Saudi Arabia has attracted a coterie of 24 multinationals to set up a regional headquarters in Riyadh as the Gulf Kingdom seeks to transform its capital into a business center to compete with Dubai’s dominance.
US engineering group Bechtel and Indian hotelier Oyo are among the companies that will establish a regional headquarters, according to Fahd al-Rasheed, chairman of the Royal Commission for the city of Riyadh.
The multinationals’ announcement, which took place at a Future Investment Initiative conference in Riyadh last week, marks a further step towards a rehabilitation of Crown Prince Mohammed’s ambitious economic reforms. bin Salman, who were devastated by the gruesome murder of journalist Jamal Khashoggi in 2018.
Multinationals now seem more comfortable with the reputational risk attached to the kingdom, which is also mired in a bloody war in Yemen, as they consider the potential benefits of Prince Mohammed’s plan to reduce the country’s dependence on oil and to reform the economy.
As revealed by the Financial Times, the Ministry of Investment and the Royal Commission have in recent weeks addressed multinationals, asking them to commit to opening a regional headquarters in Riyadh.
Multinationals tend to base their regional operations in the Dubai Mall, with some opting for oil-rich Abu Dhabi or Bahrain, which historically served as an offshore bridge to Saudi Arabia.
But they are increasingly taking into account the disproportionate nature of the Saudi economy in the region. In recent months, companies such as Google, Alibaba and Amazon have all increased their presence in the kingdom.
“Imagine the Middle East’s digital economy 10 years from now: whatever trajectory you think the Saudi economy takes, the country will still have the largest Arab economy; it will always have more oil than God and a population nearly the size of Canada, ”said Sam Blatteis, former head of Gulf government relations for Google, who now advises tech companies on market entry.
Executives and consultants have spent more and more time in the kingdom in recent years, coming and going to advise on opening up the economy. However, few are willing to relocate there, citing Riyadh’s lower standard of living than in the UAE.
In last week’s announcement, the 24 multinationals cited economic potential as the reason for establishing a regional headquarters. Bechtel, for example, recently won the project management mandate for The Line building, a 170 km futuristic city strip planned in Neom, the most adventurous domestic development of the crown prince.
Several senior executives from Oyo, the Indian hotel group backed by SoftBank’s Vision Fund, will move to its new regional headquarters in Riyadh’s King Abdullah financial district, a huge business park comprising 59 towers in the north of the city that has had struggling to attract tenants.
Saudi Arabia, which plans to scale up tourism projects in the coming years, has become an important market for Oyo, said its Middle East director Manu Midha, who currently works between Riyadh and Dubai.
The Middle Eastern franchise of Canadian coffee chain Tim Hortons is also moving its regional headquarters to the Saudi capital.
500 Startups, an American venture capital firm, said the opening of its regional headquarters in Riyadh reflects the growth in the flow and size of transactions in recent years, with technology playing an increasingly central role in the growth of entrepreneurship in Saudi Arabia.
Siemens Mobility has also confirmed that it will locate the Gulf headquarters in Saudi Arabia “to engage in potential transport projects”. However, Siemens AG, the separately managed parent company, will retain its regional headquarters in the United Arab Emirates, he said.
At the conference, Prince Mohammed said he plans to make Riyadh one of the ten largest urban economies in the world, from its current position of 40. His plan calls for increasing the population by 7, 5 million inhabitants to around 20 million by 2030.
Investment minister Khalid-al-Falih said the private sector will also play a central role in the government’s plans for Saudi riyal 6 trillion in investment in the capital.