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Saudi Arabia approves contracting regulations for non-Saudi firms

Directive related to Regional Headquarters Program
Saudi Arabia approves contracting regulations for non-Saudi firms
Kingdom's RHQ program is scheduled to become effective January 1, 2024

Saudi Arabia’s cabinet has approved legislation governing contracts for firms without regional headquarters in the kingdom.

Following the cabinet’s approval, The Regional Headquarters (RHQ) program is scheduled to become effective as of January 1, 2024.

In December 2022, Saudi Arabia’s Council of Ministers issued a resolution approving the regulations for government agencies’ contracts with firms that do not have an RHQ in Saudi Arabia and the parties associated with them.

Contracting regulations

The regulation will not apply to government works and purchases whose estimated value is less than SAR1 million. The decision comes days before the deadline, January 2024, for firms to move their regional headquarters to Saudi Arabia. Otherwise, firms will risk not being able to secure government contracts worth hundreds of billions of dollars.

The statement did not reveal the contracting regulations. Therefore, it is not clear whether they allow the Saudi government to award contracts to foreign firms that do not have an RHQ in the kingdom.

According to Reuters, which published the report, Saudi officials have not yet responded to their requests for comments at the time of writing.

Read: Saudi Arabia’s The Avenues Khobar secures SAR4.35 billion funding

Moving the economy away from oil

Saudi Minister of Finance Mohammed Al-Jadaan told Reuters in October that the deadline for a move to the kingdom would be enforced, even as foreign firms struggled to meet the deadline amid unclear regulations.

This decision is part of the efforts of Crown Prince Mohammed bin Salman to move the economy away from oil. It is also meant to attract foreign direct investment to the kingdom.

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