More than 40 multinational companies, including Baker Hughes Co., KPMG and Schlumberger, received licenses on Wednesday under the new program to make it easier to do business. Businesses will benefit from exemptions from work visa limits, relaxed regulations and assistance with staff relocation, officials said. Other companies that have signed include Deloitte, Pepsico, Unilever, Siemens Mobility and Philips, according to a presentation at an investment conference in Riyadh.
“The region simply has untapped potential and the greatest untapped potential is the kingdom and the city of Riyadh,” Fahd Al-Rasheed, director general of the Royal Commission for the city of Riyadh, said in an interview. “We’re going to make sure we take our share, which will be the lion’s share of business in the region. “
Officials are in talks with large companies with annual revenues of $ 1 billion or more, Al-Rasheed said, with the goal of having 480 established in Saudi Arabia by 2030. About half of the companies that received their permits this week had already signed agreements in January to move the regional headquarters to Riyadh. The rest was new.
Saudi Crown Prince Mohammed bin Salman wants to transform the capital into an international hub for business and talent – a push that increasingly poses a challenge in neighboring United Arab Emirates, where freewheeling Dubai has long been the regional base for global companies. Competition intensifies as the prince revamps the oil-dependent economy and relaxes social restrictions in the conservative Islamic kingdom, making Saudi Arabia – a much larger market – a more attractive place to do business.
Carrots go with a stick: From early 2024, the government and state-backed institutions will stop signing contracts with foreign companies that set up their headquarters in the Middle East elsewhere in the region. But Al-Rasheed played down the idea of competition, pointing out that many of the companies they want to integrate do not yet have a base in the region.
“This is not about Dubai,” he said. “This is about what we need here, and I’m sorry, if you want to make multibillion dollar deals in Saudi Arabia, you have to train our staff. “
One of the bonuses they offer is a plan to transform Riyadh’s King Abdullah financial district into a special zone with offshore status and incentives tailored to different sectors, pending approval from higher authorities.
“If they are in King Abdullah’s financial district, we will treat them as if they were abroad,” he said.
Other incentives include easing visa and sponsorship processes for foreigners and their families. Al-Rasheed said spouses of foreign employees will be able to obtain work permits and their adult children will be able to stay – contrary to the policies of some other Gulf countries. Restrictive rules that require foreign employees in Saudi Arabia to obtain “exit visas” to leave the country, even on vacation, will also be “liberalized,” Al-Rasheed said.
Authorities are increasing pressure on companies to replace foreigners with Saudis in order to tackle high local unemployment. Foreigners make up about a third of the population and the vast majority of workers in the private sector.
But Al-Rasheed has said the growth they are aiming for as they attempt to double Riyadh’s population will make this tension irrelevant in a few years.
“The need for human capital will far exceed the number of our local population,” he said.
(Updates with interview with Saudi official in paragraphs 1 and 3 et seq.)