Saudization not to be forced on companies that move their HQs to the Kingdom: Investment Minister

Saudization not to be forced on companies that move their HQs to the Kingdom: Investment Minister
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Updated 08 March 2021

Saudization not to be forced on companies that move their HQs to the Kingdom: Investment Minister

Saudization not to be forced on companies that move their HQs to the Kingdom: Investment Minister
  • Hundreds of opportunities to be on Invest Saudi online portal for investors to evaluate, Khalid Al-Falih said during appearance on Frankly Speaking
  • Spelling out details of new regulations for investors, he said a superficial nameplate saying 'this is the regional headquarters’ will not fly

DUBAI: Companies that choose to set up or relocate their headquarters in Saudi Arabia will not have Saudization forced on them, the Kingdom’s investment minister has told Arab News in the latest episode of Frankly Speaking, referring to the policy that requires companies to hire Saudi nationals on a quota basis.

Investment “is the name of the game,” Khalid Al-Falih said, adding that hundreds of opportunities will be on the Invest Saudi online portal “ready for investors to evaluate and take it to the next level of execution.”

Hand in hand with the investment drive, he said, the Kingdom is creating the environment for high-quality international experts to choose Saudi Arabia to be their home where they can even retire, and not only to be their workplace.

Al-Falih’s comments follow last week’s decision by Saudi Arabia to set certain rules for companies seeking to take advantage of the $3 trillion investment opportunities identified for international investors under the Vision 2030 strategy. This is the first his ministry has spelled out details of the new regulations, which are still being fine-tuned.

Al-Falih, who played an eminent role in the vital energy sector in Saudi Arabia before moving to the investment ministry last year, was appearing on Frankly Speaking, a recorded show where prominent Middle East policymakers and business leaders are questioned on their views about the most important issues of the day.

There has been speculation some companies might try to satisfy the new regulations by setting up a “nameplate” operation in Riyadh, while maintaining the real business hub elsewhere in the Middle East. But-Al Falih made it clear that multinationals wishing to bid for government contracts would have to show a serious corporate commitment to the Kingdom.

 

He said they will have to have a “major headquarters,” preferably in Riyadh, if they want to do business with the government.

“We would want to see the companies having a major headquarters office with executive staff; their C-suite being here; operations in other countries reporting to it; and support functions, whether it's training, product development, consolidation of regional operations, all taking place within their regional headquarters. So, a superficial nameplate saying 'this is the regional headquarters’ will not fly,” Al-Falih said.

Riyadh, which is the subject of ambitious plans to double its population over the next decade to become one of the top 10 urban economies in the world, is Al-Falih’s preferred location as these companies’ headquarters.

“Riyadh will be the predominant. If you look at other countries where regional headquarters have evolved over decades, we saw a trend within every country that there will be one business capital for that country, where the companies coalesce together, and the networking and the support services takes place,” he explained.

“We think it's useful for the companies to do that here in Saudi Arabia, rather than have them spread and then try to pull them together. We're encouraging Riyadh to be that city, by creating a special economic zone that will offer incentives.

“The message is that for those contracts that the Kingdom chooses to give through its procurement policy, we want to do it with companies who have their entire integrated operations here in the Kingdom, from the decision-making to the strategic development, to managing the execution of those government procurement and government contracts. That’s our interest and that's our right.”

It was up to the companies to decide the definition of the region the headquarters would serve, Al-Falih said, but he outlined official Saudi thinking on the issue: “As a government leader now but previously a leader within a private-sector enterprise, I see the Middle East and Africa and part of Western Asia as an integrated global market, and we see Riyadh as the anchor capital for that broader region.”

In addition to the option of employing non-Saudi talent, other Saudi cities likes Jeddah or Dammam could qualify as regional headquarters bases if the big global companies made a strong business case, he said.

“If somebody chooses to be in a different region because that’s closer to their customers or that's where it makes business sense for them, we will work hard to give them all of the support they need,” Al-Falih said.

The plan for Riyadh, in conjunction with the Royal Commission for Riyadh City, will make the Saudi capital an attractive proposition for global executives, he believes.

 

“We're building it out and creating a competitive advantage in livability that will be unmatched. We are attracting four additional schools in the next 12 months that will be opening up in Riyadh. These are first-class international schools. Compounds are being built, arenas for recreation, and sport events are being planned and are quite advanced,” Al-Falih said.

“The airport will be expanded and Riyadh will have one of the largest regional airports with more destinations and more passengers than any competing airport. That will be difficult to replicate in three or four cities in the Kingdom of Saudi Arabia.”

