Asian Investments in MENA: M&A and Project Essentials
China
Thomas CalvertPartner, Head of Corporate Commercial - Iraq, Head of China Group
Alanood AllhaibSenior AssociateCorporate Commercial
Jingzhuo WuAssociate,Corporate Commercial / China Group
Melody HuangAssociate,Transport & Insurance, China Group
Over the past two years, the investment corridor between Asia and the Middle East & North Africa (MENA) has rapidly expanded, evolving from a promising lane to a multi-lane expressway. Our earlier articles traced the first wave of Chinese-led oil, gas, and infrastructure projects, followed by a surge in technology, renewables, consumer, and healthcare transactions. A broad range of Asian sponsors- including Korean chaebol, Japanese trading houses, Indian conglomerates, and Southeast Asian sovereign funds - are driving deal volumes to record highs and reshaping the legal and commercial landscape for foreign capital in the region.
This update highlights key regulatory developments, sectoral hotspots, and practical considerations for Asian investors pursuing M&A or greenfield projects in MENA.
For brevity this article generally focuses on the Kingdom of Saudi Arabia (KSA), and United Arab Emirates (UAE) for illustration, but we will be happy to discuss enquiries relating to projects across MENA.
A combination of sovereign diversification strategies and the launch of giga-projects continues to drive Asian capital into the region. Vision-driven public-sector programmes - such as Saudi Vision 2030, UAE Centennial 2071, Qatar National Vision 2030, and Egypt Vision 2030 - are promoting landmark projects like NEOM, King Salman Energy Park, Masdar’s global renewables pipeline, and Egypt’s New Administrative Capital.
Regulatory liberalisation has also played a pivotal role. Since 2020, the UAE and KSA have progressively dismantled majority-local shareholder requirements, introduced competitive onshore corporate vehicles, digitalised licensing platforms, and, in the case of the UAE, adopted English-law common-law free-zone courts (DIFC, ADGM) that are attractive to international lenders.
The region’s energy transition and supply-chain realignment are accelerating, with intensified climate commitments - such as COP28 in Dubai and KSA’s Net-Zero pledge - positioning the Gulf as a potential hub for hydrogen, carbon capture, metals and minerals processing projects. Asian equipment suppliers and offtakers are seeking long-term stakes in these value chains to de-risk supply.
Hydrocarbon receipts and oil prices have also armed regional sovereign wealth funds (such as PIF, ADQ, Mubadala, QIA, OIA) with unprecedented financial firepower. These funds are increasingly open to Asian strategics (state-owned enterprises, industrial groups, and institutional investors). This reflects a growing openness to structured co-investment with Asian partners, aligning with both Gulf diversification strategies (Vision 2030, etc.) and Belt and Road ambitions.
The UAE remains a leading destination for Asian investment, thanks to its ongoing regulatory reforms. The 2020/2021 amendments to the UAE Commercial Companies Law abolished the historical 51 percent Emirati shareholding rule for most mainland activities, opening the door for full foreign ownership in a wide range of sectors. However, certain "Strategic Impact Activities"—such as defence, telecoms, and utilities—still require local majority ownership or Cabinet approval. Asian buyers can now execute full share acquisitions or amalgamations onshore, but must ensure proper filing of amended memoranda of association with the Department of Economy & Tourism (DET). While the process is generally efficient, post-closing steps such as bank account regularisation and immigration re-registrations can extend the timeline.
A significant development is the new merger-control regime, effective for transactions signed after 31 March 2025. The revamped Competition Law introduces mandatory, suspensory filing for economic concentrations where the parties’ combined annual UAE turnover meets a threshold of AED 300 million UAE turnover (in addition to the existing 40% market-share test). Filings are pre-closing, and the Ministry of Economy’s review period is 90 days, extendable by 45.
