Global companies to be rewarded for setting up in KSA: Officials

Global companies to be rewarded for setting up in KSA: Officials
The decision will boost competitiveness in the market, with the influx of foreign expertise brought by businesses into various sectors. (Shutterstock)
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Updated 17 February 2021

Global companies to be rewarded for setting up in KSA: Officials

Global companies to be rewarded for setting up in KSA: Officials
  • Kingdom aiming to attract hundreds of companies to base regional headquarters there

RIYADH: Saudi Arabia’s decision to stop signing contracts with foreign companies from 2024 unless their regional headquarters are based here will help reduce unemployment, boost the market for local goods and services, and accelerate the Riyadh Strategy 2030 plan to attract hundreds of international companies to the Kingdom’s capital.

“If a company refused to move their headquarters to Saudi Arabia it is absolutely their right and they will continue to have the freedom to work with the private sector in Saudi Arabia,” Finance Minister Mohammed Al-Jadaan told Reuters on Monday.

“But as long as it is related to the government contracts, they will have to have their regional headquarters here,” he added.

“Saudi Arabia has the largest economy and population in the region, while our share of regional headquarters is negligible, less than 5 percent currently. You can imagine what does this decision mean in terms of FDI (foreign direct investment), knowledge transfer and job creation.”

Investment Minister Khalid Al-Falih said incentives will be given to encourage companies to set up their regional base in the Kingdom, and those that make the move will be rewarded for their loyalty.

“It’s not natural for companies without their decision-making apparatus in the country to be getting the prime contracts that the government and government entities would be awarding,” Al-Falih told Bloomberg.

“It’s a reward for those who choose to be here … We believe that the combination of the infrastructure in place in Riyadh, the incentives that will be given, as well as the size of the pie in terms of business opportunities, will attract hundreds of companies to relocate and not wait until 2024.”

The announcement is part of the Riyadh Strategy 2030 plan announced by Crown Prince Mohammed bin Salman at the Future Investment Initiative forum last month.

The Royal Commission for Riyadh City has set a target to attract up to 500 foreign companies to set up their regional headquarters in the capital over the next 10 years, with 24 already confirmed, and as part of the initiative the crown prince aims to double Riyadh’s population.

According to studies, the strategy program will create 35,000 jobs for Saudis and help pump up to SR70 billion ($18.67 billion) into the national economy by the end of the decade.

“All of Riyadh’s features set the groundwork for job creation, economic growth, investment, and many more opportunities,” the crown prince said last month.

“We are therefore aiming to make Riyadh one of the 10 largest city economies in the world. Today it stands at number 40,” he added.

“We also aim to increase its residents from 7.5 million today to around 15-20 million in 2030.”

Fawwaz Al-Shammari, CEO of telecoms technology company MBUZZ, said the new Riyadh investment drive will be a catalyst for development across a number of sectors, and the initial benefits could be felt as soon as the second quarter of 2021.

With Monday’s latest announcement, experts told Arab News that the impact could be felt even sooner.

Zaki Alagl, owner of a number of accessory stores in Riyadh, told Arab News that the decision will help energize the Saudization process as global companies turn to local experts and utilize Saudi talent to develop their business in the Kingdom.

It will also boost competitiveness in the market, with the influx of foreign expertise brought by these businesses into various sectors, as their knowledge is passed down and expanded on by local talent, Alagl said.

“The decision affirms the Kingdom’s inclination to attract foreign investment. The probability of it affecting the local market is high even before it’s applied,” he added.

“Big companies won’t wait too long to invest, as that will cost them greatly through higher rent costs and manpower.”

Talat Zaki Hafiz, an economist and Saudi Financial Association board member, applauded the decision, saying most foreign companies generate up to 40-60 percent of their regional revenue and income from the Kingdom, so the policy makes sense.

“Moving regional offices to Riyadh will create job opportunities for Saudi youth (men and women), and in turn will help reduce unemployment rates that reached 14.8 percent in the third quarter of last year,” Hafiz said.

Taimur Khan, an associate partner at real estate consultancy Knight Frank, said over recent years Saudi Arabia has already seen a significant amount of foreign investment.

