Saudi Arabia’s decision not to award government contracts to companies with regional headquarters outside the kingdom is in line with its broader economic agenda of creating employment and developing a knowledge-based economy.
The measures will also help the Arab world’s largest economy achieve its goal of turning the capital, Riyadh, into one of the top 10 city-economies in the world, economists and market analysts said.
“It is a way of ... trying to boost employment as well as knowledge transfer,” said Salah Shamma, head of investment for Mena equities at Franklin Templeton.
“They are asking these corporates to come, relocate and set up their headquarters, and that obviously comes with additional employment.”
The kingdom said on Monday that the move would be effective from January 2024.
It's a way of ... trying to boost employment as well as knowledge transfer
"The cessation [of contracts] will include agencies, institutions and funds owned by the government," state-run Saudi Press Agency reported, quoting an official source.
“The cessation [of contracts] will include agencies, institutions and funds owned by the government,” state-run Saudi Press Agency reported, quoting an official source.
The move is being taken “to incentivise the localisation of businesses by foreign companies that deal with the kingdom’s government”, SPA said.
Saudi Crown Prince Mohammed Bin Salman told the Future Investment Initiative last month that the government intends to “make Riyadh one of the 10 largest city-economies in the world” and double the size of its population from 7.5 million by 2030.
The kingdom is investing $220 billion in Riyadh’s transformation and expects to attract a similar investment from the private sector, Fahd Al-Rasheed, president of the Royal Commission for Riyadh City, told Reuters on January 28.
“We have seen local sourcing drives in Saudi Arabia before, but this seems different,” said Scott Livermore, chief economist and managing director at Oxford Economics.
“It appears less about Saudisation and more about accelerating [economic] growth, particularly in Riyadh, even if expat-driven.”
As part of its reform agenda, the kingdom has opened up several sectors of its economy. It is offering privatisation and investment opportunities with government entities in sectors such as mining, industry, health care and education.
However, international companies that want to participate “will have to make a choice” as of 2024 or they will not win government contracts, Finance Minister Mohammed Al-Jadaan told Reuters in an interview on Monday.
“Saudi Arabia has the largest economy and population in the region while our share of regional headquarters is negligible, less than 5 per cent currently,” he said.
The size of the kingdom’s economy and the volume of business on offer will ultimately lure more international companies, said Hettish Karmani, head of research at Oman-based Ubhar Capital.
The kingdom is a “regional powerhouse for trade and finance and, in one way or another, most companies extract their revenue out of Saudi Arabia”, said Mr Karmani.
“Many might shift to the kingdom in the coming period as it has lately changed a lot of policies”, making it more investor-friendly, he said.
The kingdom is competing with regional business and financial centres such as the UAE and Bahrain. Both Gulf countries have housed the regional headquarters of many multinational companies and financial institutions for decades.
The UAE, the second-largest Arab economy, is currently the top financial centre within the Gulf. Its two international financial centres host the regional offices of international banks, insurance companies, asset managers and many others.
The country also has a more advanced physical and social infrastructure and is ranked as the most business-friendly locations in the region.
Saudi Arabia faces an uphill battle in drawing businesses away from such established jurisdictions, analysts said.
“Its [Saudi Arabia’s] business environment and attractiveness to expats, compared with the UAE and Bahrain, is still relatively weak despite significant recent improvements, and this is likely to weigh on the pull of Riyadh,” said Mr Livermore.
Tax holidays may prove helpful in attracting companies to Riyadh, Mr Karmani said. However, to compete with established jurisdictions, Saudi Arabia will have to do more.
The intention of the government seems to be that most of the goods and services should be delivered from within Saudi Arabia.
The kingdom will have to take steps to ensure “swift regulatory approvals, business incentives [and] a liberal visa regime” to draw multinational companies, said M R Raghu, executive vice president at Kuwaiti asset management company Markaz.
It remains unclear what constitutes regional headquarters, and more information is needed to “make an informed decision”, an executive at a digital automation company said.
Many international companies have different management structures, with some already classifying Saudi Arabia as a separate operation from other Gulf countries, he said.
For instance, UK lender Standard Chartered has a regional centre in Dubai but its Middle East chief executive is based in Riyadh, where it has held a full banking licence since 2019.
"We believe that this enables us to further unlock exciting opportunities in the kingdom and contribute to Saudi Vision 2030," a spokesman for the lender told The National.
Some companies including US contractor Bechtel, Big Four accountancy firms Deloitte and PwC, the world's biggest oilfield services company Schlumberger, German engineering business Bosch and soft drinks company PepsiCo are already moving their regional offices to Riyadh. In total, 24 companies signed agreements with the Royal Commission for Riyadh City this month.
