Introduction

As mentioned in the preceding chapter, there are certain impediments which hamper the flow of foreign investment to Sudan, and in a lesser degree also to Saudi Arabia, and so tend to create an unfavorable investment climate. Consequently these two developing countries have been impelled to try to attract foreign capital by removing these impediments, as well as by providing additional incentives, thus producing a more satisfactory investment climate. The United Nations has acknowledged the need for such measures on many occasions. One of its reports states: ‘any measure impairing the assets of any investor in a given country is likely to affect negatively the decision of potential investors in other fields of activity and even in other countries.’

This report was welcomed by many capital-importing countries, which accordingly have taken measures to minimize the impediments and increase the incentives with a view to attracting more foreign capital. These incentives are presented in national legislations, treaties, development agreements and detailed governmental statements. Most of them are in the form of fiscal concessions which make the early years of an investment project more attractive. The justification of this policy is to enable business enterprises financed with foreign capital to settle down and make a good start in the host country.

The Sudanese and Saudi investment laws in particular provide the following incentives.