The Competitive Advantage of Aligning Business Strategy with National Economic Priorities

Let us examine how this approach not only gives a big advantage by being on the same wavelength but also gives a real-life example of where Saudi Arabia is demonstrating such a strategy.

Can you please tell us, what does that mean for us if we choose the same strategy as our government?

To be specific, aligning our business strategy with national economic priorities is when we match the plans of company growth with the goals of a government for their long-term economic development.

So instead of being a mere observer, the company joins the host country in tackling a problem or realizing a visionary industry. This might involve:

• Bringing technology experts to the nations that are trying to convert their economy into digital.

• Starting a factory in the areas where the government desires that local companies should be present in the supply chain.

• Establishing decision-making centers at a level of a region where one country wants to create itself as a commercial hub.

If by the growth of your firm, the development of the host city is also achieved, you will no longer remain a simple supplier; on the contrary, you will become an invaluable partner.

3 Big Advantages of Strategic Alignment

1. You Get Priority Access to Giant Projects

The government is usually the largest buyer in an economy. When a country decides to carry out huge economic transformations, it puts actual money into those ideas.

If you are in line with such developments, your company will be right before the government tenders list, and you will have lots of state-backed contracts and strategic partnerships to your disposal. Companies that miss these points will never know what they have lost because these are the largest market opportunities.

2. You get access to incentives and regulatory speeds

Governments make things easier for companies that are aligned with their objectives. Based on where you carry out your business, alignment with national agendas may entitle you to:

• Years-long tax exemptions

• Faster granting of business licenses, corporate visas, and processing of licenses.

• Specific exemptions from local restrictions while growing your company.

Getting these advantages reduces running your business costs and also makes you market-ready much faster.

3. You Secure Long-Term Stability

Riding the wrong wave of governmental economic policies is dangerous. In fact, over-compliance is the way regulators penalize companies operating outside of their economic plans. On the flip side, when your business supports the local economy actively, you create strong local bonds of trust, easily move past any regulatory hurdle, and make a durable and stable local footprint.

Real-World Case Study: Navigating Saudi Vision 2030

One could say Saudi Arabia is the single most evident example of the change we are witnessing today. The Kingdom is actively changing its sources of revenue and gradually decreasing the level of dependence on oil by developing sectors like technology, infrastructure, tourism, and financial services through its Vision 2030 strategic plan.

To establish a successful commercial hub, the government of the Kingdom set up the program for regional headquarters (RHQ). This initiative allows the government to offer attractive incentives to multinational companies in return for their setting up a local management center. A necessary condition for a company securing a major government contract and benefitting from the program would be that it opens the local management center.

The Kingdom's RHQ license offers several exclusive benefits, including: 

• One of which is a 30-year tax holiday (0% corporate income tax and withholding tax for business operations falling under this category) Motaded

• An exemption from local recruitment quotas, known as Saudization, for 10 years Motaded

• A work visa limit of no quota plus government tender priority access. Motaded

The companies that spotted the opportunity early and became the RHQ licensee are not just a legal requirement for the country to meet; these companies have an unfair advantage over the foreign ones who didn't act.

How to Align Your Business Strategy

To begin applying this competitive strategy in your own growth, carry out three straightforward steps:

• Review Official Statements for Future Trends: Go back to the government policy documents that show the economic roadmap (Saudi Arabia's Vision 2030 is a perfect example). The ones that will get the largest investment are those goals.

• Figure Out Where You Fit: You may ask yourself: Are we offering a solution that would support the realization of one of the main goals listed in these documents?

• Join Forces with Locals: Regulations, licenses, and incentives get updated or changed frequently. Having the knowledge about those changes is the only possible way of getting regulatory benefits as well as smooth setup. Local advisors are the people that you should have on speed dial!

Ready to Expand in Saudi Arabia? Partner with TASC KSA

Establishing a business or acquiring your license at RHQ in Saudi Arabia shouldn't be a headache. We at TASC KSA have all you need to take off. It is all the way from getting the approval of the MISA and the legal documents done to government relations and the recruitment of the right people. Thus, our team enables you to open for business without any problems and within no or hardly a few days.

Make your expansion plan compatible with Vision 2030, and then contact TASC KSA to talk over your business setting-up issues and start your growth in the Middle East journey.

Frequently Asked Questions (FAQs)

1. What is an RHQ license in Saudi Arabia?

An RHQ license in Saudi Arabia is a license issued specially by the Ministry of Investment (MISA) to multinational corporations. It enables these companies to open their regional headquarters in Saudi Arabia for managing and controlling their operations in the MENA region.

2. Is an RHQ license required to do business in Saudi Arabia?

It's not required for regular private sector sales. But if a business is looking to submit a bid for a Saudi government contract and the value exceeds SAR 1 million, then getting an RHQ license is an obligatory requirement.

3. What are the advantages of attaining an RHQ license?

Highlights of the benefits are a tax relief of 60 years for corporations and withholding tax on qualifying activities, a 10-year period free of Saudization requirements, preference for government contracts as tenders, and the privilege of a special visa for the employees and company directors.

4. Do you suppose that an RHQ is allowed to carry out selling activities in Saudi Arabia in a legal manner?

The answer is clearly no. A company under the umbrella of RHQ should be a holding company or an administrative headquarters. Therefore, in order to commercialize the products/services, the company should have a local business entity (for instance, a branch or registered license company) in Saudi Arabia through which the transactions are carried out by the company in the form of selling products or services.

5. How challenging is it to make business arrangements compatible with the domestic Saudi laws?

Different types of regulations, including rules regarding office space and number of top executives (as the example), have to be complied with before getting a company registered in the Kingdom or obtaining an RHQ license. With the help of experienced legal consultants, you would quickly and efficiently get the whole process of registration and licensing of the company done without any unnecessary stress, legal problems, or errors.