Mohammed bin Salman, the crown prince of Saudi Arabia known universally as MBS, is offering top-tier multinational businesses, including a 50-year tax exemption to move to the capital Riyadh, while he seeks to rehabilitate himself as a pro-business modernizer after the disastrous damage to the state-sanctioned reputation for Jamal Khashoggi’s murder.
The attempt to fill some of the 59 skyscrapers in Riyadh’s troubled King Abdullah Business Park with the headquarters of prestigious IT and financial companies, however, has not been successful.
Companies like Google and Siemens seem destined to maintain their regional centers in the United Arab Emirates (United Arab Emirates), despite being targeted by the initiative, codenamed Program HQ, according to a report published in London Financial Times. The program HQ is itself a part of MBS’s ten-year master plan to take the country out of oil revenues, Vision2030, which also includes building a vast $ 500 billion leisure city to try to rival Dubai as a tourism center.
Despite the failure to attract a star company yet, some large companies are increasing their presence in Saudi Arabia, opening or expanding offices in the park.
For example, Google Cloud agreed last month with Saudi Aramco, the state oil company, to provide infrastructure for cloud computing services, which will prompt the technology company to open its first office in the kingdom. Alibaba and Western Union have also increased their presence in the country and opened larger offices.
Influential Saudi officials were tasked with the difficult task of fulfilling MBS ‘wishes, attracting companies from neighboring jurisdictions such as Dubai and Abu Dhabi. These city-states of the United Arab Emirates are much more cosmopolitan and liberal than ultra-conservative Saudi Arabia, where alcohol is still completely prohibited, any appearance of Western social life is non-existent and women are second-class citizens.
MBS’s response to these social and gender restrictions, which are incorporated into Saudi Arabia’s Wahhabi culture, was to start working in a $ 500 billion tourist and leisure city called NEOM. NEOM will be 1,600 kilometers from Riyadh on the Red Sea, and otherwise prohibited Western pleasures will be allowed there. The tourist city will have a parallel legal system, chaired directly by MBS. While this should make foreigners feel safe, it may well have the opposite effect, given your reputation as a murderer.
Justin Scheck, the co-author of Blood and Oil, Mohammed bin Salman’s best-selling biography, told The Daily Beast, “The biggest challenge MBS has to remake the Saudi economy is to get foreign companies to invest in Saudi Arabia. Even before Khashoggi, the way foreign business leaders wanted to do business with him was different from the way he wanted to do business with them. They just wanted him to give them money. He wanted them to invest in Saudi Arabia. Despite all these temptations, this did not happen. “
Scheck says there are corporate doubts about the country’s ethical standards and that the Khashoggi case has made it “more difficult than expected” to attract big companies. Even Uber, in which the Saudis have a 5.3 percent stake, condemned the country and its leadership over the 2018 Khashoggi murder.
MBS made only symbolic gestures of transparency about the murder: eight unidentified agents were sentenced to seven to 20 years in prison for the murder of Khashoggi in a secret trial. MBS did not accept responsibility for the order of the murder, although the CIA and a UN investigation concluded that he was guilty. Saudi officials have never said what happened to Khashoggi’s remains after his body was cut with a bone saw at the country’s embassy in Turkey.
A new film, Oscar-sponsored documentary The dissident, will make it even more difficult for Saudi Arabia to continue with the lime. The film’s director, Bryan Fogel, gains access to the room where Khashoggi was killed and reports that his body was probably transported to the Saudi consul’s house and burned in a tandoori oven.
Scheck points out that even for companies prepared to ignore the country’s continued and blatant human rights abuses, the small population of Saudi Arabia is an important factor that explains why many Western companies are not interested in accepting MBS investment invitations, regardless of how many taxes breaks or special exclusions of local laws it offers.
“The only thing he can’t fix is that, however rich the country is, it has a population the size of Mexico City. So, why would you want to build an auto factory there? The local market is simply not big enough, ”says Scheck.
Understanding this demographic destiny, MBS is now urgently trying to attract international headquarters to fill the gap and help Saudi Arabia become a normal tax-based economy, rather than financed by the constantly depleting oil wealth.
For MBS, making this transition is now a deeply personal mission and one that he has staked his reputation on, so the personnel departments of foreign companies are being reassured that their employees can relax at NEOM. Although the strategy documents leaked last year included plans for a huge artificial moon, glowing beaches and flying taxi drones, the reality so far is that the project is just another troubled Saudi construction site, mired in allegations of corruption, death and neglect.
An expatriate living in Saudi Arabia told The Daily Beast that after the “Sheikhdown” in 2017, in which hundreds of prominent Saudis were detained at the Ritz-Carlton hotel and, in some cases, beaten and tortured until they signed confessions of corruption and handing over much of the government’s fortunes, there was little appetite for criticizing MBS: “Many people think that NEOM will be an absolute disaster. It looks like a city designed by a child. But nobody will say that. MBS could throw him in prison just for disagreeing with him. “
Scheck says these criticisms simply prompt MBS to double its lunar plans. “For MBS, its legitimacy as the country’s future monarch is linked to the success of Vision 2030. When people criticize things like NEOM, it just digs deeper.”
It seems likely that any small success in attracting tenants will be richly packaged as a regional triumph and revealed during the annual investor conference of the Public Investment Fund, the sovereign wealth fund chaired by MBS, and scheduled to start on January 27.
One executive told the FT he believed the kingdom hoped to use the conference to sign agreements with companies that had provisionally agreed to move from Dubai to Riyadh.
A Saudi government adviser informed of the plans said: “It is about attracting important international anchor tenants.”
The incentives offered include a 50-year tax exemption, exemption from employment quotas for Saudis and guarantees of protection against future regulations.
Another source with close connections to many senior Saudis who have been arrested by MBS or are currently suffering under house arrest told The Daily Beast: “The Saudi royals are very used to getting what they want. The vast majority of people in prison or detainees are not threats to him; he simply cannot tolerate the prospect that they might disagree. ”
The source points to the recent arrest of Loujain al-Hathloul, 31, the activist who led the successful campaign to allow women to drive. In December, it was announced that she was being sentenced to five years in prison. Your criminal record? “Asking for change.”
The source says: “It is simply not credible for large American companies to join a regime like this. They can get some bottom feeders. But companies with public participation in the cancellation culture? They will run a mile. “