“Riyadh is undergoing a remarkable transformation to reinforce its position as one of the world’s major global centres for business, tourism and quality of life," a Deloitte spokeswoman said.
“Deloitte has been operating in Saudi Arabia since 1950 and we are honoured to be a strategic partner for the city on its journey to achieve its ambition under Vision 2030.”
Others are currently keeping a watching brief.
“With further information on the new regulations planned to be issued this year, we will be monitoring this closely to evaluate our approach,” Franklin Templeton said.
“We need to see ... rules related to the order and see how they further entice businesses who want to enter the region with Saudi Arabia as their base or who might be thinking of shifting [from within the region],” said Faisal Hasan, a UAE-based independent market analyst and former head of research at Kuwait’s Kamco Invest.
“But the intention of the government seems to be that most goods and services should be delivered from within Saudi Arabia.”
Swiss lender Credit Suisse, which opened a branch in Riyadh last month to serve affluent clients, declined to comment.
British lender HSBC, Deutsche Bank and JP Morgan also declined to comment on potential moves. BNP Paribas did not respond to The National's request for a comment.
Bugatti Chiron Super Sport - the specs:
Engine: 8.0-litre quad-turbo W16
Transmission: 7-speed DSG auto
Power: 1,600hp
Torque: 1,600Nm
0-100kph in 2.4seconds
0-200kph in 5.8 seconds
0-300kph in 12.1 seconds
Top speed: 440kph
Price: Dh13,200,000
Bugatti Chiron Pur Sport - the specs:
Engine: 8.0-litre quad-turbo W16
Transmission: 7-speed DSG auto
Power: 1,500hp
Torque: 1,600Nm
0-100kph in 2.3 seconds
0-200kph in 5.5 seconds
0-300kph in 11.8 seconds
Top speed: 350kph
Price: Dh13,600,000
UAE squad
Ali Kashief, Salem Rashid, Khalifa Al Hammadi, Khalfan Mubarak, Ali Mabkhout, Omar Abdelrahman, Mohammed Al Attas (Al Jazira), Mohmmed Al Shamsi, Hamdan Al Kamali, Mohammad Barghash, Khalil Al Hammadi (Al Wahda), Khalid Eisa, Mohammed Shakir, Ahmed Barman, Bandar Al Ahbabi (Al Ain), Adel Al Hosani, Al Hassan Saleh, Majid Suroor (Sharjah), Waleed Abbas, Ismail Al Hammadi, Ahmed Khalil (Shabab Al Ahli Dubai) Habib Fardan, Tariq Ahmed, Mohammed Al Akbari (Al Nasr), Ali Saleh, Ali Salmeen (Al Wasl), Hassan Al Mahrami (Baniyas)
Tree of Hell
Starring: Raed Zeno, Hadi Awada, Dr Mohammad Abdalla
Director: Raed Zeno
Rating: 4/5
AGL AWARDS
Golden Ball - best Emirati player: Khalfan Mubarak (Al Jazira)
Golden Ball - best foreign player: Igor Coronado (Sharjah)
Golden Glove - best goalkeeper: Adel Al Hosani (Sharjah)
Best Coach - the leader: Abdulaziz Al Anbari (Sharjah)
Fans' Player of the Year: Driss Fetouhi (Dibba)
Golden Boy - best young player: Ali Saleh (Al Wasl)
Best Fans of the Year: Sharjah
Goal of the Year: Michael Ortega (Baniyas)
The%20specs%3A%20Taycan%20Turbo%20GT
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3EDual%20synchronous%20electric%20motors%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E1%2C108hp%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E1%2C340Nm%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3ESingle-speed%20automatic%20(front%20axle)%3B%20two-speed%20transmission%20(rear%20axle)%0D%3Cbr%3E%3Cstrong%3ETouring%20range%3A%20%3C%2Fstrong%3E488-560km%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh928%2C400%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3EOrders%20open%3C%2Fp%3E%0A
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
UAE currency: the story behind the money in your pockets
The five pillars of Islam
More coverage from the Future Forum
What are the main cyber security threats?
Cyber crime - This includes fraud, impersonation, scams and deepfake technology, tactics that are increasingly targeting infrastructure and exploiting human vulnerabilities.
Cyber terrorism - Social media platforms are used to spread radical ideologies, misinformation and disinformation, often with the aim of disrupting critical infrastructure such as power grids.
Cyber warfare - Shaped by geopolitical tension, hostile actors seek to infiltrate and compromise national infrastructure, using one country’s systems as a springboard to launch attacks on others.
