How Saudi Arabia’s Programme HQ plan will affect the Gulf tech sector

A new policy stipulates that companies must move their regional HQ to Saudi Arabia or miss out on billions of dollars in government contracts. How will this affect the tech market for buyers and sellers?

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Beginning on January 1, 2024, companies that want to participate in contracts with the Saudi Arabian government and state-backed institutions must move their Middle East headquarters to the country. The policy aims to boost the Saudi economy but has the potential to affect the availability of technology used by organizations in the region, as well as business for tech vendors.

The policy, dubbed Programme HQ, aims to limit economic leakage and create more jobs in the kingdom by ensuring that more goods and services used by government entities are produced locally.  The Ministry of Investment believes that the programme’s incentives — including a 50-year tax holiday and preferential selection for government tenders — will lure many top international companies to set up their regional base in Riyadh.

Tech companies that decide to maintain their regional headquarters elsewhere will still be able to do business with the private sector in Saudi Arabia. However, even Saudi companies in the private sector rely on state-backed contracts for the majority of their business, and so may be prevented from using technology from companies that do not have headquarters in the country.

HQ plan stirs up tension between KSA, UAE

The announcement has stirred up tensions between Saudi Arabia and the UAE, currently the region’s top hub for talent in the tech industry. Many view the news as an ultimatum, others see it as fostering healthy economic competition between two historic allies with ambitious diversification strategies, offering mutual opportunities for growth.

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