Page 12 - DMEA Week 07 2021

DMEA POLICY DMEA

Firms face pressure to move

regional HQs to Saudi

SAUDI ARABIA COMPANIES were told this week that they must collaborating with state-owned Saudi Aramco,
relocate their regional headquarters to Saudi though there may be some ambiguity about
The move will be Arabia if they want to continue having access to Aramco’s position, given that around 1.7% of
brought into effect on government contracts. the company’s shares have been sold on the Tad-
January 1 2024. The move, which will be brought into effect awul All Share Index (TASI), the Saudi stock
on January 1, 2024, comes as Riyadh seeks to exchange.
create jobs and turn the capital into one of the Given the importance of the hydrocarbons
world’s top 10 city economies. industry, it may be that Riyadh will ringfence it
Speaking to the Saudi Press Agency, an offi- from the new legislation to ensure global com-
cial said that once the policy is implemented, petitiveness. However, Aramco has been push-
Saudi will cease contracting with companies ing local content through various significant
primarily based elsewhere in the region, with the initiatives, of which the in-Kingdom total val-
legislation applying to those working with Saudi ue-add (iktva) is the most important, and forms
agencies, institutions and government-owned a major part of its commitment to Saudi Vision
funds. 203.
The source noted that the decision had been With many energy companies having built
taken to incentivise the localisation of business a Gulf base in the UAE, the move will repre-
by foreign companies “to [create] more jobs, sent a clear challenge to the Emirates’ domi-
limit economic leakage, increase spending effi- nation of foreign direct investment (FDI) as
ciency, and guarantee that the main goods and the Kingdom seeks to knock it from the top
services purchased by the different government spot. That being said, Aramco already requires
agencies are made in the Kingdom with appro- strict compliance with local content from all
priate local content”. foreign partners and the company is building
No further clarity was provided on the defi- out the King Salman Global Maritime Indus-
nition of ‘region’; however, the source did say tries Complex at Ras Al Khair and the King
that regulations related to the decision would be Salman Energy Park (SPARK), both located
issued later this year. in the Eastern Province, where joint ventures
In the oil and gas sector, this news is likely are being developed to promote local energy
to start the countdown for services firms services and innovation. ™

P12 www. NEWSBASE .com Week 07 18•February•2021