By any measure, the series of stock market reforms tabled by Saudi Arabia are a big deal.

Foreign investors can take heart from the clear commitment shown by Riyadh to improve equity market infrastructure, boost investor accessibility, while also pursuing greater international integration. Ambitious and proactive policymaking is exactly what investors, particularly foreign ones, want to see from the Middle East’s biggest economy.

The range of reforms outlined last week are comprehensive. Under the new rules, the Capital Markets Authority said it will double the limit on individual foreign ownership of shares in a single company to 10 per cent, from 5 per cent. Foreign institutional investors with at least SR3.75 billion in assets under management (AUM) will now be able to obtain a license to invest in Saudi stocks, compared with a SR18.75 billion AUM requirement before.

Meanwhile, sovereign wealth funds and university endowments will now be allowed to trade in Saudi equities (as QFIs).

Among all the planned reforms, the regulator also approved the introduction of securities lending and covered short selling, while the Saudi Stock Exchange said that during the first-half of 2017 it will introduce the settlement of trades within two working days of execution.

These changes form part of a broader strategy to upgrade the post trade infrastructure in Saudi Arabia, bringing it in-line with international standards. Moreover, these measures will allow greater effectiveness of post-trade processes, while also reducing market systemic risk.

From the outside, the range of equity market reform looks seismic. But it’s necessary to consider these proposed changes in the broader context of a country undergoing huge economic and social change.

Late last month Saudi Arabia unveiled its vision for the future of the Kingdom, aimed at cutting its dependence on oil, lowering government subsidies, and stimulating the private sector. The plan, known as “Vision 2030”, is a blueprint for modernising the Kingdom’s economy. In an interview with Al-Arabiya television, Deputy Crown Prince Mohammed bin Salman said that Saudi’s “addiction to oil” had caused it to neglect other aspects of the economy. The new plan would turn Saudi Arabia into an “investment-driven economy.”

At the heart of “Vision 2030” is an attempt to address some of the more ingrained structural issues in Saudi Arabia that will enable the country, over the next 15 years, to tap into its enormous potential, reduce waste, and increase productivity across all areas of the economy. “Vision 2030” also gives international investors a much clearer road map in terms of what Saudi Arabia’s objectives are and how it sees its role in the global community.

When Saudi Arabia cautiously opened up its stock market to foreign investors in June of last year, much was made of the Kingdom’s aspirations to be included in the MSCI Emerging Markets Index. Inclusion in such a widely followed gauge could trigger significant inflows from funds that use the MSCI and similar benchmarks.

The index provider is expected to make a call in June as to whether it will review Saudi Arabia for possible inclusion in its MSCI Emerging Markets Index. All of the stock market reforms outlined last week can be seen as major step towards making promotion a reality.

Beyond the obvious benefit of significant fund inflows, MSCI inclusion would also significantly improve the profile of Saudi Arabia and the MENA region as a whole. Perhaps more importantly, it might also bridge the gap between the region’s meaningful economic contribution and its equity market under representation in Emerging Markets.

Over the course of just a month, Saudi Arabia has shown a previously unseen commitment to attracting a broader range of international investors. Such progress will only improve governance and transparency standards, and further enhance the Kingdom’s investment case.

The writer is CIO — MENA Equities at Franklin Templeton Investments (ME) Ltd.