24 multinationals, including PepsiCo, Schlumberger and Boston Scientific, told attendees at the FII investment forum in Riyadh last week that they are planning to establish regional headquarters in the Saudi capital. Their announcement was a sure sign that the KSA is beginning to rebuild a reputation that was badly tarnished by the murder of the journalist Jamal Kashoggi in Istanbul in October 2018. Riyadh’s growing appeal as a consumer hub was also in evidence at the two-day event, with the Canadian fast food chain Tim Hortons joining them in announcing it was setting up a base in the Saudi capital. Several senior executives at Oyo, the Indian hotel group backed by SoftBank’s Vision Fund, also confirmed that they will be moving into the chain’s new regional headquarters in Riyadh’s King Abdullah Financial District.
The FII announcements were evidently part of a carefully orchestrated campaign to raise Saudi Arabia’s image as a regional investment hub.The week before, Crown Prince Mohammed Bin Salman had announced ambitious plans to accelerate Riyadh’s drive to become one of the top 10 economies in the world and double the size of its population by 2030. “A key focus is to make it easier for global businesses to operate in the Kingdom,” said Fahd Al-Rasheed, president of the Royal Commission for Riyadh City. Creating the King Abdullah Financial District (ABFD) special economic zone opens the door for multinational companies to relocate to Riyadh. Now they can maximize first-mover advantage and take total control at the heart of their largest regional market.’ .
The Crown Prince’s plans puts the KSA in direct competition with neighbouring UAE and particularly Dubai. As the hub for the Emirates airline and thanks to its investment in the schools and other amenities that expatriate families look for, it enjoys a first-to-market advantage of its own. The ABFD is known to be struggling to fill its 59 towers, raising doubts about the viability of some of the kingdom’s other flagship projects, particularly The Line, a 105-mile strip of development that will enable residents of the even more ambitious 26,500 km² NEOM cross-border ‘green’ city to access all their facilities and amenities in a maximum five-minute walk. (Another of those 24 companies to pin their allegiance to the KSA at the FII last week was the US engineering company Bechtel, recently appointed as NEOM’s principal infrastructure contractor.)
Independently of the FII ‘coup’ several multinationals including Google, Alibaba and Amazon have recently also been quietly boosting their presence in the kingdom. According to a former Google government relations specialist who now advises tech firms on market entry, they have begun factoring in the Saudi economy’s long-term regional predominance. “Whichever trajectory you think Saudi’s economy will take, in ten years time it will still have the largest Arab economy; it will still have more oil than God; and it will still have a population nearly the size of Canada’s,” Sam Blatteis told the Financial Times.