In a significant reversal of one of its most closely watched business regulations, the Government of Saudi Arabia RHQ Policy has officially allowed state entities to contract with international companies that do not maintain a Regional Headquarters (RHQ) inside the Kingdom. The updated directive, confirmed this week by officials from the Ministry of Investment and the Ministry of Finance, marks a major shift from the rule first announced in 2021, which intended to mandate RHQ presence in Riyadh for companies seeking government contracts from 2024 onward.
This change comes amid evolving economic priorities under Vision 2030, as Saudi Arabia continues to push for diversified foreign investment, rapid infrastructure expansion and global partnerships across technology, energy, aviation, logistics, digital services and research sectors. Analysts say the reversal reflects Riyadh’s pragmatic approach to maintaining investor confidence while sustaining momentum in its giga-projects such as NEOM, The Line, Qiddiya, Red Sea Global and Diriyah Gate.
Senior officials have framed the shift as a “calibrated policy refinement,” designed to accelerate growth, remove administrative bottlenecks and signal openness to global businesses at a time when competition for foreign capital is intensifying across the GCC region.
Background of the RHQ Policy and Its Evolution
Saudi Arabia originally introduced the Regional Headquarters Program in 2021 with the goal of positioning Riyadh as the premier business hub for the Middle East and North Africa. The rule stated that from 2024 onward, foreign companies without an Saudi Arabia RHQ Policy inside the Kingdom would be barred from securing government contracts. The policy was backed by strong incentives including 30-year tax exemptions, relaxed Saudisation rules and licensing fast-track mechanisms.
By 2023–2024, more than 180 multinational companies, including global names across technology, consulting, aviation and finance, had registered RHQs in the Kingdom, signalling an early success for the initiative. However, many corporations expressed concerns regarding operational feasibility, high setup costs and the time required to shift major teams to Riyadh. Industry groups from the US, EU and East Asia regularly sought clarifications from Saudi authorities on exemptions and transitional arrangements.
The recent move to allow contracting with non-RHQ companies suggests the Kingdom is balancing its ambitions of becoming a regional corporate hub with the practical needs of ensuring global participation in government-led mega-projects and critical infrastructure sectors.
Government Statements and Policy Interpretation
Senior officials have publicly commented on the updated guidance to underline that the policy adjustment does not represent a reversal of strategic direction, but a “temporary operational flexibility” aimed at supporting the Kingdom’s expansion goals. A senior Ministry of Finance representative stated that the updated rule “ensures that large-scale national projects continue without delays caused by limited vendor availability.”
Officials from the Ministry of Investment emphasised that the RHQ strategy remains intact, but the new flexibility will help attract companies currently unable to relocate headquarters at short notice due to global market conditions, workforce constraints or structural challenges.
In remarks to local media, a senior Saudi economic adviser noted that the global supply chain environment and rising geopolitical uncertainties have made it essential for governments to adapt investment policies. He added that Saudi Arabia’s decision reflects “confidence in its long-term attractiveness” rather than reliance on regulatory compulsion.
Business councils from the United States, South Korea, Japan and the European Union have welcomed the updated rule, with several representatives describing the decision as “timely,” “pragmatic,” and “beneficial for Saudi Arabia’s competitiveness.”
Impact on Foreign Investors and Global Corporations
The policy shift is expected to significantly ease market access for hundreds of multinational firms that hesitated to establish RHQs due to operational commitments in Dubai, Doha, Abu Dhabi or other established hubs. For companies working in defence technology, AI systems, renewable energy, engineering, construction, pharmaceuticals, mobility and digital infrastructure, the removal of the RHQ contracting restriction opens direct access to multi-billion-dollar Saudi government tenders.
Many global companies have already expressed renewed interest in bidding for projects under NEOM, including the Industrial Valley, Trojena, Oxagon, transport networks and digital infrastructure. The updated rule also enhances the ability of international consulting, legal, auditing, architecture and engineering firms to participate in feasibility studies, design contracts and policy development roles.
Financial analysts expect an increase in contract participation over the next six months as companies reassess delayed bids. Investment groups have also noted that this move could help stabilise the foreign direct investment pipeline, which saw fluctuation due to global conditions and the earlier Saudi Arabia RHQ Policy restriction. For the private sector in Saudi Arabia, the shift may enhance competition, improve project quality and accelerate timelines.
Regional and Economic Implications Across the Gulf
Saudi Arabia’s policy update comes amid intensifying competition within the Gulf for foreign investment, global talent and corporate headquarters. The UAE, particularly Dubai and Abu Dhabi, remains a dominant hub for multinational operations, offering established infrastructure and long-standing corporate ecosystems. Qatar and Bahrain have also expanded incentives for global firms.
Analysts point out that by relaxing the Saudi Arabia RHQ Policy rule, Saudi Arabia is demonstrating its commitment to collaboration rather than confrontation within the region’s economic landscape. This may reduce pressure on foreign companies that operate Gulf-wide and rely on integrated cross-border networks.
The updated rule may also enhance economic efficiencies across mega-projects valued at more than $3 trillion, including Future Mobility initiatives, Green Hydrogen zones, mining projects under the Vision 2030 mining strategy, smart city expansions and public-private partnerships in healthcare and education.
From a macroeconomic perspective, the move aligns with Riyadh’s goal of raising non-oil GDP to more than 50% of the total economy by the end of the decade. Experts predict that the easing of restrictions could support economic diversification, attract specialised technical expertise and improve the pace of digital transformation across ministries and government authorities.
Outlook and Long-Term Strategic Context
While the Saudi Arabia RHQ Policy rule has been softened for government contracting, officials continue to emphasise that the Kingdom remains committed to building Riyadh as a global business capital. Incentive packages for RHQ establishment remain in place, and the government expects many companies to set up RHQs voluntarily due to expanding commercial opportunities in Saudi Arabia.
Policy scholars note that the update appears to strike a balance between ambition and practicality. By ensuring immediate access to global expertise while keeping long-term goals intact, the Kingdom avoids delays in giga-projects while maintaining its strategic economic vision. The government is also expected to introduce additional reforms in licensing, digital procurement and foreign ownership rules to further improve the investment climate.
The broader message from Riyadh is one of confidence and openness. Officials have reiterated that “Saudi Arabia RHQ Policy welcomes global partners,” and that economic transformation is best achieved through flexibility, collaboration and innovation. With rapid growth across energy, infrastructure, tourism, green technology and AI-driven industries, the recalibrated RHQ policy could strengthen Saudi Arabia’s position as one of the world’s fastest-growing economic ecosystems.
