Saudi Arabia has eased a major restriction that previously barred foreign companies without a regional headquarters (RHQ) from bidding on government projects, introducing new exceptions to keep strategic initiatives on track while still encouraging local investment.
Earlier this year, the Kingdom rolled out a rule requiring foreign firms to have their regional HQ in Saudi Arabia to qualify for government contracts—a move aimed at making Riyadh a regional business hub. The policy was designed to attract multinational companies to set up shop inside the Kingdom, but also raised concerns about project delays and limited competition in key sectors.
Now, in a significant shift, Saudi authorities have created a flexible, exception-based framework. Ministries, government entities, and funds can seek special approval to contract with international firms that haven’t established a regional HQ in Saudi Arabia, particularly if a project demands specialized expertise or offers substantial cost savings.
To request an exception, government bodies must apply through the Etimad Platform, the Ministry of Finance’s digital procurement gateway, before starting the tender process. Exceptions may be granted for individual projects, groups of projects, or set time periods—especially when only one technically compliant bid is received or when a foreign firm’s offer comes in at least 25% cheaper than the next best competitor.
Projects under SAR 1 million are automatically exempt from the RHQ requirement, and tenders issued before the policy change will follow previous rules.
Officials say the revised approach balances Saudi Arabia’s goal of boosting local content and business presence with the need for global expertise and competitive pricing on strategic, high-value projects.
By introducing this exception mechanism, the Kingdom hopes to ensure efficient, timely delivery of major government initiatives while maintaining a strong push for regional headquarters investment.