An influx of international executives and their families would add to the attractions of the city, and would incentivize Saudi citizens to seek employment in the private sector. “We are opening up the Kingdom, and creating the environment for expatriate staff not only to choose to work here but actually to enjoy living here, and to even retire after their employment obligations are fulfilled,” he said, adding that an existing premium residency program is being revised and upgraded just for this purpose.

“We think this mix of Saudis and expats, highly educated Saudis graduated from the best universities here in the Kingdom and around the world, will enrich these companies and make their operations more competitive to address the global markets,” Al-Falih said.

“We believe it will take place and we believe many Saudis will prosper and gain career opportunities, but (Saudization) is not going to be forced upon the companies who choose to move here.”

 

Companies that decide against a move to Riyadh would still be welcome to do business there. “Don't get me wrong — the companies who choose to have their headquarters elsewhere, I'm going to do as much marketing to them as I do to the ones who choose to be here,” Al-Falih said.

“We're still inviting those who for whatever reason choose not to have their headquarters here and the Kingdom will welcome them.”

In his view, the move to attract global companies, with the new rules due in 2024, was not too tough on multinationals. “On the contrary, I think we're extending our hand to our partners from the international community and making sure that the message is clear,” he said.

“The Kingdom has always been open for business. This is very much a market economy and a government that has always been open to the private sector.”

Al-Falih described the creation of the investment ministry by King Salman and Crown Prince Mohammed bin Salman as “quite a signal.”

“Investment is the name of the game here in the Kingdom. We are preparing the opportunities,” he said. “We have hundreds of opportunities that will be on the Invest Saudi digital portal, ready for investors to evaluate and take it to the next level of execution.”

Al-Falih said that there was still some way to go to reach the target of 5.7 per cent of GDP coming from foreign investment, but that Saudi Arabia showed an increase in FDI in 2020 compared to a global reduction of 42 per cent. “The trend is in the right direction in terms of absolute levels. We realize that this is a journey,” he said.

He also recognized that there was a need for the Kingdom to market itself better to attract International investment, but that the fundamental ingredients for foreign investors were in place. “I think at the macro level, people are recognizing that the Kingdom is one of the most stable countries in the world — politically, security, safety, quality of government and quality of governance,” he said.

Al-Falih said that his experience as chairman of Saudi Aramco and as energy minister had given him international contacts and a breadth of sectoral experience that would be an advantage in the big investment drive.

“Of course, our energy sector will always be the Kingdom's leading sector. But I always say that even beyond oil, this Kingdom will be a Kingdom full of energy, exporting energy and creating a lot of energy of different sorts,” he said.

 

 

 

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Twitter: @frankkanedubai

 


Oil rebounds above $76 on speculation virus fear overrated

Oil rebounds above $76 on speculation virus fear overrated
Updated 30 November 2021

Oil rebounds above $76 on speculation virus fear overrated

Oil rebounds above $76 on speculation virus fear overrated

LONDON: Oil rebounded by more than 5 percent on Monday to above $76 a barrel as some investors viewed Friday’s slump in oil and financial markets as overdone while the world awaits more data on the omicron coronavirus variant.

Brent crude was up $3.66, or 5 percent, at $76.38 a barrel by 1444 GMT, having slid by $9.50 on Friday. US West Texas Intermediate crude was up $4.36, or 6.4%, at $72.51, having tumbled by $10.24 in the previous session.

“We saw some correction as Friday’s plunge in oil prices has been overdone,” said Tatsufumi Okoshi, a senior economist at Nomura Securities.

Friday’s slide, the biggest one-day drop since April 2020, reflected fears that travel bans would hammer demand. The plunge was exacerbated by low liquidity owing to a US holiday and the expected demand hit does not justify such a fall, analysts said.

“The fear factor had its grip on financial markets on Friday,” said Norbert Ruecker of Swiss bank Julius Baer. “Fundamentally, the announced and enacted international air travel constraints cannot explain such a sharp slump.”

A semblance of calm also returned to wider markets on Monday as investors awaited more information about the new variant. European and Wall Street shares rose while safe haven bonds lost ground.

“I can’t help but feel that Friday’s lows were probably the bargain of the year if you were an oil buyer, speculative or physical,” said Jeffrey Halley of brokerage OANDA.


Egypt to issue $604m of treasury bonds

Egypt to issue $604m of treasury bonds
Updated 29 November 2021

Egypt to issue $604m of treasury bonds

Egypt to issue $604m of treasury bonds

CAIRO: The Central Bank of Egypt will issue 9.5 billion Egyptian pounds ($604.3 million) in treasury bonds on Monday to finance the country’s budget deficit.

The T-bonds will be issued in coordination with the Finance Ministry.

In a statement posted on its website, the central bank said the value of the first offering is 8 billion pounds for two years. The value of the second offering is 1 billion pounds for 5 years and the value of the third offering is 500 million pounds for a period of 10 years.

