Saudi Arabia seeks new economy with $500 billion business zone

Saudi Arabia has announced their plans to build a $500 billion mega city, business and industrial zone, along the coast of the Red Sea, extending to Jordan and Egypt. The city, NEOM, promises a lifestyle unlike that of Saudi Arabia’s.

Crown Prince Mohammed said that the development of the city will consult the investors every step of the way. The $500 billion investment is backed by Saudi’s Public Investment Fund, local and international investors.

The 26,500 square km city, will be entirely powered by renewable energy. The industries situated in the city will be focused on energy and water, biotechnology, food, manufacturing and entertaining, said Saudi Crown Prince Mohammed bin Salman.

Announced at a 3-day international business conference, Prince Mohammed said this project is a part of the innovative and high tech future he has promised his country.

“This project is not a place for any conventional investor … This is a place for dreamers who want to do something in the world,” he said.

The Future Investment Initiative conference, organized by the Public Investment Fund (PIF), where NEOM was announced, is the Kingdom’s move to present themselves as a leading global investment destination.

Saudi are continually working to grow the economy, with the recent ban lifted, allowing women to drive, to help modernise the Kingdom.

Additionally, privatizing 5% of Saudi Aramco is expected to raise $300 billion for the Kingdom. Saudi Electricity Co, the state-owned equity, also said they would consider selling a stake to SoftBank Vision Fund, the world’s biggest private equity fund.

Riyadh, are also removing barriers to investment and said they would allow strategic foreign investors own more than 10 percent of listed Saudi companies.

NEOM, adjacent to the Red Sea and the Gulf of Aqaba and near maritime trade routes that use the Suez Canal, the zone will serve as a gateway to the proposed King Salman Bridge, which will link Egypt and Saudi Arabia, the PIF said.

“NEOM is situated on one of the world’s most prominent economic arteries … Its strategic location will also facilitate the zone’s rapid emergence as a global hub that connects Asia, Europe and Africa,” PIF said.

NEOM will help increase the local investment options and therefore, reduce the money leaving the Kingdom, the PIF said.

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