Startup Wrap – Saudi and Egyptian startups lead funding activity

KARACHI: Many multinational corporations (MNCs) have “packed up” and left Pakistan in recent years because of the country’s “inconsistent policies and a complicated tax regime,” Overseas Investors Chamber of Commerce & Industry (OICCI) CEO Abdul Aleem said this week.
Prime Minister Shehbaz Sharif’s government has imposed as much as 29 percent taxes on corporate incomes to increase the cash-strapped country’s revenues with the help of International Monetary Fund (IMF) that wanted Islamabad to tax incomes from agriculture, real estate and retail sectors in the fiscal year 2025-26 budget that Finance Minister Muhammad Aurangzeb is expected to present on June 10.
“Basically the issue with our members and which generally the foreign investors are facing is that the consistency of policy is not there,” Aleem told Arab News in an interview on Friday.
Pakistan’s existing tax regime is “very complicated” and leads to a lot of litigations while abrupt changes in the government’s corporate policies have seen global giants like Shell plc., TotalEnergies SE and some pharmaceutical firms divest their shares in the country, the world’s fifth most populous nation and thus a big consumer market.
The OICCI is the biggest taxpayer in Pakistan that has been paying Rs15 billion ($53.2 million) daily in taxes, which is about one-third of the total taxes the nation collects in a year, according to its CEO. Its members include Pepsi-Cola International (Private) Limited, Pakistan Kuwait Investment Company, Citibank N.A., Toyota’s Pakistan unit Indus Motor Company Ltd. and Maersk Pakistan (Pvt.) Ltd.
“Many of the companies packed up a few years back,” Aleem said.
TotalEnergies SE sold 50 percent of its shareholding in Total PARCO Pakistan Ltd. to Gunvor Group last year, while Shell plc sold a majority stake in its Pakistan business to Wafi Energy LLC of Saudi Arabia in November 2023.
Higher taxes on the incomes of corporate and salaried persons is another area of concern for foreign investors who directly or indirectly employ around one million Pakistanis.
Sharif’s government has been charging businesses as much as 10 percent as super tax, 18 percent sales tax, and 29 percent as corporate tax this fiscal year, which ends on June 30.
“In comparison to the region, it is higher,” Aleem said about the corporate tax, which he said should be slashed to 25 percent through a one percent annual reduction. The 18 percent sales tax too should be reduced on the same pattern to 15 percent that will align the levy to what is being paid in the region, according to the OICCI CEO.
The 10 percent super tax should be abolished in the next three years so that the MNCs operating in Pakistan could be more competitive. The government should provide relief to the heavily-taxed salaried persons in FY26 budget to stop the so-called brain drain from the country.
Record number of skilled individuals and professionals deserted Pakistan for other countries and inflicted a huge loss on the South Asian nation in the form of human capital and resources, Bloomberg News reported in October.
The Pakistani government, which is charging salaried persons as much as 35 percent tax on incomes, has said it wants to provide some relief to them in the new budget, which will take effect from July.
“The salary taxes in Pakistan are very high. It should be reduced immediately because it is having an impact,” the OICCI chief said.
“It is very necessary that we get good quality people to remain in the country and work for the industry as well. And there should be an element of fairness in taxation.”
In recent years, PM Sharif’s government has been trying to attract foreign direct investment (FDI) into the country and has established a Special Investment Facilitation Council (SIFC), a civil-military forum, to rid foreigners of bureaucratic hurdles. However, the investment inflows have been dismal and could not increase beyond $3 billion a year.
“The government has to facilitate the existing foreign investors by not only streamlining the tax rates but also streamlining the systems, tax system, compliance system so that more and more foreign investment is attracted,” Aleem said.
The OICCI, he said, was the largest foreign investor in Pakistan and had brought about $20 billion fresh FDI besides reinvesting more than $23 billion in Pakistan over the last one decade.
“We are the largest taxpayers and I think there is need to rationalize the tax regime,” Aleem said, adding that the government could increase Pakistan’s 10.6 percent tax-to-GDP ratio to 14 percent by taxing services, agriculture and trades.
The OICCI chief said the government should decrease its expenses by “offloading” loss-making, state-owned enterprises, including the Pakistan International Airlines, as well as plug leakages in its revenue from tobacco industry.
The two MNCs, Pakistan Tobacco Company Ltd. of British American Tobacco Group and Phillip Morris International, were paying 99 percent taxes while their market share stays at 53 percent.
“That tells you that the other 47 percent or half of the industry is not paying its tax which is Rs300 billion,” he said. “There is need for more robust action from the authorities.”
Arab News contacted Qamar Sarwar Abbasi, spokesperson for the finance ministry, regarding the concerns raised by the OICCI official, but he did not offer any comment.

