Saudi Arabia has told international companies to move their regional headquarters to its capital or lose

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  • On Wednesday, Saudi Arabia said 44 global companies were moving their regional headquarters to Riyadh, the capital.
  • The kingdom boldly told companies in February that it would not do business with them unless they moved their headquarters there.
  • Expats and bankers denounced the move as “corporate bullying” earlier, but it appears to have had the desired effect.
  • For more stories, visit Business Insider.

In February, Saudi Arabia issued a bold ultimatum to multinationals: 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 capital, Riyadh, into a global center of finance, business and logistics, so that the kingdom would be less dependent on oil which represents 70% of its exports, by OPEC.

Investors and expats balked at the idea at the time, with many saying it was a ploy to snatch business from Dubai in the neighboring United Arab Emirates, where 90% of the workforce work is foreign. A veteran financier described it as “anti-competitive” and “corporate bullying,” according to CNBC.

But the tactic seems to be working. Saudi Arabia announced on Wednesday that 44 international companies, including PepsiCo, Siemens and Unilever, would establish their regional headquarters in Riyadh, local news reported.

Hosam Alqurashi, the program director of the kingdom’s regional headquarters, said during the announcement that his capital “now bears witness to the greatest artistic movement since the Renaissance”, according to Arab News.

The new total is up from the first 24 companies that said in January they would move their regional offices from Dubai to Saudi Arabia.

At the time, authorities were trying to lure businesses in with a 50-year corporate tax holiday and job quota waivers.

The February ultimatum took a different turn. “Everyone is freaking out. We are used to governments offering carrots, but this time a big stick has come out of the bag,” a regional manager for a multinational company told the Financial Times at the time. “Frankly, it’s offensive.”

Despite the backlash, Fahd al-Rasheed, chairman of the Royal Commission for the city of Riyadh, told Reuters the Saudis’ aim was not to “dismantle” businesses 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 go in and out of. We want to see you with us for the long term,” he said on Wednesday.

Al-Rasheed added that Riyadh wants 480 companies to establish regional headquarters there by 2030 – also the deadline set by the crown prince to diversify the Saudi economy.

Still, the kingdom may struggle to replicate Dubai’s success.

The 2018 assassination by Saudi agents of journalist Jamal Khashoggi, who had criticized the royal household, tarnished the global reputation of the kingdom and Prince Mohammed Bin Salman and left its sovereign wealth fund vulnerable, Joel Rubin, former undersecretary of Deputy State. , told CNBC earlier this year.

Saudi Arabia has in recent years tried to shake off its reputation as a hardline conservative with reforms such as letting women drive and opening cinemas for the first time in decades. But it still doesn’t offer a lifestyle on par with the freedoms foreigners in Dubai can enjoy, such as the freedom to drink, expats told CNBC.

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