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

 


UAE and Saudi Arabia among biggest sources of remittances in 2020

UAE and Saudi Arabia among biggest sources of remittances in 2020
Updated 6 min ago

UAE and Saudi Arabia among biggest sources of remittances in 2020

UAE and Saudi Arabia among biggest sources of remittances in 2020
  • Remittances from Saudi Arabia have been slowly declining since 2015 as oil prices have moderated

DUBAI: The UAE was the second largest source of remittances globally in 2020, followed by Saudi Arabia, according to the latest report from the World Bank.

The US was the biggest source country, sending $68 billion abroad last year, while the foreign workers in the UAE sent home $43 billion and those in Saudi Arabia transferred $35 billion, said the report, published Thursday. Among middle-income countries, immigrants to Russia were the biggest remitters, sending $17 billion.

Remittances from Saudi Arabia have been slowly declining since 2015 as oil prices have moderated and the government has encouraged hiring of nationals. For instance, foreign workers sent $1.8 billion to the Philippines in 2020, down 36 percent from 2015.

Despite the large drop in foreign workers in the GCC, remittances from Saudi Arabia held up in 2020 thanks in part to the cancelation of travel to Saudi Arabia, which diverted funds set aside for the Haj pilgrimage to remittances to Bangladesh and Pakistan, according to the report. Both of those countries offered tax incentives last year to boost remittances from migrant workers abroad, while a devastating flood in July 2020 also led to an increase in payments.

Remittances to the Middle East and North Africa rose by 2.3 percent to about $56 billion in 2020, following a 3.4 percent increase in 2019, the report said. The gains came amid unexpectedly strong inflows to Egypt (up 11 percent to a record $30 billion), the fifth-largest recipient of remittances globally, and to Morocco (6.5 percent to $7.4 billion). Tunisia saw a 2.5 percent increase, while other countries, including Lebanon, Iraq, Jordan, and West Bank and Gaza all experienced double-digit declines.

Globally, remittances to low- and middle-income countries fell 1.6 percent to $540 billion, a smaller decline than expected, the World Bank said. The figure is forecast to increase to $553 billion this year and to $565 billion in 2022.


Turkish lira falls to weakest level this year

Turkish lira falls to weakest level this year
Updated 13 May 2021

Turkish lira falls to weakest level this year

Turkish lira falls to weakest level this year
  • Turkish currency weakens on inflation data
  • Latest losses focus attention on forex reserves

BENGALURU:Turkey’s lira fell to a six-month low on Thursday as risks of tighter US monetary policy after strong inflation data weighed on most emerging market assets, with stocks set for their worst day since late March.
The lira fell around 0.8 percent to 8.4968 against the dollar, just a few points shy of its 8.5789 record low. The currency was likely subject to offshore selling on Thursday, given that Turkish markets were closed for a holiday.
Recent losses in the lira have brought the focus back to Turkey’s shrinking foreign exchange reserves, as well as its central bank, which is hesitant to tighten policy even as inflation surges.
Data on Wednesday showed US consumer prices increased the most in nearly 12 years in April, raising expectations that the US Federal Reserve will tighten its monetary policy sooner than signalled.
The MSCI’s index of emerging market currencies fell 0.2 percent, its third day of declines, as the dollar advanced and yields on 10-year Treasuries marked their biggest daily rise in two months.
The MSCI’s index of emerging market stocks plunged 1.3 percent to a seven-week low.
“With yields moving higher and inflation expectations becoming increasingly un-anchored from 2 percent, expectations grew that the Fed might have to start normalizing monetary policy earlier than previously expected,” said Marshall Gittler, Head of Investment Research at BDSwiss Holding.
“There’s going to be a real struggle for control of the narrative between the Fed and the market for the next few months,” added Gittler.
The Russian rouble strengthened on Thursday, up 0.2 percent, recovering some losses sustained on Wednesday. Bloomberg reported that the country was planning bond buybacks to fix its COVID-ravaged debt market. (https://bloom.bg/33BhvxY)
South Africa’s rand held steady as higher gold prices outweighed interest rate risks and a stronger dollar.
Most Central European currencies gained on Thursday with the Czech crown, Hungarian forint and Polish zloty gaining between 0.2 percent and 0.3 percent.
Still, JPMorgan reiterated its underweight position in Central and Eastern European local bonds and currencies, warning of “taper tantrum” risk as central banks tighten monetary policy.
Central bank bond purchase programs in Hungary and Poland — to support their economies through the coronavirus crisis — have been among the largest in emerging markets over the past year.
Asian currencies and stocks declined, while Taiwan stocks dropped 1.5 percent and the dollar eased 0.2 percent on fears of a COVID-19 resurgence and as the island started a rotational electricity blackout after a major outage at a coal plant.


