Foreign investment is considered one of the enablers of development in countries, resulting in higher growth rates in their gross domestic product (GDP), providing job opportunities for its citizens, and transferring scientific expertise (know-how) and the latest technological technologies. Countries are competing in attracting the largest number of investments in order to gain its great benefits. In this context, the door is wide open for the entry of foreign investments into the host countries, and thus the need arouses to put in place some precautions in order to ensure the preservation of the state’s economic sovereignty, to support local industries. It is necessary to regulate and promulgate policies, laws, and regulations to control the negative impact of foreign investments. This study attempts to clarify the relationship of foreign investments and its impact on the national security of the host countries. What are foreign investments and how they relate to national security? What is the appropriate balance between countries’ needs to steer foreign investment and their obligation to protect national security? What is the role of the legislative environment and investment climate in achieving a balance between attracting foreign investments and protecting national security? What are the oversight mechanisms that countries use to ensure a balance between foreign investment activities in the host country and the protection of its national security? How is institutional control over foreign investments achieved? And how can a foreign investor ensure that it can be protected from any abuse by the State of its sovereignty?. This study concluded with the importance of maintaining the issuance of approval for the entry of foreign investment into sensitive sectors such as communications and oil industry by a royal decree (law), due to their sensitive nature and connection to vital resources and strategic sectors. In addition, it would be important to make easier the administrative procedures for nonsensitive sectors, and considering the possibility of establishing a permanent governmental committee that has the authority to review foreign investments whether such investments could impair the national security.