5 Reasons Why Companies Are Setting up HQs in Saudi Arabia

Until recently, most indices, rankings, surveys, and studies highlighting business opportunities in the Middle East have pointed to the glam and glitz of the UAE, with most roads in terms of foreign investments, entrepreneurship, and innovation leading to Dubai and Abu Dhabi.?

A few braver and more adventurous investors took the road less travelled to set up and scale their companies in Bahrain or Qatar.

However, over the last few years, a time-honored superpower has made the world sit straighter and take notice of its immense potential and future-forward vision – the Kingdom of Saudi Arabia.?

Indeed, the pace and the momentum at which the Saudi economy has been accelerating is nothing short of astounding, especially given current circumstances around the globe.

According to the latest report published by the International Monetary Fund (IMF) in August, Saudi Arabia is well on its way to becoming one of the world’s fastest-growing economies in 2022, led primarily by its pro-business reforms.

The Kingdom’s gross domestic product (GDP) is expected to expand by 7.6 percent in 2022, marking the fastest growth in almost a decade. Moreover, the financial sector remains resilient while systemic risks remain low.

In line with its ambitious Vision 2030 strategy, Saudi Arabia has embarked on strong structural, fiscal, and economic reforms under the visionary leadership of HRH King Salman bin Abdulaziz Al Saud and the Crown Prince HRH Mohammed bin Salman Al Saud.

At the outset, Saudi Arabia aims to continue modernizing the Kingdom while maintaining its rich cultural heritage. The Vision 2030 blueprint outlines the Kingdom’s plan to diversify its economy, reduce its dependence on oil, and develop the health, education, infrastructure, recreation, and tourism sectors, among others.

This has resulted in an improved business environment, catalysing private investment. For instance, the Kingdom has made it much easier to startup and run a business.

A business can be registered in Saudi Arabia in just three minutes. (within a box inside the article)

Additionally, the gradual delinking of government fiscal policies from oil price fluctuations coupled with attractive visa norms have also spurred public-private partnerships and foreign investment into the country.?

Meanwhile, social, technological, and labour market reforms have boosted digitalization efforts, increased the number of industrial facilities, and have raised female participation in the workforce.?

Some of the key reforms driving investment into Saudi Arabia include:

- Stock market reforms to double the ownership limits from 5% to 10% for foreign institutional investors in 2016;

- A new bankruptcy law and regulations granting foreign investors full access to a parallel market for SMEs named “Nomu” in 2018;

- Relaxing of laws that, until 2019, limited foreign investment in Saudi stock exchange-listed companies to 49%

- Ease of contractual restrictions for expats and abolishing the ‘kafala’ sponsorship system in 2020

- Naturalisation efforts that offer citizenships and permanent residencies to exceptional expats

- A set of new draft laws designed to improve the efficiency and integrity of the Kingdom’s judicial system in 2021

The result: The world is now looking at Saudi Arabia with renewed respect and awe, marking a huge shift in perception and opening doors to a new world of possibilities.?

It is not surprising, therefore, that many international companies have set up offices in Saudi Arabia including BlackRock, Amazon, Morgan Stanley, and PwC – to name just a few.??

Here are 5 reasons why companies are now looking to Saudi Arabia to set up their headquarters in the Middle East:

1.Tax Benefits and High Quality of Life?

For any company, ensuring tax efficiency is a key factor when it comes to setting up an office. Saudi Arabia scores highly on that account.?

Foreign investors have very limited liability for personal income tax while corporation tax rates are also very low. Several goods and services are exempted from VAT as well.?

Increasing cosmopolitanism and social norms being steadily relaxed ensure that expats who move into the country can now integrate easily, both economically and socially.

The cost of living in Saudi Arabia is similar to or lesser than most international cities with compensation packages being high compared to international standards.?

2. An Explosion of Digital Growth

The digital revolution is a key aspect of Vision 2030. Tech-led sustainable development has moved from being a buzzword to a reality.?

The Saudi leadership’s bold plans for progressive digital transformation across all sectors have led to increased investments in the digital ecosystem, infrastructure, and services.?

Sustainability is another important element in the mix and initiatives such as the mega city of NEOM and Qiddiya will be the forefront of sustainable living.?

In fintech as well as mobility, Saudi Arabia is racing ahead of others. Driverless vehicles are providing public transit in cities and impending innovations like Hyperloop travel are gaining speed.?

Take any aspect of digital transformation and you will realise that Saudis are ahead of the curve when it comes to cutting-edge technologies, all of which contribute greatly to the attractiveness of the business environment.?

3. A Diversified Economy Leads to Better Opportunities?

Saudi Arabia’s decision to move away oil-based economy has not been without its challenges but has also opened new sectors to investors.?

The petrochemical industry, energy and water desalination sectors, as well as education, healthcare, and tourism, have proved to be very attractive for companies.?

The financial sector has also seen a huge boost with the Kingdom looking at new ways to modernise and improve their system with the latest technologies.?

The digital transformation drive, growth of the Metaverse, the popularity of gaming, and the emergence of new media all point to economic history being rescripted in the Kingdom.?

To achieve its aim to be a hub for global technology, Saudi Arabia has listed a series of initiatives worth more than USD 1 billion. The country is also aiming to increase the tech contribution to its GDP by approximately SAR 50 billion.?

So, whether you are an entrepreneur or startup or huge conglomerate with bright innovative ideas, this is the time to move your headquarters to Saudi.

4. Starting a Business is Easy ?

When it comes to starting a business in Saudi Arabia, there are some processes and procedures to go through, but they are neither overcomplicated nor tiresome.

The Saudi government is keen to make it easy for companies to set up their headquarters in Saudi Arabia and have made plenty of resources available.?

Additionally, reforms aimed at attracting foreign investment, empowering women, creating new jobs and social opportunities, and expanding the role of the private sector and MSMEs have made doing business in Saudi Arabia much easier.?

5. Optimal Location and Global Attention?

Saudi Arabia’s location on the map also makes it an ideal location to start a business. It is centrally located between several continents. It also has very mature infrastructure and connectivity as well as very high internet penetration, with several data centres established in the Kingdom.?

The country has also invested in educating and qualifying its nationals. As its reputation grows, exceptional expat from around the world have also turned their eyes to the Kingdom, offering international companies an abundance of talent.

Additionally, the comprehensive Vision 2030 strategy has snowballed unprecedented transformation in almost every structure of society and every feature of the economy, leading to global attention and interest in all things related to Saudi Arabia.?

The benefits offered by Saudi Arabia to investors, entrepreneurs, business leaders, and innovators far outweigh those offered by their Middle East neighbours – and the best is yet to come. The only question that stands now is: Are you going to make the most of this incredible opportunity?