Emiratisation and In-Country Value (ICV) requirements are also increasingly important. Private sector entities with 50 or more employees must increase the proportion of Emirati nationals in skilled roles by two percentage points each year until a ten percent threshold is met in 2026. Non-compliance can result in fines and suspension of new work permits. For government or ADNOC-related procurement, investors should anticipate ICV scoring in tenders. Many Asian EPC contractors are establishing UAE manufacturing lines or partnering with local SMEs to boost their ICV coefficients.
Finally, investors should consider the choice between free zone and mainland structures. Where 100 percent foreign ownership is essential but onshore regulatory licences are restrictive, hybrid models are emerging. These often involve a free-zone holding company (owning IP and contracting internationally) paired with an onshore operating subsidiary permitted limited onshore activities. Careful VAT grouping and economic substance analysis is required to avoid duplicate tax filings, especially following the introduction of the nine percent corporate tax from June 2023 for onshore companies above certain thresholds.
Saudi Arabia has also undertaken sweeping reforms to attract foreign investment. The new Investment Law (Royal Decree M/19 of July 2024) replaces the historical Foreign Investment Law and removes the distinction between foreign and Saudi investors for most sectors. The new Investment Law is part of the comprehensive regulatory reforms introduced by the KSA to enhance the general operation of the Saudi legal system, reinforce KSA’s commitment to being open for investment and generally improve the investment and business environment to align with the Kingdom's Vision 2030 and the National Investment Strategy.
Wholly foreign ownership is permitted except for a list of "Excluded Activities," which include oil exploration, security services, and certain real estate activities. Legacy foreign investment licences will transition to universal investment certificates administered by the Ministry of Investment (MISA), and investors should monitor renewal deadlines to avoid lapses that could void their commercial registration. The Investment Law consolidates existing freedoms and rights into a unified framework to improve transparency, flexibility and investor confidence. It adheres to international investment principles, ensuring the rule of law, fair treatment, property rights, intellectual property protection, and the freedom to manage and transfer investments.
A key initiative is the Regional Headquarters (RHQ) programme. From January 2024, companies without a licensed RHQ in Saudi Arabia are generally barred from public-sector contracts. RHQs benefit from 0% corporate income tax and 0% withholding tax for 30 years, provided they maintain adequate substance, including a strategic mandate, locally resident C-suite, annual board meetings, and consolidated regional P&L reporting. Asian contractors bidding on giga-project EPC packages or healthcare PPPs should consider establishing an RHQ or partnering with an existing RHQ licensee to ensure eligibility for government tenders. Conducting an analysis on whether an RHQ is required is very important.
Labour market reforms are also significant. The Nitaqat framework assigns sector-specific Saudization quotas, with percentages varying by sector, company size, and periodically updated by the Ministry of Human Resources and Social Development. Investors should benchmark HR data against the current quota dashboards rather than relying on fixed figures.
Finally, the General Authority for Competition (GAC) has issued new guidance clarifying filing triggers and analytical tools for vertical and minority acquisitions; minority stakes with governance rights may also require notification. It is important to consider whether any proposed merger, acquisition or joint venture is a notifiable transaction under KSA’s Competition Law. The other two key concerns under KSA’s Competition Law relate to practices that prejudice competition and exploitation of a dominant position. Investors should be aware that that even their actions abroad have the potential to trigger competition issues in KSA, as KSA’s Competition Law apply to foreign transactions if there is an anti-competitive impact within KSA.
The MENA region continues to offer a diverse range of opportunities for Asian investors, with several sectors standing out as particularly attractive. The table below highlights key opportunities and deal considerations across major sectors:
Sector
Illustrative Opportunities
Deal Considerations
Technology & Digital Infrastructure
Data centres (Abu Dhabi KEZAD, Riyadh area), fintech (BNPL, e-wallets), AI SaaS providers partnering with local sovereign funds.
Data localisation laws require on-shore hosting for certain categories; VARA licensing in Dubai for digital-asset plays.
Energy Transition
Green hydrogen hubs (Neom, Masdar), solar PV, battery storage, CCUS.
Long-term offtake agreements often governed by Saudi or UAE law with indexed commodity pricing; local-content multipliers.
