Saudi Arabia’s has announced plans for a futuristic $500 billion (£380 billion) city to be built to run entirely on alternative energy and be an innovation hub for the future.
The project, dubbed Neom, will be built on untouched land along the country’s Red Sea coastline near Egypt and Jordan and will span three countries.
The ambitious plans, announced by Crown Prince Mohammed bin Salman today, could lead the way in the use of drones, driverless cars and robotics.
Saudi Arabia’s has announced plans for a new £380 billion ($500 billion) city. The zone will be built on Saudia Arabia’s Red Sea coastline and will power itself with green energy sources. It could lead the way in driverless cars and drone and robotics technology
The 26,500 square km (10,230 square mile) zone will focus on industries including energy and water, biotechnology, food, advanced manufacturing and entertainment.
The zone will be adjacent to the Red Sea and the Gulf of Aqaba, and near maritime trade routes that use the Suez Canal.
The land mass will extend into Egypt and Jordan, making it the first private zone to cover three countries.
It will power itself solely with wind power and solar energy, said the Public Investment Fund, Saudi Arabia’s top sovereign fund.
The area will serve as a gateway to the proposed King Salman Bridge, which will link Egypt and Saudi Arabia, the PIF said.
Saudi Arabia’s border with Jordan touches the northern end of the Gulf of Aqaba, near the Israeli city of Eilat.
It also sits opposite Egypt, across the Straits of Tiran.
‘Neom is situated on one of the world’s most prominent economic arteries,’ PIF said.
‘Its strategic location will also facilitate the zone’s rapid emergence as a global hub that connects Asia, Europe and Africa.’
The kingdom’s sovereign wealth fund, which the crown prince chairs, the Saudi government and global technology firms will help build the city.
Prince Mohammed announced the project at a major investment conference in Riyadh aimed at shining a spotlight on the kingdom’s efforts to diversify its revenue streams away from dependence on oil exports.
The Future Investment Initiative conference is being attended by giants in the business world, corporate managers from some of the world’s largest firms and senior Saudi officials.
There was no immediate comment on the plan from Jordan and Egypt, both of which are close allies of Saudi Arabia.
The 26,500 square km (10,230 square mile) zone will focus on industries including energy and water, biotechnology, food, advanced manufacturing and entertainment
The ambitious project could lead the way in the use of drones, driverless cars and robotics. The city will focus on nine industries, including biotech, technological and digital sciences
Saudi Arabia’s economy, though rich, has struggled to overcome low oil prices.
In less than two years, Prince Mohammed has launched a series of economic and social reforms – such as allowing women to drive – to modernise the kingdom.
The former CEO of Siemans Klaus Kleinfeld has been appointed to lead the development at NEOM.
SoftBank Group and Vision Fund have signed an agreement to buy a ‘significant’ stake in the Saudia Electricity company which will provide energy for the city, according to Bloomberg.
The project ‘seems to be broadly modeled on the ‘free zone’ concept pioneered in Dubai, where such zones are not only exempt from tariffs but also have their own regulations and laws, hence operating separately from the rest of government,’ said Steffen Hertog, a professor at the London School of Economics.
‘In Dubai, this has worked well, but attempts to copy it have done less well in the region.’
The project, dubbed Neom, will be built on untouched land along the country’s Red Sea coastline near Egypt and Jordan
The kingdom’s sovereign wealth fund, which the crown prince chairs, the Saudi government and global technology firms will help build the city
Bureaucracy has slowed many Saudi development plans, and private investors are cautious about getting involved in state projects, partly because of an uncertain legal environment.
‘Saudi Arabia has announced a number of mega-projects recently, but what investors will ultimately look for is greater details, progress with plans and initial investment,’ said Monica Malik, chief economist of Abu Dhabi Commercial Bank.
Saudi Arabia will need huge financial and technical resources to build NEOM on the scale it envisages. Past experience suggests this may be difficult.
But the project underlines Prince Mohammed’s ambition to rescue the economy from severe damage caused by low oil prices.
Prince Mohammed bin Salman is looking to remake the kingdom and prepare it for a post-oil era. 10,000 square miles (25,900 square kilometers) have been allocated for the development
Saudi Arabia’s Crown Prince Mohammed bin Salman has announced plans for a new $500 billion ($380 billion) city that will be run entirely on alternative energy
The ambitious plans, announced by Crown Prince Mohammed bin Salman (right) today. Klaus Kleinfeld (left) was appointed as Neom’s Chief Executive Officer
NEOM will reduce the volume of money leaking out of Saudi Arabia by expanding limited local investment options, the PIF said.
A key source of future investment funds for the PIF, which now has about $230 billion (£175 billion) of assets under management, is the planned sale of a roughly five per cent stake in Saudi Aramco, which could raise tens of billions of dollars.
PIF Managing Director Yasir al-Rumayyan told the conference that Saudi Arabia was still on track to conduct an initial public offering (IPO) of Aramco shares in 2018, but did not say on which stock markets the company would be listed.
Aramco CEO Amin Nasser told reporters that in addition to Riyadh, possible foreign listings in markets such as New York, London, Tokyo and Hong Kong had been looked at, and a decision still had to be made.