Saudi Crown Prince Mohammed Bin Salman is spearheading a campaign to lure multinationals to relocate from Dubai to Riyadh in an ambitious plan that could anger the kingdom’s smaller Gulf ally. Under the initiative, dubbed “Programme HQ”, Saudi authorities are said to be offering incentives to blue-chip companies in sectors such as IT, finance and oil services to relocate to Riyadh, according to consultants advising the government and executives who have heard the pitch.
Speaking about Dubai based companies that have been approached, a consultant working in the kingdom is reported saying in the Financial Times, “it’s more like who hasn’t been tapped up.” The aim of the initiative is to bolster foreign investment and support the crown prince’s ambitious Vision 2030 plan and to establish the kingdom as a regional business hub.
“They are looking at the regional HQs, not the operating units, so they basically want the senior leadership,” said an executive briefed on the plans. “I think it’s about the optics: ‘we are a serious player, we are the largest market, we want the companies that do business here to be based here’.”
The campaign is said to have gathered momentum ahead of the annual investor conference affiliated to the Public Investment Fund, the sovereign wealth fund chaired by the crown prince, scheduled to begin on 27 January. The annual event, which sees top executives flocking to Riyadh, suffered a huge blow in 2018 following the murder of journalist Jamal Khashoggi by a group of Saudi agents. The UN and several intelligence agencies including the CIA concluded that the crown prince had authorised the brutal murder.
Many businesses, however, are said to have put aside their concerns about the reputational risk of working in the kingdom.
Mohammed Bin Salman is hoping that his offer of a 50-year tax holiday, waiving quotas on the employment of Saudis — which has proved to be a burden for companies — and guarantees of protection against future regulations, will be enough to entice major firms to relocate to Riyadh’s King Abdullah Financial District, a vast development of 59 skyscrapers north of the capital.
But executives told the FT that companies were lukewarm to “Programme HQ” as they balanced the implications of relocating senior executives from Dubai, which is more liberal, better connected and has state of the art infrastructure including good schools, with the need to placate influential Saudi officials. Companies are nonetheless considering shifting various business units — if not their regional management — to Riyadh to appease Saudi concerns, consultants and executives said.