The Saudi Regional Headquarters(RHQ) Program limits the scope of multinational corporations (MNCs) toeffectuate government tenders from January 2024. The possibility of governmenttendering for MNCs will be severely affected, unless timely measures are takento comply with the guidelines, as set out, under the RHQ policy. The Ministryof Investment, Saudi Arabia (MISA) and the Royal Commission for Riyadh City(RCRC) have collectively expressed an intention to diversify the economy ofSaudi Arabia, by encouraging foreign companies to relocate their regionalheadquarters to the Kingdom, if the latter wish to continue procuringgovernment tenders after January 2024. This has also been made official throughthe announcement dated February 15, 2021, published by the Saudi Press Agency.
As per the guidelines proposed byMISA, a RHQ is defined as "a unit of a multinational group that is dulyestablished under the laws of Saudi Arabia for the purpose of supporting,managing and providing strategic direction to its branches, subsidiaries andaffiliates operating in the MENA region". Furthermore, the RHQ programprovides that the foreign companies which are willing to execute futuregovernment contracts in Saudi Arabia will have to mandatorily obtain a RHQbusiness license. However, optional compliance requirements, under this mechanisminclude carrying out strategic directional and managerial functions along with aminimum of three operational activities.
Many companies such as the BakerHughes Co., KPMG and Schlumberger have already received their licenses as onOctober 27, 2021 for carrying out profitable business in the Kingdom of SaudiArabia. Moreover several other companies that have signed up for receiving thebenefits provided by the RHQ program include Deloitte, PepsiCo, Unilever,Siemens Mobility and Philips.