Saudi Arabia has ruled that it will stop signing contracts with foreign companies unless they base their regional headquarters in the kingdom, in a new reform aiming to increase the country’s economic ranking.
The decision – which also includes agencies, government-run funds, and institutions – reportedly does not include deals with the private sector and will not affect any foreign investors’ ability to deal in the Saudi market, according to a statement by the Saudi Press Agency (SPA).
The ruling is only aimed at foreign companies that deal with the Saudi government, incentivising them to base themselves in the kingdom before the ruling comes into effect in 2024. It also has the aim of somewhat centralising the Saudi market, reportedly helping to create jobs, ensure the purchase of goods and services from the kingdom itself, and to increase spending efficiency.
With around 24 international companies already having stated their intention to move their regional headquarters to the country, the government’s decision comes as part of its plan to place the kingdom amongst the world’s top ten economies.
Riyadh’s target is one of many it has instituted in its efforts to achieve its Vision 2030, which it hopes will make it a major business and economic hub in the region and the world.
Its grand plans were stalled over the past year, however, primarily due to the ongoing coronavirus pandemic. It has since been approaching multinational companies with offers of relocating to the kingdom, leading up to this recent move to refuse contracts to those which do not set up their headquarters in Saudi by 2024.