Oil & Gas
Upstream and downstream investments, LNG sales, petrochemical complexes, and cross-border pipeline projects.
Regulatory approvals, local content requirements, environmental compliance
Healthcare & Life Sciences
PPP hospitals, med-tech distribution, vaccine manufacturing JVs.
Mandatory data privacy compliance (DPL 2023 in KSA) and local agent requirements for medical devices.
Logistics & Industrial
Integrated economic zones (Oman Khazaen, Saudi SPARK), cold-chain investments for food security.
Free-zone concessions may include local-partner cargo handling monopolies; diligence on customs agents.
Hospitality & Entertainment
Theme parks, esports arenas, resort islands (Red Sea, Ras Al Khaimah).
Compliant financing structures; land use restrictions and cultural approvals.
Regulatory Mapping: Begin with a comprehensive review of all required approvals, including foreign investment registration, merger control, and sector-specific regulatory consents.
Timeline Buffer: Build a three-to-six-month buffer into your transaction schedule to accommodate regulatory reviews and potential delays, especially in relation to competition clearances.
Enhanced Due Diligence: Go beyond standard corporate and financial checks to consider operational needs - include labour quota compliance, In-Country Value (ICV) scoring, sanctions exposure, contract terms, and cyber-security vulnerabilities.
Local Partner Vetting: Rigorously verify ultimate beneficial owners, review litigation and regulatory history, assess government connections, and conduct reputational checks in line with anti-bribery laws.
Local Content and KPIs: Where local content is a factor in tender awards, incorporate measurable requirements and KPIs into shareholders’ agreements and SPA provisions to ensure compliance and alignment.
Arbitration Seat Selection: Designate a clear dispute resolution provision in transaction documents, and if international arbitration is selected. arbitration seat (for instance such as London, DIFC, or Riyadh) and a reputable institution to ensure enforceability under the New York Convention.
Financing Structures: Consider finance options, security enforcement, and possibly Islamic finance (murabaha, ijara, sukuk) alongside conventional debt, as these may appeal to local lenders and support.
Tax Planning: With the introduction of corporate tax in the UAE for onshore corporates, assess permanent establishment risks and confirm the availability of free-zone tax incentives to optimise your structure.
ESG and Supply Chain Compliance: Prepare for rising ESG and supply-chain requirements, including mandatory sustainability reporting and emissions traceability.
Payment Security and Exit Planning: Enhance payment security with parent guarantees, advance-payment bonds, and milestone-based escrow arrangements. Plan for exit scenarios, leveraging deepening liquidity on regional exchanges such as Tadawul and ADX.
A broad range of Asian sponsors- including Korean chaebol, Japanese trading houses, Indian conglomerates, and Southeast Asian sovereign funds - are driving deal volumes to record highs and reshaping the legal and commercial landscape for foreign capital in the region.
Beyond the UAE and Saudi Arabia, other MENA jurisdictions are also making significant strides to attract Asian investment. Qatar has since 2019 amended its foreign partner regulations to permit 100 percent foreign ownership in most sectors and is advancing major smart city and infrastructure projects. Oman continues to implement its Foreign Capital Investment Law and is allocating land for green hydrogen developments. Egypt has expanded its Golden Licence regime and is seeking to improve FX liquidity while offering stronger incentives for renewable energy. Iraq is discussing reforms to introduce more flexible hydrocarbons contracts, and Morocco is rolling out new incentives under its Investment Charter, with a focus on logistics and industrial partnerships. Each of these markets presents distinct opportunities and regulatory considerations for Asian investors in many sectors.
Asian investment in MENA shaped by a gradual increase in cross-border investments and trade. To succeed, investors will need to approach opportunities with careful preparation, a clear understanding of local legal frameworks and market dynamics, and flexibility in meeting localisation, compliance, and sustainability requirements. Taken together, these developments suggest that Asian investors can play an important and constructive role in the region’s next phase of growth.
For further information,please contact Thomas Calvert, Alanood Al-Haib, Jingzhuo Wu and Melody Wu.
Published in October 2025