The government borrows through bonds and treasury bills and government banks are the largest purchasers of these financial instruments.

The Ministry of Finance estimated the financing gap for the state’s general budget during 2021/2022 at about 1.06 trillion pounds, compared to 997.733 billion pounds during the last fiscal year, an increase of 6.31 percent, which will be financed through borrowing and issuance of securities.

Egypt had received $2.7 billion from the International Monetary Fund.

The Monetary Policy Committee of the Central Bank of Egypt decided to keep the overnight deposit and lending rate and the central bank’s main operation rate unchanged at 8.25 percent, 9.25 percent, and 8.75 percent, respectively.

Last month, the committee announced that the interest rate would be fixed for the seventh time in a row this year.


Saudi Fund for Development signs two agreements with Pakistan worth $4.2 billion

Saudi Fund for Development signs two agreements with Pakistan worth $4.2 billion
Updated 29 November 2021

Saudi Fund for Development signs two agreements with Pakistan worth $4.2 billion

Saudi Fund for Development signs two agreements with Pakistan worth $4.2 billion

RIYADH: The Saudi Fund for Development on Monday signed two agreements worth $4.2 billion with Pakistan. The deals aim to support the Pakistani economy.

The first agreement includes a $ 3 billion deposit to the State Bank of Pakistan to support the country’s foreign currency reserve levels and mitigate the impact of the coronavirus disease pandemic. The second deal seeks to support Pakistan in financing oil derivatives trade with $1.2 billion.

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Thailand plans to boost tourism through bitcoin holders: Crypto wrap

Thailand plans to boost tourism through bitcoin holders: Crypto wrap
Updated 29 November 2021

Thailand plans to boost tourism through bitcoin holders: Crypto wrap

Thailand plans to boost tourism through bitcoin holders: Crypto wrap

RIYADH: The Tourism Authority of Thailand is working with the country’s regulators to make it easier and more convenient for visitors to spend cryptocurrency in the country, Bloomberg reported.

Thailand is laying the groundwork for becoming a positive crypto community with the aim of attracting cryptocurrency holders and promoting tourism in it.

The country is also hoping to recover some of the $80 billion in tourism revenue lost due to the COVID-19 pandemic and subsequent lockdown.

The plan is already being discussed with the Thai Securities and Exchange Commission, the Bank of Thailand, and Bitkub Online Co., the largest crypto exchange in the country.

The authority will create a new unit next year to handle the issuance of its crypto tokens, produce a wallet, and build a new tourism ecosystem, according to Bitcoin.com.

However, Thailand does not currently recognize cryptocurrencies as legal tender.

Adoption

Robert Kiyosaki, the author of Rich Dad Poor Dad, has revealed that he is buying more Bitcoin and ether in response to the alarming rise he sees in inflation.

Meanwhile, Blockchain protocol Moonlift has unveiled a new name and a new product release as part of a large-scale rebranding initiative.

The blockchain project will be known as MoonLift Capital and will launch a decentralized exchange that will enable token exchange and liquidity mining features, Bitcoin.com reported.

MoonLift is a community-driven project that aims to provide users with passive income using blockchain technology.

The blockchain protocol also provides a one-stop solution for upcoming crypto projects across marketing, fundraising, and community building services.

MoonLift Capital is also backed by numerous partners and advisors. One of the biggest names is the DeFi startup guide LaunchZone.

MoonLift Capital will offer new projects to Launchzone, providing them with a favorable position to launch their tokens via IDO.  

Daily trading

Bitcoin traded higher on Monday rising by 4.75 percent to $56,926 at 6:38 p.m. Riyadh time.

Ether traded at $4,313, up 5.80 percent, according to data from CoinDesk.


Oil demand expected to reach pre-pandemic levels despite omicron fears: Aramco CEO

Oil demand expected to reach pre-pandemic levels despite omicron fears: Aramco CEO
Updated 29 November 2021

Oil demand expected to reach pre-pandemic levels despite omicron fears: Aramco CEO

Oil demand expected to reach pre-pandemic levels despite omicron fears: Aramco CEO

Dhahran: Aramco’s CEO is optimistic about oil demand growth next year despite fears over the new COVID-19 variant omicron. 

Oil demand will be over 100 million barrels per day in 2022, reaching pre-COVID19 levels, Amin Nasser told Arab News during a media briefing at the company's headquarter today.

On COVID-19’s new strain, he said that “the markets overreacted,” adding that the impact of omicron on demand cannot be measured without a full medical assessment.  

Nasser’s remarks came during a ceremony in Dhahran to kickoff development of the unconventional gas field Jafurah.