Saudi Arabia's decision to cease contracting with companies and commercial institutions with regional headquarters not located in the Kingdom as of 2024 will apply only to contracts offered by the government, the finance minister told Reuters on Monday.
"If a company refused to move their headquarters to Saudi Arabia it is absolutely their right and they will continue to have the freedom to work with the private sector in Saudi Arabia, but as long as it is related to the government contracts, they will have to have their regional headquarters here," Mohammed al-Jadaan said by telephone.
He added that the decision aims to expand the slim share of regional headquarters in the region's largest economy and help the government's push to create jobs for young Saudis and attract foreign investment to diversify its oil-dependent economy.
Saudi Arabia will no longer sign contracts with foreign companies which do not have a regional headquarters in the kingdom after 2023, state news agency SPA reported on Monday, citing an official source.
The policy, which comes into effect on Jan 1. 2024, is designed to encourage foreign firms to open a permanent, in-country regional presence that would help create local jobs, SPA reported.
"The decision ... will reflect positively in the form of creating thousands of jobs for citizens, transferring expertise, and localizing knowledge, as it will contribute to developing local content and attracting more investments to the kingdom," Minister of Investment Khalid al-Falih later wrote on Twitter.
The Saudi policy will apply to government agencies, institutions and funds, the source was quoted as saying, with new regulations to be issued this year.
Once it comes into effect, it would increase efficiency of state spending, help keep capital within the country and guarantee the main goods and services purchased by the government were of local origin, SPA said.