FII: 44 multinational companies shift regional headquarters to Saudi Arabia

Move to attract foreign companies could contribute $18bn to the local economy

Forty four multinational companies received licences to shift their regional headquarters to Saudi Arabia, a move that could positively affect the kingdom's economy.

The licences were issued at the Future Investment Initiative summit to companies in sectors such as technology, food and beverages, consulting and construction, the Royal Commission for Riyadh City (RCRC) said on Wednesday.

The companies that have relocated their regional headquarters include PepsiCo, DiDi, Unliver, Siemens, KPMG, Novartis, Baker Hughes, Halliburton, Philips, Flour, Schlumberger, SAP, PwC, Oyo, Boston Scientific and Tim Hortons.

“We have noted a strong response from investors in recent years, which is driving increases in foreign direct investment. As investment grows, we expect to see these investors expand their presence in the local market,” said Khalid Al-Falih, Saudi Arabia's Minister of Investment.

Saudi Arabia has been encouraging multinationals to establish regional offices in its capital as it seeks to “make Riyadh one of the 10 largest city economies in the world”, up from number 40 currently, Crown Prince Mohammed bin Salman said earlier this year.

In February this year, the government said it would stop giving contracts to any company that has its regional headquarters outside the kingdom from 2024.

The Regional Headquarters Attraction Programme of Multinational Companies is expected to yield significant local benefits to Saudi Arabia's economy.

"By 2030, the programme will contribute $18 billion to the local economy and create around 30,000 new jobs,” said Fahd Al-Rasheed, chief executive of the RCRC.

"It is estimated that for every job attracted through the programme, two-and-a-half jobs are created indirectly in the base economy."

The initiative will also provide opportunities for local talent to work with multinational companies, he said.

Job creation is a priority under Prince Mohammed's Vision 2030 initiative that seeks to diversify Saudi Arabia's economy by nurturing a local manufacturing industry, developing its entertainment and tourism sectors and reducing its reliance on oil.

The kingdom has created about 55,000 jobs over the past four years alone through the projects it developed as part of the Vision 2030 initiative, according to data cited by Knight Frank.

The RCRC defines regional headquarters as a unit of a multinational group duly established under the laws of Saudi Arabia for the purpose of supporting, managing and providing strategic direction to its branches, subsidiaries and affiliates operating in the Mena region.

“I am delighted by the number of multinational companies that have chosen to relocate to Riyadh, demonstrating that our national capital is becoming an increasingly attractive place to do business and developing into an investment destination of choice," Mr Al Falih said.

Saudi Arabia issued 478 new foreign investor licences in the first quarter of this year – the highest number since records began in 2005, according the Ministry of Investment. The number of foreign investor licences issued rose 2.6 per cent from the last quarter of 2020, marking the fourth consecutive increase since the onset of the pandemic.

The kingdom has also been investing in a number of projects in Riyadh and enacting various reforms in the education sector to increase the quality of life. Two international schools, Kings College Riyadh and SEK International School Riyadh, began operations in September, the RCRC said on Wednesday.

Updated: October 27th 2021, 1:38 PM
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