Episode 19 of The 966 weekly podcast with special guest Chris Johnson, managing attorney, Johnson & Pump and Chairman, MECACC & KKR Saudi Arabia. Chris is a resident of Riyadh and, along with his legal work, publishes a terrific weekly newsletter. The hosts and Chris discuss a handful of topics including Nitaqat in Saudi Arabia, doing business in KSA, a potential purchase of Inter Milan by the PIF, and much more.
The hosts kick off each each with their “one big interesting thing this week in Saudi Arabia.” Richard highlights a forthcoming conversation The 966 has with energy expert Kate Dourian and discusses dwindling new oil supplies coming on-line in 2021. Lucien notes that, while not a done deal, a PIF takeover of Inter Milan would be a big deal for Saudi Arabia’s global sports ambitions and would be a strong blue chip global football brand to add to the powerful investment fund’s portfolio. Chris Johnson weighs in on both of these topics before the group discusses Nitaqat, a concerning letter from the U.S. Embassy in Riyadh, and then discuss Chris’s work in Riyadh with MECACC and as a lawyer navigating the Kingdom’s changing legal landscape.
2:00 – Oil and gas firms are having “their worst year for new fossil fuel discoveries in decades and reserves are dwindling. The oil and gas industry is on track to discover just 4.7 billion barrels of oil equivalent (boe) by the end of 2021, its worst performance in 75 years, according to the research firm Rystad Energy,” Quartz reports. Richard discusses the implications of this news and highlight a forthcoming interview the hosts have publishing on Monday with energy expert Kate Dourian.
8:25 – Saudi Arabia’s PIF is reportedly close to acquiring another major European soccer team.
The PIF is reportedly looking to buy a controlling stake in Inter Milan for an estimated $1 billion, and of course if it goes through, would be the second major soccer club in the PIF portfolio, having recently closed its deal to buy Newcastle United. The club’s got some money problems. An IBT report this week said it was losing $15 million bucks a month, and has had to sell off some of its star players recently. Currently owned by the Suning Holdings Group Co., Ltd, a private Chinese company, the club was founded in 1908 and since its debut in 1909, Inter is the only Italian team to have always competed in the top flight of Italian football.
13:00 -Nitaqat, also known as Saudization, is a policy in Saudi Arabia aimed at increasing Saudi citizen participation in the workforce – especially the private sector workforce. The policy dates back to 2011 and over the last decade has grown into a series of policies aimed at reforming the country’s labor market and lowering the Kingdom’s chronically high unemployment rates and also increasing female employment.Nitaqat uses a rating system which classifies companies into four zones; platinum, green, yellow and red. Nitaqat requires employers in the private sector with over nine employees to hire a certain percentage of Saudi nationals, depending on the company’s industry and the number of employees in the company. Companies with less than 10 employees are exempt from the zoning system, but are still required to hire at least one Saudi national.December 1st, the latest version of the Nitaqat program comes in effect and contains several new features, and has a goal of creating 340,000 jobs by 2024 as well as simplifying the compliance rules for businesses.The hosts discuss: how is Nitaqat going?
25:52 – The environment for U.S. business in Saudi Arabia.
Per a Bloomberg report in November, The U.S. embassy in Riyadh criticized Saudi Arabia’s tax authorities and warned that disputes with foreign companies risk discouraging investment in the country. “Numerous multinational enterprises” operating in Saudi Arabia “have experienced tax issues exhibiting a lack of transparency, consistency and due process compared to what they have come to expect from other nations,” the U.S. embassy in Riyadh said in a letter to the Saudi Ministry of Investment.The hosts unpack this challenge to securing additional foreign investment and discuss the current business climate in Saudi Arabia.
39:37 – The hosts ask Chris Johnson about his work in Riyadh as an attorney. Mr. Johnson also publishes the Saudi Business Continuity updates for Sharif Law, and discuss his work with the AmCham Saudi Arabia (once ABGR) as well as his efforts with the MECACC and the latest Door Knock.
52:10 – ‘Yallah,’ The 966 podcast’s finish which includes a range of quick-hit topics to get you up to speed on more going on in Saudi Arabia before the weekend. The hosts and Chris Johnson react to, and discuss, each one. The topics this week:
•Saudi Arabia has reintroduced mandatory wearing of face masks and maintaining social distancing indoors and outdoors effective from Thursday, in a new move to curb the rapid increase in cases of COVID-19 variants.•A new Law of Evidence was just approved by the Council of Ministers. This is the first of the four key judicial reform legislations that includes a new Civil Status Law, Civil Transactions Law, and Penal Code for Discretionary Sentences.•The real estate sector provided 40,000 job opportunities in 2021, increasing the private sector’s participation to more than $103 billion, said Majid Al-Hogail, minister of Municipal and Rural Affairs and Housing.•Diriyah in Saudi Arabia has announced the first 14 of its 38 hotels which will be opened in coming years at the development north-west of Riyadh.•American cinema giant AMC which partners with Saudi Entertainment Ventures was an early mover after cinemas were re-opened in 2018. AMC had hoped to open 20 cinemas by the end of 2020 but currently only runs 10 with 65 screens.•Saudi police have arrested three people who destroyed a traffic monitoring device at Umwah governorate in the southwestern region of Asir. Dozens of motorists had been criminally charged in the past for destroying Saher cameras when the monitoring scheme was first introduced in Saudi Arabia in the past few years.•Saudi Arabia has delayed the launch of a major development strategy for the city of Riyadh up to 2030 until next year due to some “incomplete elements”, the state news agency SPA reported on Tuesday.