Saudi Arabia says 44 global companies are moving their regional headquarters to its capital.
The kingdom told companies in February it would shut down if they didn’t take such a step.
Critics earlier called the move “corporate bullying”, but it appears to be working as expected.
In February, Saudi Arabia issued a bold ultimatum to multinational companies: move your regional headquarters to the country by 2024, or the government will stop doing business with you.
The announcement was part of a large-scale push by Crown Prince Mohammed bin Salman to transform the Saudi capital, Riyadh, into a global center for finance, business and logistics as the kingdom seeks to be less dependent on oil , which OPEC figures indicate 70% of its exports.
Investors and expats balked at the ultimatum at the time, with many saying it was a ploy to divert businesses from Dubai to neighboring United Arab Emirates, where 90% of workers are foreigners. A seasoned financier described it as “anti-competition” and “business bullying,” according to CNBC.
But the tactic seems to be working. Saudi Arabia on Wednesday announced that 44 international companies, including PepsiCo, Siemens and Unilever, were establishing their regional headquarters in Riyadh, local media reported.
Hosam Alqurashi, program director at the kingdom’s regional headquarters, said during the announcement that his capital “has witnessed the greatest artistic movement since the Renaissance,” according to Arab News.
The new total is up from the top 24 companies that said in January they would move their regional offices to Saudi Arabia from Dubai.
At the time, officials tried to lure companies in with a 50-year tax holiday and waivers for job quotas.
The February ultimatum took a different turn. “Everyone is panicking. We’re used to governments giving out carrots, but this time a big stick is out of the bag, ”a regional manager of a multinational company told the Financial Times. “Frankly, it’s offensive.
Despite the backlash, Fahd al-Rasheed, chairman of the Royal Commission for the City of Riyadh, told Reuters that the Saudis’ goal was not to “dismantle” business in neighboring countries.
“We’re just saying – you have to have your regional headquarters here because it’s not just a contract economy that you walk in and out of,” he said on Wednesday. “We want to see you with us for the long haul. “
Al-Rasheed added that Riyadh wanted 480 companies to establish a regional headquarters there by 2030 – also the deadline set by the crown prince to diversify the Saudi economy.
Still, the kingdom could struggle to replicate Dubai’s success.
The 2018 assassination by Saudi agents of journalist Jamal Khashoggi, who had criticized the royal household, tarnished Crown Prince Mohammed’s worldwide reputation and weakened the kingdom’s sovereign wealth fund, said Joel Rubin, former deputy secretary of Deputy state. CNBC earlier this year.
In recent years, Saudi Arabia has attempted to shake off its reputation as a die-hard conservative with changes such as letting women drive and opening cinemas for the first time in decades. But it doesn’t yet offer a lifestyle that compares to the freedoms foreigners in Dubai can enjoy, like the freedom to drink alcohol, the expats told CNBC.
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