(Bloomberg) -- The United Arab Emirates can stand its ground against Saudi Arabia’s effort to redraw the Gulf’s corporate map by enticing multinationals to move their headquarters to Riyadh, according to Abu Dhabi’s Investment Office.
Competition is heating up across the region as governments prepare for a post-pandemic world and race to diversify their economies away from oil.
Saudi Crown Prince Mohammed bin Salman has said investment opportunities in the kingdom will amount to $6 trillion over the next decade, half of which represent new projects. The Arab world’s largest economy is offering incentives to convince multinationals in industries such as IT, finance and oil services to relocate their regional headquarters, the Financial Times reported this month.
Asked about the initiative by the UAE’s bigger neighbor, the director general of the Abu Dhabi Investment Office, Tariq Bin Hendi, said his country and its capital aren’t at risk of losing their “competitive advantage.”
“It all comes back to the positioning that you have, what is it that you have to offer, and what is a direct versus the indirect cost,” Bin Hendi said. “In fact, what it will do is it will help us enhance what we already have.”
The government entity known as ADIO is responsible for attracting investment to the wealthiest of the seven sheikhdoms that comprise the UAE.
It’s opening offices in eight cities across Europe, Asia and the U.S. and trying to help firms in key selected industries that choose to operate in Abu Dhabi get the support of the emirate’s sovereign wealth funds.
At stake are the UAE’s grip on regional commerce and the standing of Dubai as a stronghold for almost all large multinationals with a presence in the region. Abu Dhabi, home to one of the world’s largest wealth funds, has been accelerating a push to build up its technology sector and move away from slowing industries such as real estate and construction.
‘Major’ Newcomers?
ADIO received a lot of interest from companies last year including “major international institutions” looking to expand or operate in the region, despite the coronavirus pandemic, Bin Hendi said. Israel, which normalized political relations with the UAE last year, accounted for a lot of the outreach.
With 2 billion dirhams ($545 million) available for rebates, grants and other incentives, ADIO is accelerating a campaign to lure foreign companies and startups by also providing access and assistance to navigate the local market.
The focus is mostly on companies in fintech, IT, biotech and health care, Bin Hendi said. ADIO may shoulder some costs to help facilitate “knowledge transfer,” he said.
Companies “want to expand their reach and they want us to help them de-risk some of that initial expansion,” Bin Hendi said. “That’s the way our program is designed.”