The policy reversal represents part of the Saudi government’s broad reforms to diversify the economy partly in response to low oil prices, which have hit the country’s finances.
“Digital transformation is one of the key kick-starters for the Saudi economy, as it will incentivise the growth of internet-based businesses, especially in the media and entertainment industries,” a statement from the information ministry said.
“Access to VoIP (voice over internet protocol) will reduce operational costs and spur digital entrepreneurship – that’s why it is such an important step in the Kingdom’s internet regulation,” it said.
Saudi Arabia, which introduced the ban in 2013 and its Gulf Arab neighbours have been wary of secure internet communication, which experts say is harder to monitor, especially by activists and militants.
Gulf Arab states, except the island kingdom of Bahrain, were mostly spared the “Arab Spring” mass protests often organised over the Internet which roiled much of the region in 2011.
Lifting the ban could squeeze Saudi Arabia’s three main telecoms operators – Saudi Telecom Co (STC), Etihad Etisalat (Mobily) and Zain Saudi – which earn revenue from international phone and text calls made by the millions of expatriates living in Saudi Arabia.