Saudi Arabia says 44 global companies are moving their regional head offices to its capital.
The kingdom told companies in February that it'd cut off business if they didn't make such a move.
Critics decried the move as "corporate bullying" earlier, but it seems to be working as intended.
In February, Saudi Arabia issued a daring ultimatum to multinational companies: Shift your regional head office to the country by 2024, or the government will stop doing business with you.
The announcement was part of a full-scale push by Crown Prince Mohammed bin Salman to turn the Saudi capital, Riyadh, into a global center for finance, business, and logistics as the kingdom seeks to be less reliant on oil, which OPEC figures indicate make up 70% of its exports.
Investors and expats balked at the ultimatum at the time, with many saying it was a ploy to wrench business away from Dubai in the neighboring United Arab Emirates, where 90% of workers are foreigners. One veteran financier described it as "anti-competition" and "corporate bullying," per CNBC.
But the tactic seems to be working. Saudi Arabia announced on Wednesday that 44 international corporations, including PepsiCo, Siemens, and Unilever, were establishing their regional headquarters in Riyadh, local news reported.
-Abdulhadi Habtor (@Alhabtour) October 27, 2021
Hosam Alqurashi, the director of the kingdom's Regional Headquarters Program, said at the announcement that its capital was "witnessing the greatest art movement since the Renaissance," per Arab News.
The new total is up from the initial 24 corporations that in January said they'd move their regional offices to Saudi Arabia from Dubai.
Back then, officials tried to entice businesses with a 50-year corporate tax holiday and waivers for employment quotas.
The February ultimatum took a different spin. "Everyone is freaking out. We are used to governments offering carrots, but this time a big stick has come out of the bag," a regional manager of a multinational company told the Financial Times then. "Frankly, it's offensive."
Despite the backlash, Fahd al-Rasheed, the president of the Royal Commission for Riyadh City, told Reuters the Saudis' goal wasn't to "dismantle" business in neighboring countries.
"We are simply saying - you need to have your regional headquarters here because this is not simply a contract economy that you come in and come out," he said Wednesday. "We want to see you with us for the long term."
Al-Rasheed added that Riyadh wanted to get 480 companies to establish regional headquarters there by 2030 - also the deadline the crown prince set to diversify Saudi Arabia's economy.
Still, the kingdom may have some difficulty replicating Dubai's success.
The 2018 assassination by Saudi agents of the journalist Jamal Khashoggi, who had been critical of the royal house, soured the global reputation of Crown Prince Mohammed and left the kingdom's sovereign wealth fund vulnerable, Joel Rubin, a former deputy assistant secretary of state, told CNBC earlier this year.
Saudi Arabia has in recent years tried to shed its hardline-conservative reputation with changes like letting women drive and opening cinemas for the first time in decades. But it's yet to offer a lifestyle on par with the liberties that foreigners in Dubai can enjoy, like the freedom to drink alcohol, expats told CNBC.
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