Book

The Foreign Partner... A Thorn in the Side!

Prof. Dr. Yassin Abdulrahman Al-Jifri

Date of publication: July 20, 2026 22:31 KSA

The Saudi investor is interested in partnering with a foreign investor, who helps him benefit from the available opportunities and achieve returns, perhaps due to experience and knowledge, or perhaps because he has a comparative advantage or a good brand. The steps begin with registration, forming the company, injecting capital, and the associated steps. Usually, the investor willing to invest is aware of the investment size and has a desire to benefit from the opportunity, not to market it as an agency or distributor, hoping for a larger share, and believing in the size of the opportunity and its benefit. In the absence of a systematic franchise from his side or in the target market, or because the market is unclear and difficult to grant a franchise, the foreign partner proposes a partnership mechanism. Suddenly, with changing economic conditions and declining performance, the foreign partner begins to pressure, dictate terms, or leave the Saudi partner struggling with suspended matters.

The tragedy begins when the foreign partner wants to withdraw, leaving the company suspended, being stubborn about closing it, and starting a series of blackmailing the Saudi partner into signing declarations or burdening him with the consequences. With the foreign partner leaving Saudi Arabia, the entire problem falls on the Saudi partner, who cannot close the company and faces various types of problems, such as fines for not submitting financial statements or for non-compliance. Although part of the financial burden falls on the foreign partner, the fines remain on the local (Saudi) partner. The pressure continues, and the issue drags on for several years, while the foreign partner is not held accountable for anything, and no fine reaches or applies to him, as he is outside the borders. The blackmail continues against the local partner because the law applies to him easily, and he is forced to pay the fines. But just as we seek to attract investments and foreign investors, we must protect the local investor from the arbitrariness and harm of the foreigner. There are many cases that have existed for decades, with no solution, and the multitude of fines exhausts the citizen who fell into the trap. So, is there a possibility to limit the blackmail by foreign investors and support the local investor?

The solution – undoubtedly – exists, and it is important for us. The system's articles and fines were enacted for compliance and enforcement, which is good, and everyone acknowledges and respects that. However, the loophole that foreign investors exploit to cripple the local investor must be addressed, thus removing the thorn from the side of the Saudi investor.

Investments and Foreign Investors