Finance

King Abdullah Financial District helps grow FDI

November 3, 2023, 10:46 AM

Global consultancy business JLL recently announced the establishment of its regional headquarters in King Abdullah Financial District, joining other multinationals such as Pfizer, Bupa and Arthur D Little that are already set up there.

Launched in 2006 and located in northern Riyadh, KAFD plays an important role in Saudi’s push towards attracting foreign investments and multinationals within the kingdom.

“FDI doubled between 2020 and 2021 and non-oil sectors are growing rapidly. The government’s focus is on diversifying the economy and that’s where KAFD plays a significant role,” said Gautam Sashittal, CEO of KAFD.

However, inward investment into the kingdom dropped 59 percent last year, from $19.3 billion in 2021 to $7.9 billion in 2022, according to data released by Saudi Central Bank (Sama).

In an effort to ramp up foreign direct investment and attract global companies, it announced the launch of the regional headquarters programme, which limits the ability of Saudi government agencies to do business with multinationals that do not have head offices in the kingdom.

The programme, which will come into effect in January 2024, has already resulted in more than 80 companies setting up their head offices in the kingdom, many of which are in KAFD.

“We provide a business ecosystem free of charge,” said Sashittal. “Everyone you want to do business with will be in this district.

“We have Grade A office spaces of substantial size that is typically what a multinational organisation would want.”

Of the 1.6 million square metres developed in KAFD, 950,000 square metres is office space. That is a big “value proposition” for businesses, as occupancy of Grade A and B office spaces in Riyadh reached 99.9 percent and 99.4 percent respectively, according to CBRE.

KAFD is not yet a free zone, in which tax exemptions apply. But Saudi Arabia announced the launch of four special economic zones (SEZ) in April this year – King Abdullah Economic City (KAEC) SEZ, Jazan SEZ, Ras Al Khair SEZ and Cloud Computing SEZ located in King Abdulaziz City for Science and Technology.

These SEZs will offer incentives such as 5 percent corporate tax – as opposed to the standard 20 percent corporate tax – flexible regulations around foreign talent, no withholding tax on repatriation of profits to foreign countries and more.

Watch the full video to learn more about KAFD’s progress report, which includes a monorail in the works.