Saudi Arabia has told companies to move their regional headquarters to Riyadh or lose business. It works. – .

Saudi Arabia has told companies to move their regional headquarters to Riyadh or lose business. It works. – .

  • Saudi Arabia on Wednesday said 44 global companies were moving their regional headquarters to Riyadh, the capital.
  • The kingdom boldly told companies in February that it wouldn’t do business with them if they didn’t move their headquarters there.
  • Expats and bankers earlier called the move “corporate bullying”, but it seems to have had the desired effect.

In February, Saudi Arabia issued a bold ultimatum to multinational companies: move your regional headquarters to the country by 2024, or the government will stop doing business with you.

The announcement was part of a large-scale campaign by Crown Prince Mohammed bin Salman to transform the capital, Riyadh, into a global center of finance, business and logistics, so that the kingdom is less dependent on oil which represents 70%. of its exports, by OPEC.

Investors and expats balked at the idea at the time, with many saying it was a ploy to divert companies from Dubai to the neighboring UAE, where 90% of the workforce work is foreign. A seasoned financier described it as “anti-competition” and “business bullying,” according to CNBC.

But the tactic seems to be working. Saudi Arabia on Wednesday announced that 44 international companies, including PepsiCo, Siemens and Unilever, would establish their regional headquarters in Riyadh, local reports reported.

Hosam Alqurashi, program director for the kingdom’s regional headquarters, said during the announcement that his capital was now “witness to the greatest artistic movement since the Renaissance,” according to Arab News.

The new total is up from the top 24 companies that said in January they would move their regional offices from Dubai to Saudi Arabia.
At the time, authorities were trying to lure companies in with a 50-year tax holiday and waivers for employment quotas.

The February ultimatum took a different turn. “Everyone is panicking. We’re used to governments offering carrots, but this time a big stick has come out of the bag, ”a regional manager of a multinational company told the Financial Times at the time. “Frankly, it’s offensive.

Despite the backlash, Fahd al-Rasheed, chairman of the Royal Commission for the City of Riyadh, told Reuters that the Saudis’ goal was not to “dismantle” business in neighboring countries.

“We’re just saying – you have to have your regional headquarters here because it’s not just a contract economy that you walk in and out of. We want to see you with us for the long term, ”he said on Wednesday.

Al-Rasheed added that Riyadh wanted 480 companies to establish a regional headquarters there by 2030, a date also set by the crown prince to diversify the Saudi economy.

Still, the kingdom might struggle to replicate Dubai’s success.

The assassination in 2018 by Saudi agents of journalist Jamal Khashoggi, who had criticized the royal household, tarnished the world reputation of the kingdom and Prince Mohammed Bin Salman and weakened its sovereign fund, Joel Rubin, former deputy secretary of Deputy state. , told CNBC earlier this year.

In recent years, Saudi Arabia has attempted to shake off its hard-line conservative reputation with reforms such as letting women drive and opening cinemas for the first time in decades. But it has yet to offer a lifestyle comparable to the freedoms foreigners in Dubai can enjoy, such as the freedom to drink, the expats told CNBC.


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