Saudi Arabia issues 127 regional headquarters licences in Q1
Over 125 international companies relocated their regional headquarters (RHQs) to Saudi Arabia during the first quarter of 2024, according to a quarterly report issued by the Ministry of Investment (MISA) issued on 3 June. The figure represents a 477% year-on-year increase.
The drive to attract RHQs is a key part of Saudi Arabia’s Vision 2030 initiative to diversify the Kingdom’s economy away from oil. As from 1 January, Saudi government entities were prohibited from contracting with foreign companies that have not established a RHQ in the Kingdom with at least 15 full-time employees.
Last December, the government also announced a range of incentives and benefits to attract RHQs, which included a 30-year exemption from corporate income and withholding taxes, a 10-year exemption from Saudisation requirements and the ability to issue unlimited number of visas to RHQ employees.
At that time, MISA said that it had issued 180 RHQ licences to international companies. A further 127 licences were issued in the first quarter of this year and Saudi Investment Minister Khalid Al-Falih said in May that the total now stood at over 400.
These included technology giants Amazon, Alphabet, Google and Microsoft, consulting and auditing firms like PwC and Deloitte, and consumer goods multinationals such as PepsiCo and Unilever. In May, Goldman Sachs became the first US investment bank to apply for a RHQ licence.
Meanwhile, the world’s largest asset manager BlackRock announced that it is to launch an investment platform in Riyadh with the help of a USD5 billion anchor investment from Saudi Arabia’s Public Investment Fund, the Kingdom’s sovereign wealth fund.
The new platform will be called BlackRock Riyadh Investment Management (BRIM). It aims to help bring foreign institutional investment into Saudi Arabia as well as develop the Saudi asset management industry, expand local capital markets and investor diversification, and support the development of the kingdom’s asset management talent, the release said.
In terms of asset classes, the intention is to manage equities and bonds on the public side, and private debt and infrastructure on the private markets side. These will be Middle East and North Africa-based assets, but the majority of investments will be Saudi-specific.
BlackRock CEO Larry Fink said in the statement that the Kingdom “has become an increasingly attractive destination for international investment as Vision 2030 comes to life.”
The MISA quarterly report also said that the Kingdom had processed 445 applications for investor visit visas during the first quarter of this year and closed 64 investment deals.
Investment licences issued during the first quarter totalled 3,157, which represented a 92.9% increase over the preceding year. Of these, 864 investment licences were issued in the construction sector, 620 in manufacturing, 396 for vocational, educational and technical activities, and a further 263 in the information and communication technologies sector.
“In Q1 2024, real estate recorded the highest growth in investment licenses by 253.3% year-on-year, followed by vocational, educational and technical activities, and agriculture, forestry and fishing by 141.5% and 129.4% respectively,” said the ministry.
“The recent influx of businesses looking to setup their RHQs in the Kingdom highlights the successes of the transformative efforts being made across a variety of business sectors.” – James Elliot-Square, Regional Business Development Manager at Sovereign PPG Corporate Services
