Saudi leadership’s grand vision to transform national economy
In a bid to boost the national economy, the Saudi government has decided to stop signing contracts with foreign companies from 2024 unless their regional headquarters are based in the Kingdom. The rule applies to agencies, institutions, and government-owned funds. The decision aims to incentivize foreign companies that deal with the Saudi government to base themselves in the Kingdom.
It will create jobs, increase spending efficiency, and guarantee that the main goods and services purchased by government agencies are produced internally.
The move comes after Saudi Arabia announced during the Future Investment Initiative a strategic plan to make Riyadh one of the world’s top 10 city economies.
Some 24 international companies said they intended to move their regional headquarters to Riyadh. Investors should be reassured that it will not affect their ability to enter the Saudi market, or continue their business with the private sector. It is undoubtedly a welcome move and will help the national economy in achieving its goals set in the Vision 2030. Had this decision been taken a few decades ago, the Saudi economy would have been entirely transformed by now. It is, however, better late than never.
The decision is the result of the Kingdom’s leadership’s grand vision to diversify the Saudi economy and reduce its dependence on oil revenues.
Saudi Arabia has tremendous natural and human resources awaiting to be utilized effectively and that is exactly what Crown Prince Mohammed bin Salman has been doing since the launch of his ambitious Vision 2030 program.
The recent change aims to create an environment conducive for foreign investments, ensure transparency in high-value government projects and boost public-private partnerships.
The Saudi government is taking several measures to encourage public-private partnerships, as it is a proven way to take the burden off the shoulders of the government, increase competition in the private sector, and boost efficiency.
The establishment of corporate regional headquarters in the Kingdom will lead to the creation of thousands of jobs for Saudi citizens in different sectors and specialties.
The decision will also boost the market for local goods and services, and accelerate the Riyadh Strategy 2030 plan to attract hundreds of international companies to the Kingdom’s capital. It is estimated that the value of the foreign investments will exceed far beyond SR9 billion, which was recorded at the end of the third quarter of 2020.
It will also boost competitiveness in the market, with the influx of foreign expertise brought by businesses into various sectors, with their knowledge being passed down and expanded on by local talent.
The establishment of regional headquarters by different corporations in the Kingdom will help shape the local business scene along modern lines. It will increase healthy competition, which will ultimately improve the national economy.
We must not ignore the fact that the presence of key international business players will also have a profound effect on the local business culture. In a bid to compete effectively, all commercial establishments will have to adopt best management practices.
In other words, this decision will have a farreaching impact on the national economy and business culture. It is a win-win situation for the Kingdom and a testimony to the Saudi leadership’s impressive vision for the progress of the country and prosperity of its people.
The recent change aims to create an environment conducive for foreign investments.