127 Firms Move Regional HQs To Saudi Arabia In 1Q 2024, Recording A Giant Leap Of 477%
As many as 127 international companies have relocated their regional headquarters to Saudi Arabia during the first quarter of 2024. These figures showed a giant leap of 477 percent compared to the same period in 2023. This confirms that the local market continues to attract these headquarters looking for most attractive and favorable investment environment in the Kingdom.
The efforts of the Saudi Ministry of Investment focused on providing a safe and more competitive investment environment, and working to develop investment systems and procedures with its partners from government agencies, in order to complement the legislative and regulatory structure, as legislation plays a decisive role in enhancing the environment and attracting capital to the Kingdom.
Saudi Arabia initiated new tax incentives for multinational companies for moving their regional headquarters that aim to determine the provisions related to the tax incentives granted. These include a 30-year exemption on corporate income tax and withholding tax related to headquarters activities, alongside exclusive discounts and comprehensive support services such as relocation, concierge, facilitation, and professional advice. This initiative marks a pivotal shift in Riyadh’s global economic role, reinforcing Saudi Arabia’s vision to diversify its economy and reduce its dependence on oil.
According to a recent report issued by the Ministry of Investment, it was able to address 34 of the challenges facing investors, whether legislative or procedural, an increase of 89 percent, compared to the first quarter of last year. It also dealt with 445 applications for an investor visit visa, which is granted to investors from outside the Kingdom to enable them to visit the country and explore investment opportunities there.
The ministry has provided more than 58,000 services through its electronic platform, an increase of 29 percent over the same period in 2023, while the provision of advisory services through comprehensive service centers increased to represent 40 percent of the total services provided.
The Saudi market witnessed the completion of 64 investment deals in the first quarter of this year, of which innovation and entrepreneurship accounted for the largest share in terms of number due to investors’ interest in this activity with about 34 deals, followed by sports with approximately 12 deals. The United States ranked first in terms of closed deals, with about 11 deals while the United Kingdom came second with about 5, and it was followed by the UAE and Singapore with 3 deals each, and the rest were distributed among 6 other countries.
The ministry issued 3,157 licenses in the first quarter of 2024, an increase of 93 percent compared to 1,637 licenses in the same period of the previous year after excluding licenses issued under the campaign to rectify the status of violators of the Anti-Commercial Concealment Law, while the total investment licenses issued reached 3,197 licenses in this period.
In general, most of the investment licenses issued were concentrated in construction activity, manufacturing industries, professional, educational and technical activities, information and communications, accommodation and food services and activities, wholesale and retail trade, and vehicle repair, and the number of licenses issued in these activities constitutes about 81.8 percent of the total.
Real estate activity has the highest growth in investment licenses issued during the first quarter of 2024 compared to the same period last year, with a growth rate of 253.3 percent, followed by professional, educational, and technical activities, agriculture, forestry, and fishing, at 141.5 percent and 129.4 percent respectively.
Given the legal status of the companies that issued investment licenses in the first quarter, the number of licenses for single-person limited liability companies reached approximately 2,112 licenses. Limited liability companies recorded 754 licenses, while the rest of the 331 licenses were distributed among other types of companies.
Egypt was the topper in terms of the number of investment licenses issued with 950 licenses, followed by Yemen with 346, then India with 321 licenses, while Syria and Pakistan came in fourth and fifth place with 180 and 159 licenses respectively.
The report revealed that foreign direct investment flows into the Kingdom increased by 32.2 percent on an annual basis in the fourth quarter of last year, while the balance of foreign direct investment in this period witnessed a growth of 1.7 percent. According to the report, the Kingdom achieved advanced positions in a number of international indicators for the years 2023 and 2024, as it ranked first in both the indicators of total venture investment and the index of confidence in the government, as well as the consumer confidence index for investment. It ranked second in both the Consumer Confidence Index and the Global Competitiveness Index in Cybersecurity.
The Ministry of Investment, in coordination with other government agencies, plays a fundamental role in promoting investment and attracting investors through organizing and participating in a number of events, as it organized and participated in 13 local and international events during the first quarter of 2024, in various fields, such as the real estate sector, industry, sports, technology, and mining.
The report highlighted investment in the Kingdom’s coastal tourism, which combines luxury, the natural beauty of the islands, and distinctive cultural landmarks, by providing a group of exclusive and unique experiences for tourists coming from different parts of the world.
