In 2021, Saudi Arabia’s Mohammed bin Salman launched “Programme HQ.” The idea was to entice the world’s largest technology firms, as well as innovative start-ups, away from the regional hubs in Dubai and into the Saudi capital. The initiative included a range of financial incentives, such as a thirty year tax break, but also came with the blunter threat: relocate to Riyadh or lose out on the mega-contracts offered by the Saudi Arabian government. The deadline for this has just passed – January 1st 2024.
Programme HQ was born out of the economic challenges of the coronavirus pandemic, during which the price of oil collapsed and briefly traded below $0 a barrel, badly hitting the Gulf’s oil exporters and further incentivising bin Salman to pursue his Vision 2030 policy of economic diversification. It was also partly motivated by public relations considerations – an executive was quoted at the time as saying: “I think it’s about the optics: we are a serious player, we are the largest market, we want the companies that do business here to be based here.”
However, three years on and with the deadline now passed, the initiative is starting to yield substantial financial results at a time of economic strength in the Middle Eastern country. A period of strong oil prices in the aftermath of Russia’s invasion of Ukraine has bolstered the coffers of the Gulf exporters, which benefited from a collective windfall of up to $1 trillion.
Now, over the course of the last few months, several of the world’s biggest technology firm have announced plans to move to Riyadh in response to Programme HQ. Huawei was one of the first to do so, in what was perhaps a sign of the growing diplomatic and business ties between Riyadh and Beijing. Amazon, Google, Microsoft, Airbus, Oracle, and Pfizer are just some of the global firms to have followed, having all been granted licences to establish regional headquarters in Riyadh.
There was initially some reluctance to relocate from Dubai on the part of global tech executives, mainly for personal rather than business reasons. Saudi Arabia’s strict ban on alcohol, limited entertainment options, and conservative society has not yet proved as appealing to an international workforce than Dubai or elsewhere in the region.
Ayman Aljohani, CEO of the Builtop tech firm in Riyadh, told Disruption Banking that more firms are relocating to the city in order to take advantage of the opportunities associated with the Saudi market.
“The Saudi Arabian market is becoming really interesting for global companies – not just for tech companies, but also venture capital finds, accelerators, incubators, and others who all see the huge potential,” he said.
“The United Arab Emirates and especially Dubai has been a key destination for most of the tech companies and investors from around the globe, particularly concentrated within the real estate space,” Aljohani added. “That is largely because Dubai has been an early adopter of many technologies. But now is the time for Saudi Arabia.”
Aljohani believes that Saudi’s time has come “for two reasons.”
“Firstly, tech firms in Saudi Arabia benefit from huge government enablement – Saudi start-ups have access to legal firms in the Kingdom with discounted fees to legal firms, discounted fees to marketing agencies, incubators in Riyadh, Jeddah, and Damman that helps accelerate the growth process,” Aljohani said. “These incubators also give start-ups full access and exposure to decision-makers in the government or industry. The incentives for global firms, investors, and start-ups to come and join the ecosystem are very strong.”
It remains to be seen the extent to which global tech firms are serious about boosting their presence in Saudi Arabia – or whether they are simply trying to position themselves to benefit from the government contracts on offer in Riyadh. However, the signs are undoubtedly positive for a country which is becoming of ever greater importance across the global technology and finance industries.
Author: Harry Clynch
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