Sipu Jha
Foreign companies without a regional headquarters in Saudi Arabia are no longer automatically out of the running for government contracts. Under a revised procurement framework, government entities may apply for structured exemptions, softening the strict 2024 relocation requirement while preserving the broader policy objective.
A targeted adjustment to the 2024 rule
From the beginning of 2024, government bodies were barred from contracting with foreign companies whose regional headquarters were located outside Saudi Arabia. The directive applied to all government agencies, institutions, funds and their affiliated entities.The new step does not cancel that decision. Instead, it introduces a structured pathway for exceptions in cases where projects require highly specialised technical expertise or where strong financial competitiveness justifies it.The Local Content and Government Procurement Authority has formally communicated the regulatory framework governing such contracts, including arrangements involving related parties.
How the exemption process works
Government entities may now submit a request to a designated committee seeking an exemption for:
- A specific project
- A group of projects
- A defined time period
The request must be filed before issuing a tender or initiating direct contracting procedures.To streamline the process, the authority has launched an electronic service through the “Etimad” digital platform. The service went live in November 2025 and is available to government entities that publish their tenders via the platform.For tenders published before the service was introduced, or those issued outside “Etimad”, the previously established submission mechanism will continue to apply.The “Etimad” platform serves as the Ministry of Finance’s official electronic portal for financial services. It supports the digital transformation of government operations and aims to enhance transparency and efficiency across budgets, contracts, tenders, payments and procurement processes.The system is also designed to strengthen interaction between government entities and the private sector.
When can bids be accepted?
The regulations clarify that companies without a regional headquarters in the Kingdom are not automatically excluded from public tenders. However, their bids will only be accepted under two specific conditions:
- If no more than one technically compliant bid is submitted, or
- If the bid, after comprehensive technical evaluation, is deemed the most advantageous and is at least 25 per cent lower than the second-best offer
Projects with an estimated value not exceeding SR1 million are exempt from these restrictions.
Headquarters relocation milestone
By early 2026, more than 700 international companies had relocated their regional headquarters to Saudi Arabia. This figure surpasses the original target of attracting 500 companies by 2030.The relocation policy was introduced to deepen the integration of foreign companies working with Saudi government entities and affiliated bodies. It also seeks to generate employment, reduce economic leakage, enhance spending efficiency and ensure that key products and services are delivered domestically with appropriate local content.The latest exemption mechanism reflects an effort to maintain those objectives while allowing room for specialised expertise and competitive advantage when required.
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