Major technology companies, including Amazon.com, Google, and Microsoft, are intensifying their presence in Saudi Arabia following government pressure to have regional headquarters in the country.
The Saudi government’s move, announced in February 2021, stipulated that companies without regional headquarters would no longer receive state contracts.
The recent flurry of activity saw these tech giants secure licenses for regional HQs in Riyadh just before the January 1 deadline, reported Fortune.
Other corporations joining this trend include Airbus, Oracle, and Pfizer.
The Saudi government aims to limit “economic leakage” by directing state contracts towards companies with substantial local presence.
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Crown Prince Mohammed bin Salman’s economic agenda includes curbing spending that benefits firms without a significant presence in the kingdom.
The government’s push has been seen as a bid to compete with Dubai, the region’s primary business hub.
Despite recent reforms and economic incentives, the limited options and policies, such as the ban on alcohol, have made some foreign executives hesitant to relocate to Saudi Arabia.
Microsoft, Google, and Airbus have confirmed their engagement with Saudi authorities and compliance with the country’s rules.
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Under the new regulations, companies can obtain a special HQ license by establishing a center in Riyadh, meeting certain criteria, and can benefit from incentives like tax breaks and exemptions from certain hiring rules.
However, the Saudi plan has faced confusion, with uncertainties about its application to certain business types and which government entities are covered by the procurement restrictions.
The Ministry of Investment, which announced over 200 firms receiving HQ licenses in December, has not responded to requests for clarification. Despite the challenges, companies like Bechtel, PwC, and PepsiCo have declared Riyadh their regional headquarters.
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