Saudi Arabia to stop signing contracts with foreign companies without a regional headquarters in the Kingdom, state news agency SPA reported on Monday. The move aims at incentivizing foreign firms including agencies, institutions and government-owned funds and will come into effect from Jan 1, 2024.
However, the decision will not affect private sectors and investors can make way into the Saudi market. Saudi Arabia, the region's largest economy and the world's largest oil exporter, aims at localizing firms to curb economic leakage, boost employment opportunities and increase spending efficiency.
"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," said Mohammed Al-Jadaan, the Saudi finance minister, to Reuters. "But as long as it is related to the government contracts, they will have to have their regional headquarters here."
The decision comes in line with the Kingdom's Vision 2030 after Saudi's Public Investment Fund (PIF) launched a 5-year strategy to bolster the local economy.
The Crown Prince Mohammed bin Salman had announced a strategy to make Riyadh amongst the top 10 economic cities in the world during a Future Investment Initiative (FII) gathering last month. During the FII forum, 24 international companies, including Deloitte, Bechtel and PepsiCo, announced their decision to move their regional headquarters to Riyadh, according to SPA.