He added that in the first nine months of 2020 alone, the Ministry of Investment granted 812 foreign investment licenses despite lockdown periods and intermittent border closures.

“This announcement is likely to further support and encourage such activity, which in turn will have positive implications for the Kingdom’s real estate market, and this will not be limited to just its commercial real estate sector,” Khan said.

Ali Al-Hudaif, CEO of Al-Sudais Transport, said the influx of potentially hundreds of international companies to the Kingdom will help raise standards among local businesses.

He added that the move will be good for local small and medium enterprises as it will open up the market, and may lead to more mergers and acquisitions involving local firms and international brands looking to get a foothold in the Kingdom in order to comply with the new rules.

Setting a deadline of 2024 gives international companies time to prepare and evaluate where they want to set up their new headquarters, Saudi economist Fahad bin Juma’a told state TV channel Al Ekhbariya. “If they want to deal with Saudi Arabia then they need to come to Riyadh,” he said.

The timing also gives the Kingdom time to get its marketing in place, to help companies move employees and integrate internal processes.

“It’s important to identify the cultural dimensions, including education research, habits and traditions, historical museums, tourism, arts, sports, industry and investments. Marketing of cities is important for city development,” Dr. Eman Al-Shammari, deputy dean of the College of Economics and Administrative Sciences at Imam Muhammad bin Saud Islamic University, told Arab News.


Battery prices need to fall before Mideast motorists embrace electric vehicles says Nissan official

Battery prices need to fall before Mideast motorists embrace electric vehicles says Nissan official
Updated 01 March 2021

Battery prices need to fall before Mideast motorists embrace electric vehicles says Nissan official

Battery prices need to fall before Mideast motorists embrace electric vehicles says Nissan official
  • Middle East gearing up for transition to electric vehicles: Senior Nissan official
  • Drop in battery prices, improved infrastructure key drivers in move toward EVs

RIYADH: Saudi Arabia is leading the regional push towards electric vehicle (EV) adoption but battery prices remain a worry for motorists, according to a top Nissan official.

Guillaume Cartier, senior vice president of marketing and sales at the Japanese motor manufacturer said that the speed of introduction would depend on a fall in battery prices to a level that made the cost of an EV equivalent to that of a regular car.

Speaking to Asharq Business, Cartier said that a comprehensive infrastructure for charging EVs was needed before a successful transition could happen.

He noted that there was an intention to switch to EVs and that the region was moving from a mentality of pioneering the adoption of EV technology to a real desire to provide it.

Saudi Arabia has already put itself on the path to adopting EVs and the Saudi Standards, Metrology, and Quality Organization has approved imported EVs and allowed local agents to start bringing the vehicles into the Kingdom.

Other initiatives taken by the government may contribute to the promotion of EVs.  These include Saudi Electricity Co.’s 2018 agreement with Nissan for the first EV pilot project in the country that included the development of fast-charger EV stations.
 


Oman orders partial commercial shutdown from March 4-20, state TV

Oman orders partial commercial shutdown from March 4-20, state TV
Updated 01 March 2021

Oman orders partial commercial shutdown from March 4-20, state TV

Oman orders partial commercial shutdown from March 4-20, state TV

DUBAI: All commercial activities in Oman will close from 8 p.m. to 5 a.m. local time in the period from March 4 to March 20, as part of measures to combat the spread of the coronavirus, Oman State TV reported on Monday.


Saudia signs new flight deal to help boost e-commerce

Saudia signs new flight deal to help boost e-commerce
Updated 01 March 2021

Saudia signs new flight deal to help boost e-commerce

Saudia signs new flight deal to help boost e-commerce

RIYADH: Saudi Arabian air freight flag carrier Saudia Cargo is to operate five weekly flights from Hong Kong to Liege in Belgium, with Riyadh as a connection point, in a bid to help boost e-commerce links between Europe and China.

The new flights are as a result of the signing of a cargo agreement with IT and logistics operator Cainiao Network, the logistic arm of Alibaba Group.

Cainiao logistic services cover more than 200 countries, while Alibaba Group is one of the largest e-commerce brands in the world. Its total revenue for the last three months of 2020 was up 37 percent to $34.2 billion.

