Move In or Lose Out: Saudi Arabia’s Ultimatum Unsettles Firms - Bloomberg
Saudi Arabia’s ultimatum for global companies to move their regional hubs to Riyadh by 2024 or lose business is the kind of decision making that has made some wary of investing there.
The millions of dollars in costs, sudden policy changes and arbitrary legal rulings mean companies will need to weigh the risks of moving there with the potential rewards Crown Prince Mohammed bin Salman’s economic overhaul promises.
Saudi Arabia said this week state contracts would go only to companies with regional hubs in the country to stop economic “leakage.” It gave few details, fueling the kind of uncertainty many regional executives say complicate their dealings with the world’s top oil exporter.
Some businessmen say Saudi Arabia is a sleeping giant that’s waking up, with a consumer market three times the size of the United Arab Emirates, planned mega-projects worth hundreds of billions of dollars and a young, rapidly-changing society that’s almost unrecognizable from the ultra-conservative kingdom of five years ago.
But one manager at a multinational headquartered in Dubai, the Gulf’s main business hub, said companies know the political tide can turn fast in Saudi Arabia. The lack of legal recourse they have makes them vulnerable as most contracts come via the state so it’s difficult to chase unpaid money, he said. Like others he spoke on condition of anonymity because of the sensitivity.
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