property theft.

The report mentioned in a negative way that the government imposed the employment of Saudis on companies (Saudization or indigenization), and the head of investments in Diriyah Financial denounced this claim, saying, “Does the government shall be blamed when 76% of the workforce are non-Saudis?” If jobs inside Saudi Arabia are not for Saudis, then for whom? Of course, the article did not mention the percentage of non-Saudis, in the labor market.

He pointed out that the percentage of non-Americans, in the American labor market does not exceed 2% of the total workforce.

Despite this low percentage, the US government puts as many as obstacles, in the way of hiring non-Americans, kicking the ball back to the court of the alleging report and the paper, to conclude.