U.S. technology firm CSG is among several foreign companies that agreed earlier this year to set up regional offices in Saudi Arabia rather than overseeing operations remotely from a commercial hub in Dubai.
A Saudi ultimatum of sorts was issued by Saudi in mid-February and prompted some firms to rethink their strategy: From 2024, companies seeking state contracts in the Middle East’s biggest economy must have key offices in the kingdom.
In parallel, Saudi also launched sweeping economic and social reforms to attract investors, aiming to make the kingdom an easier place to live and work in and cutting the red tape that long deterred them.
Dubai, a global city with one of the world’s busiest airports, alongside fancy hotels and restaurants, plays a central role in the region as a magnet for business activity.
But Saudi is playing an aggressive game of catch-up. The Saudi state news agency SPA said in early February that 24 international firms had signed agreements to establish main regional offices in Riyadh, the capital of the world’s biggest oil exporter.
The list included PepsiCo, Schlumberger, Deloitte, PwC, Tim Hortons, Bechtel, Robert Bosch, and Boston Scientific, SPA reported.
Under economic changes pushed by Saudi Crown Prince Mohammed bin Salman, Saudi has jumped 30 places since 2019 in the World Bank’s ease of doing business rankings. It now ranks at 62, although that lags the UAE at 16.
“We have made significant progress in recent years in key reforms – introducing 100% foreign ownership across a number of sectors as well as a number of other reforms,” Saudi Investment Minister Khalid al-Falih told Reuters in an email.
Obtaining a foreign investor license now requires two documents, not 12, and can take 3 hours, not 3 days.
The Royal Commission for Riyadh City wants to attract up to 500 foreign companies to set up their regional headquarters in the Saudi capital over the next 10 years with an initiative part of the government’s wider plan to create 35,000 jobs for Saudi nationals and boost the national economy by up to $18.67 billion by 2030.
To help achieve this, Saudi Arabia has unveiled a raft of initiatives. Its sovereign wealth fund aims to launch a new airline to compete with Gulf carriers and new hotels are planned. Riyadh, a huge urban sprawl, is building a metro system, while some social restrictions, such as a ban on cinemas, have been eased.
UAE not sitting idle
But there are many gaps still to fill if it is to rival UAE’s mega metropolitan city Dubai. Not least, Riyadh needs more international schools to attract skilled expatriates and their families, executives told Reuters.
Dubai has already shown it is ready to fight to keep its title, announcing a five-year plan to increase air and shipping routes by 50% and to more than double tourism and hotel capacity over the next 2 decades.
It introduced a number of laws to incentivize the move to the city including liberalizing residency rules for expatriates, which represent 80% of its population, introducing freelance visas, and expanding its 10-year golden visa program. It also opened a path towards citizenship.
Dubai’s Expo 2020 is right around the corner and still hopes to attract 25 million visitors especially with an aggressive vaccination campaign. The country’s Ministry of Health and Prevention (MoHAP) said the total doses administered now stands at 8.39 million as of April 1.
More than half of the eligible population has currently been vaccinated.
The UAE has improved its ranking as a preferred destination where foreign nationals would like to work. According to the Bayt.com and Boston Consulting Group’s (BCG) ‘Decoding Global Talent, Onsite and Virtual’ report, the UAE rose 6 places to rank 13th globally as the most preferred place of work for foreign nationals.
The 2021 Edelman Trust Barometer reveals strong trust in the UAE’s leadership, with the government emerging once again as the most trusted institution, at 80%, and a double-digit lead over the private sector and NGOs.
This represents a four-point increase since last year and reinforces the UAE’s position as one of the most trusted governments in the world, behind only Saudi and China, both at 82%.