Riyadh challenges Dubai: but loses over lack of rights, trumping economy
Saudi Arabia requires foreign companies to establish their regional headquarters in the capital. The law will come into force in 2024 and leaves ample time (and room for negotiation). Analysts and experts speak of whim of bin Salman. The emirate remains more attractive not only for funding, but for greater freedom (including of faith).
Riyadh (AsiaNews / Agencies) - Political allies, the United Arab Emirates (UAE) represent an economic and commercial rival for Riyadh on a regional and international level, capable so far of better attracting wealth and investments than the Wahhabi kingdom.
However, the picture could change in the not too distant future, thanks to investments and (attempts at) reforms launched by the house of the Saud. First of all, the ambitious decades-long "Vision 2030" plan promoted by Crown Prince Mohammad bin Salman (Mbs), who would like to redesign the face of the nation with openness to modernity, glossing over draconian human rights abuses.
Riyadh recently announced its intention to close existing contracts with companies and commercial entities whose regional headquarters are not established in the kingdom. The provision, which is not intended to affect investors' ability to enter the domestic market or pursue activities in the private sector, will come into effect on January 1, 2024.
Some analysts and local investors have dubbed it “a whim" by MBS, because setting such a distant date is a way to grant ample room for negotiation to the companies already operating and find a solution with the government. While remaining the most important economy in the Arab world, in fact, Saudi Arabia also has to face the repercussions due to the new coronavirus pandemic and the collapse in oil prices. In addition, the unemployment rate reached 15%, although foreign companies present in the country are forced by law to reserve a quota for Saudi citizens in terms of workforce.
In the meantime, a working group linked to the Saudi Ministry of Investments has launched a real recruitment campaign to persuade companies, multinationals and businesses to set up regional offices in Riyadh. Among the bonuses proposed are favourable taxation, waivers on visas to passports for at least 10 years and economic incentives for hiring local staff. A not too veiled way to align with the positions of Dubai and compete with what, at the moment, remains the pole of greatest attraction in the whole Middle East. In reality, the offer did not have the desired effects and the gap with the emirate still remains wide to bridge.
To encourage development and free the nation from oil, the crown prince personally approved the project that will lead to the birth of the futuristic city of Neom. North of Riyadh rises the al-Aqiq district, a financial centre launched in 2006 and dotted with skyscrapers and modern buildings on a total of 1.6 million square meters. Construction work is still in progress, but the area is already a popular walking destination for many citizens, although inside many offices remain empty. A merciless confrontation with the financial center of Dubai, born two years earlier and characterized by a vibrant atmosphere and a volume of business among the first in the world.
The goal of the Saudi authorities is to convince at least 500 foreign companies to establish their regional headquarters in the capital within the next 10 years, while creating 35,000 new jobs. Nevertheless, Dubai maintains the primacy for the best investment opportunities offered, greater freedom of life and the nationality granted to certain categories of workers. The common opinion is that "Dubai remains 10-15 years ahead" compared to Riyadh and the Saudis, who in addition to the economy should look to rights and freedoms, even that of worship today prohibited in the kingdom except for Sunni Islam, to attract investors and capital from abroad.