Carlos Ghosn says he cut salary because of public opinion, court hears

Carlos Ghosn says he cut salary because of public opinion, court hears
Updated 13 May 2021

Carlos Ghosn says he cut salary because of public opinion, court hears

Carlos Ghosn says he cut salary because of public opinion, court hears
  • Ghosn’s testimony was presented as evidence by Kelly’s defense attorney

RIYADH: Carlos Ghosn told prosecutors during his detention in late 2018 that there was no legal obligation for Nissan to pay any deferred compensation that was voluntarily waived, according to statements read aloud in court during the trial of former director Greg Kelly, Asharq Business reported.
“The reason I cut my salary was because of public opinion, and to preserve the motivation of Nissan employees,” Ghosn told prosecutors at the time, according to testimony read by Kelly’s attorney in Tokyo District Court last Tuesday. Kelly has denied charges that he helped Ghosn not report his wages at more than 9 billion yen ($ 83 million), the news site said.
Actions against Kelly, 64, is about to enter its final stage. Kelly is due to stand in front of the podium, eight months after hearing testimonies from current and former carmaker executives, experts and other witnesses. Although Ghosn fled Japan from what he called an unfair legal system at the end of December 2019, his presence loomed large on the horizon during the trial, Asharq Business reported.
In comments translated into Japanese and then into English, Ghosn said: “As a businessman, I had hoped that Nissan, or through the alliance, would legally compensate me. People around me wanted to find ways to legally compensate me. They wanted me to stay in April.”
Ghosn’s testimony was presented as evidence by Kelly’s defense attorney, as well as by prosecutors, and Nissan, who was also accused of providing false information about Ghosn’s compensation. Despite the presence of Nissan’s defense attorney in court, the company has not actually appealed any dispute.
The arrest of Ghosn and Kelly in November 2018 caused a major uproar in companies and in the legal community, and its resonance continues to this day. Nissan has recorded low profits for a decade and has embarked on a cost-cutting plan to transform itself. The carmaker’s alliance with Renault SA and Mitsubishi Motors has also collapsed. The Americans, Michael and Peter Taylor, were extradited to Japan to face accusations of helping Ghosn flee the country, and the first hearing will take place next month.
Ghosn is now in Beirut, and he’s trying to restore his reputation. Besides conducting interviews, Ghosn has also launched a website, published a book, and is working on a documentary. Tuesday’s court testimony is a rare glimpse of what the former auto company’s CEO told prosecutors while in detention in Tokyo.
Ghosn, who was arrested twice in 2019, spent around 130 days in prison before being released for the last time in April of that year.
Ghosn told the prosecution office during his detention: “What I revealed was the amount I received, and if the deferred compensation was conditional, then this means that I understood that it is in a gray area. The reward will not be paid if the conditions are not met, and the amount should not be paid if it is not met. Disclose it. Compensation determined to be payable must be disclosed. “
Ghosn criticized the Japanese legal system, describing it as “a system of justice that violates basic principles of humanity.” The Japanese government described these allegations as unfounded, and accused the former CEO of spreading false information about the legal system in the country. The Justice Ministry also pledged to return Ghosn to Japan for trial, although this is unlikely, given that Japan does not have an extradition treaty with Lebanon.


British Airways cancels flight to Tel Aviv amid escalating conflict

British Airways cancels flight to Tel Aviv amid escalating conflict
Updated 13 May 2021

British Airways cancels flight to Tel Aviv amid escalating conflict

British Airways cancels flight to Tel Aviv amid escalating conflict
  • United Airlines, Delta Air Lines and American Airlines on Wednesday all canceled flights between the United States and Tel Aviv

LONDON: British Airways canceled its flights to and from Tel Aviv on Thursday, the latest international carrier to avoid flying to Israel amid an escalating conflict there.
“The safety and security of our colleagues and customers is always our top priority, and we continue to monitor the situation closely,” British Airways said.
United Airlines, Delta Air Lines and American Airlines on Wednesday all canceled flights between the United States and Tel Aviv.
The fiercest hostilities in years continued on Thursday, as Israel was preparing ground troops along the Gaza border and Hamas launched rocket barrages at southern Israel.
British airline easyJet said that it was not yet canceling its flights to Tel Aviv. Its next flight there is from Berlin and not scheduled until May 16, with a service from London Luton to Tel Aviv scheduled for May 18.
“We will of course continue to monitor the situation,” an easyJet spokeswoman said.
From May 17, Israel is one of the few low-risk COVID-19 destinations which Britons can visit without needing to quarantine on their return, but the conflict is already making getting there difficult and will likely deter visitors.


Iraqi Kurdistan producer Gulf Keystone to pay $25m special dividend

Iraqi Kurdistan producer Gulf Keystone to pay $25m special dividend
Updated 13 May 2021

Iraqi Kurdistan producer Gulf Keystone to pay $25m special dividend

Iraqi Kurdistan producer Gulf Keystone to pay $25m special dividend
  • KRG proposes amended terms for the payment of arrears because of the COVID-19 pandemic

DUBAI: Iraqi Kurdistan-based independent oil producer Gulf Keystone announced a special dividend of $25 million, citing strong oil prices and an improving economy.
The special dividend is in addition to an annual dividend of $25 million, both of which will be voted on at the company’s AGM on June 18, Gulf Keystone said in a filing to the London Stock Exchange on Thursday.
“We will continue to balance investment in growth and returns to shareholders as we develop and realise value from the Shaikan Field for the benefit of all stakeholders,” the company said in the filing.
Separately, Gulf Keystone said it had received a letter from the Kurdistan Regional Government (KRG) proposing amended terms for the payment of arrears because of the COVID-19 pandemic.
The KRG suggested that its monthly arrears payment be calculated as 20 percent (previously 50 percent) of the difference between the average Brent crude price and $50 per barrel, multiplied by the gross Shaikan crude volumes sold in a month. Outstanding payments between November 2019 and February 2020 stand at $65 million.
The proposal is yet to be discussed with the KRG or been accepted by Gulf Keystone, it said.
Gulf Keystone is the operator of the Shaikan Field, one of the largest developments in the Kurdistan Region of Iraq.