Riyadh seeks role as Middle Eastern regional headquarters venue
The growing attraction of Riyadh as an economic, financial and investment hub has been underlined by recent decisions by 24 multinational companies to establish their regional headquarters in the Saudi capital.
The companies – including PepsiCo, Schlumberger, Bechtel and Boston Scientific – announced their plans during the Future Investment Initiative (FII) conference held in Riyadh in January, at which Crown Prince Mohammed Bin Salman announced plans to accelerate the city’s growth to join the ranks of the top 10 city economies in the world and double the size of its population by 2030.
Multinationals have tended to base their Middle Eastern regional operations in the UAE commercial hubs of Dubai and Abu Dhabi, or in Bahrain, which has historically acted an offshore bridge into Saudi Arabia. But they are increasingly now focusing on the scale of the Saudi economy. In recent months, companies such as Google, Alibaba and Amazon have all boosted their presence in the kingdom.
In the FII announcement, the 24 multinationals cited economic potential as the reason for setting up regional headquarters. Bechtel, for example, recently won the mandate to project-manage building ‘The Line’, a futuristic 170km city strip planned in NEOM, the Crown Prince’s most adventurous domestic development.
President of the Royal Commission for Riyadh City Fahd Al-Rasheed said: “A key focus is to make it easier for global businesses to operate in the Kingdom. Creating the King Abdullah Financial District special economic zone opens the door for multinational companies to relocate to Riyadh. Now they can maximise first-mover advantage and take total control at the heart of their largest regional market.”
Al-Rasheed also highlighted Riyadh’s plans to make the city more livable, with plans for big green spaces, more sports and leisure facilities, as well as arts and cultural activities. Full detailed plans for the expansion of the city would be ready by the second quarter.
Al-Rasheed said that some US$220 billion had already been spent or earmarked as government investment for projects in and around Riyadh, but that most of the rest of the required investment would come from the private sector. “The government is working with the private sector as partners, it will not crowd out the private sector,” he said.
Minister for Investment Khalid Al-Falih said that a number of key reforms relating to the establishment and governance of special economic zones, labour and education laws were due to be ratified in the first half of this year. Companies operating in the zones will enjoy a range of tax exemptions, incentives and labour law enhancements for ten years, as well as fast and simple commercial licensing.