RIYADH: Saudi Arabia is steadily progressing in its journey to attract $100 billion in foreign direct investments by the end of this decade, with the Kingdom heavily focusing on securing funds in high-growth sectors, experts have said.

Saudi Arabia’s Vision 2030 economic diversification program aims to transform its economic landscape, including attracting foreign direct investment and increasing FDI’s contribution to the Kingdom’s gross domestic product.

To facilitate and increase FDI, in August Saudi Arabia approved an updated investment law, aimed at boosting transparency and easing the process of investing in the Kingdom.

Speaking to Arab News, Emilio El-Asmar, partner at Oliver Wyman’s Government and Public Institutions practice – India, Middle East and Africa, said that the mining sector is one of the most promising industries that will help the Kingdom achieve its FDI goals by 2030.

He also pointed out that the ongoing regulatory reforms happening in Saudi Arabia are making the Kingdom an attractive destination for foreign investments.

“Saudi Arabia’s National Investment Strategy, central to Vision 2030, aims to transform the Kingdom into a globally competitive, innovation-driven economy,” said El-Asmar. 

Saudi Arabia offers geopolitical neutrality, long-term offtake potential, and value-add opportunities.

Emilio El-Asmar, partner at Oliver Wyman’s Government and Public Institutions practice – India, Middle East and Africa

He added: “Mining and metals are among the most promising areas, as the Kingdom has $2.5 trillion worth of untapped resources, including gold, copper, lithium, and rare earth elements, which are vital to energy transition and global industry. Regulatory reforms and integrated industrial zones are opening this frontier market to international investment.”

The comments from the Oliver Wyman official come after Saudi Arabia launched a new incentive package to attract foreign direct investments into the nation’s mining sector.

The Ministry of Investment is collaborating closely with the Ministry of Industry and Mineral Resources through an exploration enablement program aimed at simplifying investments in the mineral exploration industry, the Saudi Press Agency reported in March.

Ryan Alnesayan, partner at Arthur D. Little in the Middle East region, also echoed similar views and said that the mining sector could become a game changer in Saudi Arabia’s economic diversification journey.

“The new mining law and exploration incentives are attracting serious interest, and the Kingdom is positioning itself as a global mining hub with reliable data, infrastructure, and long-term demand,” said Alnesayan.

El-Asmar further said that Saudi Arabia’s Ras Al-Khair and Wa’ad Al Shamal offer integrated infrastructure, rail and port access, and proximity to downstream processing, making them investment-friendly destinations for international entities.

“These ecosystems support refining, smelting, and metal fabrication. A pipeline of investable projects, from exploration to processing, is backed by national institutions including the Public Investment Fund and industrial champions,” said the Oliver Wyman official. 

Global players are investing in everything from gaming and digital media to smart cities and AI.

Ryan Alnesayan, partner at Arthur D. Little in the Middle East region

He added: “As global supply chains seek secure mineral sources, Saudi Arabia offers geopolitical neutrality, long-term offtake potential, and value-add opportunities. Its location between Africa, Asia, and Europe gives investors access to regional growth markets.”

In January, speaking at the Future Minerals Forum, Saudi Arabia’s Minister of Industry and Mineral Resources Bandar Alkhorayef said the nation seeks to promote exploration opportunities across 5,000 sq. km of mineralized belts in 2025, aligned with the Kingdom’s broader plans to establish mining as the third pillar of its industrial economy.

In May, a report released by the General Authority for Statistics revealed that net FDI into Saudi Arabia stood at SR22.1 billion ($5.89 billion) in the fourth quarter of 2024, representing a rise of 26 percent compared to the previous three months.

