Goldman Sachs has distinguished itself as the pioneering Wall Street financial institution to align with Saudi Arabia’s Regional Headquarters (RHQ) policy, acquiring a permit to establish its central Middle Eastern hub in Riyadh. With the kingdom’s recent policy, enacted from January 1, 2024, firms are mandated to set up a regional office in Saudi Arabia, staffing a minimum of 15 personnel, including top-tier C-suite executives to supervise international operations. Incentives provided by Saudi Arabia include a 30-year tax holiday and eligibility to engage in business endeavors with state agencies, including the colossal $1 trillion Public Investment Fund.
Debuted in 2021 to counteract ‘economic leakage’—a phrase coined by the Saudi government to describe national expenditures that trickle to enterprises lacking a robust presence within the nation—the RHQ initiative is a cornerstone of Vision 2030. This program is designed to lure foreign investment, create job opportunities for its burgeoning, well-educated populace, and pivot the economy from its traditional oil reliance. The year 2023 saw non-oil revenues in Saudi Arabia surge to 50% of the GDP, an unprecedented level. Moreover, this shift in policy intensifies the kingdom’s rivalry with the United Arab Emirates, historically the primary commercial and financial nexus in the Middle East, where international corporations typically manage their regional operations from Dubai while maintaining minor offices in Saudi Arabia.
The plan appears to be gaining traction. Over 400 international corporations have received regional headquarters licenses in the kingdom, as per Minister of Investment Khalid Al-Falih. This roster includes tech behemoths such as Amazon, Alphabet, Google and Microsoft, alongside consultancy and auditing firms like PwC and Deloitte, and consumer goods conglomerates such as PepsiCo and Unilever. Nevertheless, global banking entities have displayed hesitation moving to Riyadh, expressing concerns regarding regulatory transparency and the potential challenges of adapting a Western workforce to Saudi Arabia’s stringent societal and cultural norms. Despite these apprehensions, it’s improbable that global banks will allow Goldman Sachs to monopolize the promising and largely untapped Saudi market indefinitely.