Saudi Arabia is taking seriously the Jan. 1 deadline for corporations to move their regional headquarters to Riyadh, or waste government contracts.

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RIYADH (AP) — Saudi Arabia is sticking to its ultimatum that foreign corporations will have to identify their regional headquarters in the kingdom or face a ban on lucrative government contracts. Deadline: January 1, 2024.

In an ambitious and surprising move in February 2021, the Saudi government announced that it would prevent doing business with all foreign corporations whose regional headquarters were not in the country until 2024.

The news stunned expat investors and workers, many of whom saw the move as an attack on Dubai, the advertising capital of the United Arab Emirates that is home to the concentration of regional headquarters in the Middle East.

Faisal Al Ibrahim, Saudi Arabia’s minister of economy and planning, told CNBC that the plan was still underway and explained how the kingdom plans to include foreign corporations in the change.

When asked via CNBC’s Dan Murphy if the deadline was still in place, Al Ibrahim replied, “Yes. And when you move, there are sure benefits and incentives that will make that make sense. “

The minister was speaking from Riyadh at the Future Investment Initiative, an annual three-day convention on finance and investment organized through Saudi Arabia’s Public Investment Fund and an original concept of the Vision 2030 project.

“There is a total diversity of incentives, benefits and supports that are changing, evolving and that are also being discussed with those players,” Al Ibrahim said. “So it’s not just negative reinforcement. There’s also a lot of positive reinforcement. “”

Vision 2030, an ambitious crusade introduced by Crown Prince Mohammed bin Salman in 2016, aims to create jobs in the personal sector and diversify its economy away from oil, while Saudi Arabia’s population (more than 60% of whom are in their 30s) is booming. The kingdom regional headquarters crusade is one of them.

When it was first announced, the HQ ultimatum was met with skepticism and complaints from many regional investors and analysts, who questioned the ability of Saudi Arabia (a notoriously conservative Muslim theocracy known for its much-criticized human rights record) to attract enough foreign talent. Expats at the Dubai regional headquarters have questioned the kingdom’s ability to offer sufficient quality-of-life services, such as foreign schools, plentiful housing, and facets of a more Western lifestyle, such as alcohol, which has lately been illegal in Saudi Arabia.

But as more corporations take an interest in Saudi Arabia’s vast and relatively untapped market, the kingdom is attracting a lot of interest and developing investments, Al Ibrahim said. The presence of several thousand foreign investors and financiers from around the world at this week’s IFI convention in Riyadh turns out to be a smart indicator of this interest.

“We’re seeing strong momentum, we’re definitely prioritizing corporations that bring price creation to where price is consumed, that create high-quality jobs for Saudis, Saudis and others, and that help us achieve our quality effects from our needs. , whether facilities or goods, in a larger and more significant way,” the Minister said, adding that the Kingdom receives requests on a daily basis.

“The responses [from companies] are very meaningful and very positive,” he described. “For decades, our price has escaped other economies, which is good. But today, the bet that the [35 million] and the expansion in terms of the population is to bring price creation to where the price is consumed,” he said.

“And in the long run, it’s better for those investors, those deals as they evolve, they can get closer to those markets. And they can take advantage of the young skill that you can have in Saudi Arabia, the Saudi skill, and take advantage of the rest of the platform to”

The World Bank forecasts an economic contraction of 0. 9% for Saudi Arabia in 2023 due to declining oil production and prices. But the International Monetary Fund sees strong non-oil expansion for the kingdom, which it says has accelerated since 2021. “at an average of 4. 8% in 2022,” and is expected to “remain close to 5% in 2023, driven by strong domestic demand. “

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