Saudi’s aggressive “Move In or Lose Out” ultimatum puts businesses on edge: Many international businesses and investors are working out their next moves after Saudi Arabia threatened to withhold government contracts unless they move their regional headquarters to Riyadh, a move that aims to pull multinationals from Dubai, according to the Financial Times. Businesses are being given until the beginning of 2024 to relocate, after which state-owned entities will “cease contracting with companies and commercial institutions with regional headquarters not located in the kingdom,” Saudi state news agency SPA reported last month.

This is all in service of MbS’s grandiose regional ambitions: Crown Prince Mohamed bin Salman (MbS) wants to establish Saudi Arabia as a regional business hub, attracting the world’s largest companies to set up shop in the King Abdullah Financial District — a huge development comprising 59 skyscrapers — instead of the UAE, the favored destination of most multinationals. The government is investing USD 220 bn to develop the city, with the ambition of transforming the capital into one of the world’s 10 biggest cities by the end of the decade.

Time for Plan B: MbS is resorting to Operation Arm Twist after his offer of lucrative tax breaks earlier this year failed to turn heads. In an initiative launched in January dubbed “Programme HQ,” the kingdom announced it would offer companies a 50-year exemption from corporate taxes, remove them from hiring quotas, and protect them from future regulations if they set up their headquarters in Riyadh. The programme didn’t go down as expected when only 24 companies agreed provisionally to move. “My sense is they didn’t get as big a splash as they would like so they have ratcheted it up,” a Gulf-based executive told the salmon-colored paper. “They wanted more like 100.”

The kingdom has leverage but…? Despite being the region’s largest economy, the world’s biggest oil exporter and the vast sums of government investment in the economy, many multinationals continue to have concerns about committing to Saudi Arabia. The country’s conservative culture and poor education, as well as its human rights record exemplified by MbS’s alleged involvement in the 2018 murder of journalist Jamal Khashoggi, all count against it.