Saudi Arabia has raised the stakes in a competition with freewheeling Dubai for foreign talent and cash, Reuters informed.
From 2024, the Saudi government will stop giving state contracts to companies and commercial institutions that base their Middle East hubs in any other country in the region, the Saudi finance minister told Reuters.
The measure is the latest attempt by the kingdom, a religiously conservative nation that is the birthplace of Islam, to remould itself as a financial and tourism hub under the leadership of de facto ruler Crown Prince Mohammed bin Salman.
But challenging the dominance of Dubai, in neighbouring United Arab Emirates (UAE), as the region’s commercial and financial capital will not be easy.
With little of the oil wealth of its neighbours, Dubai has built its economy on its open-for-business credentials and the promise of a glitzy lifestyle for well-heeled expatriates.
“It’s a further challenge to UAE business, especially Dubai, though the superior operating environment, legal environment and facilities (there) suggests that businesses may continue to have offices across the region,” said Rachel Ziemba, adjunct senior fellow at the Center for a New American Security, a Washington think tank.
Still, the UAE is taking seriously the threat from Saudi Arabia, the largest Arab economy and the world’s top oil exporter.
The UAE has already moved to make the country more attractive to foreign firms including allowing expatriates to divorce, cohabit and drink alcohol without a license.
Dubai’s former finance chief Nasser al-Shaikh said Riyadh’s move contradicted the principles of a unified Gulf market.
“Global experiences and history have proven that forced attraction is not sustainable,” he tweeted following the Saudi announcement.
Saudi’s finance minister told Reuters that Dubai and Riyadh would complement each other.
“This is not about Dubai or Abu Dhabi or any other city, this is about Saudi Arabia’s right to have its fair share of regional headquarters,” Mohammed al-Jadaan said.
Along with the ultimatum, Saudi Arabia is offering companies that set up regional headquarters in Riyadh zero corporate tax for 50 years, a waiver on mandatory quotes to employ Saudis for at least 10 years and potential favouring in government entities’ tenders and contracts, according to a brochure by Invest Saudi, the country’s investment brand overseen by the Ministry of Investment.
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