“A superficial nameplate saying ‘this is the regional headquarters’ will not fly,” Saudi Arabia’s Minister of Investment Khalid al-Falih told Arab News when asked about details of new regulations for foreign companies starting from 2024.
“We would want to see the companies having a major headquarters office with executive staff; their C-suite being here; operations in other countries reporting to it; and support functions, whether it's training, product development, consolidation of regional operations, all taking place within their regional headquarters. So, a superficial nameplate saying 'this is the regional headquarters’ will not fly,” Al-Falih told Arab News’s Frank Kane during an appearance with the newspaper’s Frankly Speaking show.
Earlier last week, Saudi Arabia confirmed it will no longer sign contracts with foreign companies without a regional headquarters inside the Kingdom starting from 2024. The Kingdom’s Finance Minister clarified at the time that the decision would only apply to contracts offered by the government and that companies without regional headquarters in Riyadh would still be able to bid for private sector contracts.
#FranklySpeaking: Superficial nameplates stating Saudi Arabia is the regional HQ “will not fly” warns #Saudi Investment Minister @Khalid_AlFalih | Full episode here: https://t.co/SR0MGkxNgl pic.twitter.com/riKnM0XLtl— Arab News (@arabnews) February 22, 2021
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, the Saudi Press Agency reported at the time.
Al-Falih also confirmed to Arab News during a recorded show of Frankly Speaking that companies that do eventually choose to set up a permanent shop in Riyadh would not be forced to follow Saudization policies.
“So Saudization within the regional headquarters will be a choice, we believe it will take a place and we believe many Saudis will prosper and gain career opportunities, but it is not going to forced upon the companies who choose to move here,” al-Falih told Arab News.
Economists and business leaders who spoke to Al Arabiya English said the latest Saudi move regarding foreign companies setting up regional headquarters signals the Kingdom’s desire for corporations to commit to playing a part in the future of its society in a way that has not been seen before.