Jakarta, CNBC Indonesia – Saudi Arabia gave an ultimatum to multinational companies that have divisions in the Middle East to move their offices to that country. This was conveyed when Riyadh was trying to collect revenue by building a new economic center.
In the news CNBC International, the Saudi government announced that it would stop or prohibit foreign companies that do not have offices in the country from receiving government contracts. They were given a deadline of January 1 2024 to open an office in Saudi.
“And when you move, there are several benefits and incentives that make it make sense,” said Saudi Minister of Economy and Planning, Faisal Al Ibrahim, at the Future Investment Initiative event.
“There are lots of incentives, benefits and support that are always changing, always evolving, that are also being discussed with these players. So it’s not just negative reinforcement. There’s a lot of positive reinforcement too,” he added.
This is known to be a major blow to the United Arab Emirates (UAE). Saudi’s neighbor is currently the hub of multinational companies for the Middle East region.
Saudi itself is seeking to create a new economic center within the framework of Saudi Vision 2030. This is an ambitious campaign launched by Crown Prince Mohammed bin Salman in 2016, aimed at creating jobs in the private sector and diversifying its revenues from oil.
When first announced, this headquarters ultimatum drew skepticism and criticism from many investors and regional analysts. They question the ability of Saudi Arabia, known as a conservative Muslim country, to attract enough foreign talent.
Expats in UAE regional centers such as Dubai question the kingdom’s ability to provide adequate quality-of-life services such as international schools, spacious housing and aspects of the Western lifestyle, such as alcohol, which are currently illegal in Saudi Arabia.
However, as more and more companies look to Saudi Arabia’s large and relatively untapped market, Al Ibrahim admits that the kingdom is receiving a lot of interest and investment is growing rapidly.
On the other hand, Saudi is also known to be building the international city NEOM, which has looser regulations such as providing alcohol.
″The (company) response has been meaningful and very positive. For decades, our values have leaked to other countries, and that’s okay. “But right now, the best option for the (35 million) population and its growth is to bring value creation to the places where it is consumed,” he said.
“We think ultimately, this is not just about Saudi Arabia improving its position and procurement policies, but will also have a strong impact on these companies and the economy around us,” he said again.
[Gambas:Video CNBC]
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