Foreign firms race to open Saudi offices before deadline

RIYADH

A wave of ribbon-cutting ceremonies is sweeping the Saudi capital as multinationals face a January deadline to open regional headquarters in the Gulf kingdom or lose out on government contracts.

In what has become a common scene, executives in suits and Saudi officials in white robes gather to inaugurate the new offices, sipping Arabic coffee in a haze of incense smoke while singing the praises of last year's fastest-growing G20 economy.

Announced in February 2021, Saudi Arabia's regional headquarters (RHQ) programme is widely seen as a bid to compete with Dubai in the neighbouring United Arab Emirates, a favourite base for global firms with business in the Middle East.

Despite complaints from some executives that there remains a lack of clarity on key details of the Saudi programme, the Jan. 1 deadline is holding, the Saudi investment ministry told AFP in a written response to questions.

"Only multinational companies with regional headquarters in the Kingdom will be eligible for tenders and contracts floated by government entities,” it said.

So far, 162 regional headquarters licenses have been granted in sectors including pharmaceuticals, IT and construction, "with many others being processed", the ministry said.

The big question, analysts say, is whether participating firms are merely ticking a box to retain access to Saudi funds or genuinely embracing the government's vision of Saudi Arabia as the centre of the region.

The program is "an early litmus test of the degree to which foreign businesses are prepared or willing to comply with and buy into Saudi initiatives, or whether they will seek workarounds that see them retain the majority of staff in the UAE and delegate a select few to Saudi," said Kristian Ulrichsen, a fellow at Rice University's Baker Institute.