Saudi Arabia said on Monday evening it will stop giving contracts to any company that has its regional headquarters outside the kingdom from 2024.
"The cessation will include agencies, institutions and funds owned by the government and will take effect January 1st, 2024," the state-run Saudi Press Agency said, citing an official source.
The move is being taken “to incentivise the localisation of businesses by foreign companies that deal with the kingdom’s government”, its agencies and its related funds, SPA said.
Saudi Arabia has been encouraging multinationals to establish regional offices in the kingdom’s capital as part of ambitious growth plans. The kingdom aims to “make Riyadh one of the 10 largest city economies in the world”, up from number 40 currently, Crown Prince Mohammed Bin Salman told the Future Investment Initiative last month.
That will involve doubling the size of its population from 7.5 million currently to more than 15m by 2030.
Speaking at the same event, Brendan Bechtel, president of the US's biggest contracting group, Bechtel, said his company is relocating its regional office to Riyadh.
Bechtel was one of 24 companies that subsequently signed agreements with the Royal Commission for Riyadh City to establish their main regional offices in Riyadh earlier this month. Others included Big Four accountancy firms Deloitte and PwC, the world's biggest oilfield services company Schlumberger, German engineering business Bosch and soft drinks giant PepsiCo.
The decision “will not affect any investor’s ability to enter the Saudi market, or to continue their business with the private sector,” the SPA said.
New regulations relating to the decision are set to be drawn up this year, it added.