GASTAT also added that this figure was the highest level across the year, surpassing the SR15.5 billion seen in the first three months of 2024, the SR19 billion recorded in the second quarter, and the SR17.5 billion witnessed in the third.

This development comes after Saudi Arabia rose to 13th place in Kearney’s 2025 Foreign Direct Investment Confidence Index, published in April.

This is up one spot from last year and also means the Kingdom retained its position as the third-most attractive emerging market, signaling continued global confidence in its transformation strategy.

Kearney added that the ranking reflects the nation’s bold, reform-driven approach to building an internationally competitive, future-ready economy.

Other crucial sectors

El-Asmar also outlined other crucial areas that could drive FDI into Saudi Arabia in the coming years.

According to the Oliver Wyman official, sectors including pharmaceuticals, biotechnology and petrochemicals are also expected to see foreign funds pour into the Kingdom.

He added: “In petrochemicals, Saudi Arabia is expanding beyond crude oil into speciality chemicals, high-performance plastics, and packaging, backed by integrated feedstock and logistics infrastructure.”

El-Asmar said that Saudi Arabia is ranked second among G20 countries in digital competitiveness, and the Kingdom has strong infrastructure, forward-looking regulations, and digital competitiveness capable of drawing FDI in AI, cloud, cybersecurity, smart city tech, fintech, and health tech.

“Incentives include regulatory sandboxes, IP protections, and access to a growing consumer and enterprise market, making the Kingdom attractive for global tech firms and startups,” said El-Asmar.

Alnesayan also highlighted the role of technology and entertainment sectors in materialising Saudi Arabia’s FDI goals.

“Entertainment and tech reflect Saudi Arabia’s new growth story. Global players are investing in everything from gaming and digital media to smart cities and AI. These sectors are fueling job creation, innovation, and a dynamic consumer market,” said the Arthur D. Little official.

El-Asmar agreed that the entertainment sector is central to Saudi Arabia’s diversification and FDI strategy, reflecting cultural openness and rising domestic demand.

“With a population of 35 million and rising demand for premium experiences, the Kingdom is seeing growth in cinemas, theme parks, live events, and content production. Major international brands are entering the market, supported by co-investment and giga-projects like Qiddiya,” he said.

RHQ program and FDI

Alnesayan believes that Saudi Arabia’s regional headquarters program is emerging as one of the key drivers of FDI in the Kingdom.

“The RHQ Program is not just about relocating offices — it’s about anchoring decision-making in Riyadh. That brings investment, talent, and deeper regional integration. We’ve already seen over 600 companies commit, and the momentum is accelerating,” he said.

Saudi Arabia’s regional headquarters program offers incentives such as a 30-year corporate income tax exemption, withholding tax immunity, and various support services for international businesses.

Some of the noted firms that relocated their headquarters to the Kingdom are Northern Trust, Bechtel and Pepsico from the US, and IHG Hotels and Resorts, PwC, and Deloitte from the UK.

El-Asmar also highlighted the importance of the RHQ program and said that Saudi Arabia’s location — at the crossroads of Europe, Asia, and Africa — makes it an ideal base for regional operations.

Potential challenges

Despite all these positive developments, experts also outlined some of the challenges Saudi Arabia could face in achieving its FDI targets within the stipulated timeline.

“The fundamentals are strong, but challenges remain — global volatility, talent gaps, and the need for ongoing regulatory clarity. But the Kingdom is addressing these head-on through reforms, infrastructure investment, and strategic partnerships that reduce risk and increase investor confidence,” said Alnesayan.

El-Asmar said that foreign investors need predictability, and to address this, Saudi Arabia has launched the Investor Confidence Protection Mechanism and Investor Council, alongside legal reforms including English-language documentation and digital licensing portals.

“High operational costs and complex procedures persist in some sectors. Special Economic Zones, tax incentives, and digital services are helping to reduce these barriers and simplify market entry,” said El-Asmar.

He concluded: “While these challenges are real, Saudi Arabia’s strategic reforms, long-term vision, and favorable location continue to make it one of the world’s most promising emerging FDI destinations.”