Sri Lanka v England
First Test, at Galle
England won by 211
Second Test, at Kandy
England won by 57 runs
Third Test, at Colombo
From Nov 23-27
Tuesday results:
- Singapore bt Malaysia by 29 runs
- UAE bt Oman by 13 runs
- Hong Kong bt Nepal by 3 wickets
Final:
Thursday, UAE v Hong Kong
UAE currency: the story behind the money in your pockets
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The%20specs
%3Cp%3E%3Cstrong%3EEngine%3A%3C%2Fstrong%3E%20Twin-turbocharged%204-litre%20V8%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E542bhp%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E770Nm%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3EEight-speed%20automatic%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh1%2C450%2C000%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ENow%3C%2Fp%3E%0A
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Killing of Qassem Suleimani
The biog
DOB: 25/12/92
Marital status: Single
Education: Post-graduate diploma in UAE Diplomacy and External Affairs at the Emirates Diplomatic Academy in Abu Dhabi
Hobbies: I love fencing, I used to fence at the MK Fencing Academy but I want to start again. I also love reading and writing
Lifelong goal: My dream is to be a state minister
The years Ramadan fell in May
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Zayed Sustainability Prize
Company%20Profile
%3Cp%3E%3Cstrong%3EName%3A%3C%2Fstrong%3E%20HyveGeo%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202023%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Abdulaziz%20bin%20Redha%2C%20Dr%20Samsurin%20Welch%2C%20Eva%20Morales%20and%20Dr%20Harjit%20Singh%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3ECambridge%20and%20Dubai%3Cbr%3E%3Cstrong%3ENumber%20of%20employees%3A%3C%2Fstrong%3E%208%3Cbr%3E%3Cstrong%3EIndustry%3A%20%3C%2Fstrong%3ESustainability%20%26amp%3B%20Environment%3Cbr%3E%3Cstrong%3EFunding%3A%20%3C%2Fstrong%3E%24200%2C000%20plus%20undisclosed%20grant%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EVenture%20capital%20and%20government%3C%2Fp%3E%0A
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
Mohammed bin Zayed Majlis
The five pillars of Islam
Mohammed bin Zayed Majlis
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
The years Ramadan fell in May
Mohammed bin Zayed Majlis
Vidaamuyarchi
Director: Magizh Thirumeni
Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra
Rating: 4/5
Zayed Sustainability Prize
The five pillars of Islam
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
Zayed Sustainability Prize
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
Killing of Qassem Suleimani
More on animal trafficking
KEY HIGHLIGHTS
Healthcare spending to double to $2.2 trillion rupees
Launched a 641billion-rupee federal health scheme
Allotted 200 billion rupees for the recapitalisation of state-run banks
Around 1.75 trillion rupees allotted for privatisation and stake sales in state-owned assets
Remaining fixtures
- August 29 – UAE v Saudi Arabia, Hazza bin Zayed Stadium, Al Ain
- September 5 – Iraq v UAE, Amman, Jordan (venue TBC)
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3EName%3A%20%3C%2Fstrong%3EEjari%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3ERiyadh%2C%20Saudi%20Arabia%3Cbr%3E%3Cstrong%3EFounders%3A%20%3C%2Fstrong%3EYazeed%20Al%20Shamsi%2C%20Fahad%20Albedah%2C%20Mohammed%20Alkhelewy%20and%20Khalid%20Almunif%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3EPropTech%3Cbr%3E%3Cstrong%3ETotal%20funding%3A%20%3C%2Fstrong%3E%241%20million%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3ESanabil%20500%20Mena%2C%20Hambro%20Perks'%20Oryx%20Fund%20and%20angel%20investors%3Cbr%3E%3Cstrong%3ENumber%20of%20employees%3A%20%3C%2Fstrong%3E8%3C%2Fp%3E%0A
TWISTERS
Director: Lee Isaac Chung
Starring: Glen Powell, Daisy Edgar-Jones, Anthony Ramos
Rating: 2.5/5
LOS ANGELES GALAXY 2 MANCHESTER UNITED 5
Galaxy: Dos Santos (79', 88')
United: Rashford (2', 20'), Fellaini (26'), Mkhitaryan (67'), Martial (72')
Director: Romany Saad
Starring: Mirfat Amin, Boumi Fouad and Tariq Al Ibyari
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
On racial profiling at airports
Race card
5pm: Maiden (PA) Dh80,000 (Turf) 1,600m
5.30pm: Handicap (PA) Dh80,000 (T) 1,600m
6pm: Arabian Triple Crown Round-1 Listed (PA) Dh230,000 (T) 1,600m
6.30pm: Wathba Stallions Cup Handicap (PA) Dh70,000 (T) 1,400m
7pm: Maiden (PA) Dh80,000 (T) 1,200m
7.30pm: Handicap (TB) Dh100,000 (T) 2,400m