Saudia Cargo CEO Omar Hariri said: “We are excited for this strategic agreement (with Cainiao) which will enhance logistic services between the two continents through the famous Alibaba’s e-commerce platform and its high traffic of online shoppers.

“This agreement is part of our framework to transform the Kingdom into an open gate for world trade and a bridge connecting East and West by leveraging its strategic location in the center of the world. Other promising partnerships will be coming up in the near future to reinforce logistic operations of Alibaba in both continents,” he added.

William Xiong, Cainiao’s chief strategist and general manager of export logistics, said: “We are happy to launch a collaboration with Saudia Cargo. Both our sellers and customers from China, Saudi Arabia, and Europe will benefit from the new flights that will decrease delivery time for their parcels.

“Expanding our logistics network into new regions will also help us in building efficient global exports networks. This new route will be one of the key elements to create seamless logistics and increase synergy between different regions.”


Egypt offers $820m worth of treasury bonds

Egypt offers $820m worth of treasury bonds
Updated 01 March 2021

Egypt offers $820m worth of treasury bonds

Egypt offers $820m worth of treasury bonds

CAIRO: Egypt is offering treasury bonds worth EGP13 billion ($820 million) in a bid to finance the country’s budget deficit.

The Central Bank of Egypt on Monday announced that the value of the first offering amounted to EGP5 billion for a period of three years. The second offering would be EGP7 billion for a period of seven years and the third around EGP1 billion for a 15-year term.

The Egyptian Ministry of Finance recently announced the possibility of reducing the acceptable quantities of bids for bills and bonds on the public treasury, issued in local currency, until the end of the current fiscal year.

Egypt’s deficit rose to $2.8 billion in the July-September quarter, up from $1.4 billion in the same quarter of 2019, as the North African country felt the economic impact of the coronavirus disease (COVID-19) pandemic.

Revenues from tourism fell by almost 70 percent last year, while net foreign direct investment was down 31 percent year-on-year to $1.6 billion, Reuters reported in January.

In May, the International Monetary Fund (IMF) approved Egypt’s request for emergency financial assistance of $2.772 billion to combat the impact of the pandemic.

“The government of Egypt has responded to the crisis with a comprehensive package aimed at tackling the health emergency and supporting economic activity,” Geoffrey Okamoto, first deputy managing director of the IMF, said at the time.

“As the crisis abates, measures to lower the debt level would need to resume along with continued implementation of structural reforms to increase the role of the private sector to achieve higher and inclusive private sector-led growth and job creation, unlocking Egypt’s growth potential and entrenching resilience,” he added.


Emirates allows passengers to purchase entire rows as pandemic upends travel habits

Emirates allows passengers to purchase entire rows as pandemic upends travel habits
Updated 01 March 2021

Emirates allows passengers to purchase entire rows as pandemic upends travel habits

Emirates allows passengers to purchase entire rows as pandemic upends travel habits
  • It comes as passengers seek out more space on planes amid a pandemic that is forcing airlines to re-think the entire flying experience

DUBAI: Emirates passengers can now purchase up to three empty adjoining seats on their economy class flights.
It comes as passengers seek out more space on planes amid a pandemic that is forcing airlines to re-think the entire flying experience
The Dubai carrier said the new scheme will be offered to all economy class customers with a confirmed booking, but there will be no option to pre-book the empty seats.
Customers can only purchase the seats, which cost $55 to $165, upon airport check-in.
Emirates said the move was based on customer feedback, particularly on seeking extra privacy and space while flying economy class.
Customers who are likely to purchase extra seats include couples, parents traveling with in-lap infants, and those who want to be socially distant while travelling amid the pandemic.

Gulf airlines are seeking new ways to encourage passengers to return to flying as the industry grapples with continuing international travel restrictions.
The International Air Transport Association (IATA) now expects that the airline industry will remain cash negative throughout 2021.
“With governments having tightening border restrictions, 2021 is shaping up to be a much tougher year than previously expected,” said Alexandre de Juniac, IATA’s Director General and CEO.
“Our best-case scenario sees airlines burning through $75 billion in cash this year. And it could be as bad as $95 billion.”