Saudi officials are talking to 7,000 companies around the world about opening regional headquarters in the kingdom, offering tax breaks and other incentives to turn their desert capital into a global business hub that rivals Dubai.
More than 40 multinational companies including Baker Hughes Co., KPMG and Schlumberger received licenses on Wednesday as part of the new program to facilitate business. The firms will get exemptions from work visa limits, eased regulations, and help with the relocation of staff, officials said. Other companies that have signed up 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 largest untapped potential is the kingdom and the city of Riyadh,” Fahd Al-Rasheed, chief executive of the Royal Commission for Riyadh City, said in an interview. “We are going to make sure we take our share, which is going to be the lion’s share of the business in the region.”
Officials are talking to major companies with annual revenues of a billion dollars or more, Al-Rasheed said, with the aim of getting 480 of them to set up in Saudi Arabia by 2030. Around half the companies that received their permits this week had already signed agreements in January to relocate regional headquarters to Riyadh. The rest were new.
Saudi Crown Prince Mohammed bin Salman wants to transform the capital into an international hub for business and talent – a push that’s increasingly posing a challenge to the neighboring United Arab Emirates, where free-wheeling Dubai has long been the regional home base for global firms. Competition is heating up as the prince overhauls the oil-dependent economy and eases social restrictions in the conservative Islamic kingdom, making Saudi Arabia – a significantly larger market – a more attractive place to do business.
The carrots are paired with a stick: From the start of 2024, the government and state-backed institutions will stop signing contracts with foreign companies that base their Middle East headquarters elsewhere in the region. But Al-Rasheed downplayed the idea of competition, pointing out that many of the companies they want to bring in don’t have any base in the region yet.
“It’s not about Dubai,” he said. “It’s about what we need here, and I’m sorry, if you’re going to take multi-billion dollar deals in Saudi Arabia, you have to train our people.”
One of the bonuses they’re offering is a plan to turn Riyadh’s King Abdullah Financial District into a special zone with offshore status and tailored incentives for different sectors, pending approval from higher authorities.
“If they’re in the King Abdullah Financial District we’ll treat them as if they are abroad,” he said.
Other incentives include easing visa and sponsorship processes for foreigners and their families. Al-Rasheed said that spouses of foreign employees will be able to get work permits and their adult children will be able to stay – a contrast to policies in some other Gulf countries. Restrictive rules that require foreign employees in Saudi Arabia to get “exit visas” to leave the country, even on vacation, will also be “liberalized,” Al-Rasheed said.
Officials are currently increasing pressure on businesses to replace foreigners with Saudis in a bid to tackle high local unemployment. Foreigners make up about a third of the population and the vast majority of private sector workers.
But Al-Rasheed said that the growth they’re targeting as they try to double the population of Riyadh will render that tension irrelevant in a few years.
“The need for human capital will far exceed our local population’s numbers,” he said.
(Updates with interview with Saudi official in paragraph 1 and paragraph 3 onwards)