Saudi Arabia is committed to its ultimatum, set for January 1st, that all companies must relocate their headquarters to the country by 2024 to be eligible for government contracts. In February 2021, the Saudi government announced that it would cease doing business with international companies whose regional headquarters were not based within the country, and this came as a surprise to many as it could be seen as a shot at Dubai, the commercial capital of the UAE and home to the highest concentration of Middle East regional headquarters. This decision has raised questions about the future of the region’s business landscape.
This decision is in line with Vision 2030, an ambitious campaign launched by Crown Prince Mohammed bin Salman in 2016. The vision aims to create private sector jobs and diversify Saudi Arabia’s economy away from oil as its population grows. By requiring international companies to relocate their regional headquarters to the kingdom, Saudi Arabia is taking steps towards achieving this goal.
In its pursuit of becoming the main hub for Middle East business, Saudi Arabia faces dense competition from Dubai. However, with this new policy, Riyadh aims to position itself as a strong contender and attract more businesses to set up their operations within its borders.
Furthermore, Saudi Arabia has recently launched a new international economic corridor with India and Europe. To be an effective member of this corridor and maximize its benefits, Saudi needs to boost its economic position. Encouraging international companies to establish their regional headquarters in the kingdom is one way to achieve this objective.
Faisal Al Ibrahim, Saudi Minister of Economy and Planning, confirmed that the plan is still going ahead and discussed how the kingdom aims to support foreign companies with the transition. This demonstrates Saudi Arabia’s commitment to its policy and determination to create a favorable business environment for both local and international entities.
As Jan. 1, 2024 approaches, all eyes will be on Saudi Arabia’s progress in attracting businesses and transforming itself into a thriving economic powerhouse. With Vision 2030 guiding its path towards diversification and growth, it remains to be seen how successful these efforts will be in reshaping the region’s business landscape.
