The Islamic Finance Handbook: A Practitioner's Guide to the Global Markets

24Saudi ArabiaSteady Growth amidst New Regulations^*

Nabil Issa

Partner, King & Spalding

James Stull

Senior Associate, King & Spalding

The kingdom of Saudi Arabia is characterised by a booming and stable economy driven by ample oil revenues and boosted by recent fiscal stimuli. Saudi Arabia recorded a GDP of approximately US$264 billion in 2012, a growth of 6 percent from 2011. The IMF forecast a growth of 4.2 percent in 2013, with GDP reaching US$275 billion.

Saudi Arabia is home to a large majority of investment funds being domiciled in the Gulf Cooperation Council (GCC) because of the country's relatively clear and predictable funds regime. Moreover, it is one of the fastest growing markets globally in terms of both sukuk issuances and the volume of financing structured in a Shari'ah-compliant manner. Saudi Arabia also introduced a number of new regulations in late 2012 and in 2013 to improve its finance, mortgage, real estate, and funds industries as well as streamlining the enforcement of foreign arbitral awards, domestic judgments, and promissory notes.

Regulatory Framework

The Capital Market Authority (CMA) and the Saudi Arabian Monetary Authority (SAMA) are the governmental bodies that regulate asset management and financing transactions.

The CMA regulates the capital markets, which include the stock exchange and other sales of assets, equity securities, and debt securities (such as sukuk). Its power is granted under the Capital Market Law, which took effect in 2003. ...