Saudi Arabia offers $6 trillion investment opportunities over the next decade
The Crown Prince of Saudi Arabia, Mohamed bin Salman, has announced a new state economic project in which Saudi Arabia offers investment opportunities for the next decade. The statements, made this Wednesday at the World Economic Forum, have been picked up by the Saudi news agency.
Known in the West as MBS, the Crown Prince detailed in the virtual meeting the main investment opportunities in the country. Over the next ten years, these will amount to $6 trillion, while half of the investment will go into "new projects" as part of the Vision 2030 reform programme.
The opportunities are part of the economic programme led by Bin Salman, which aims to create "promising new growth sectors". This means ending Saudi Arabia's dependence on oil and transforming the kingdom into a global investment power with a diversified economy.
The project became crucial following the fall in oil prices due to the COVID-19. The Saudi Arabian coffers were hit by the economic crisis and the authorities have been forced to undertake plans to mitigate the losses.
Saudi Arabia's intention is to be a leader in renewable energy and a pioneer in the fourth industrial revolution, as well as in tourism, transport, entertainment and sport. All this in relation to its assets and profits, added Bin Salman himself in his address.
The Public Investment Fund (PIF) and the Saudi private sector will finance 85% of the economic programme. The remaining percentage will depend on "the stimulation of foreign capital from the Gulf countries and from all the countries of the world", according to the Crown Prince.
The PIF is a sovereign fund, managed by Bin Salman himself, which manages assets of approximately $360 billion and has more than 1,000 employees. In recent months it has also bought shares in European and North American companies.
This fund is the main investor in a series of mega-projects promoted by the Kingdom. The latest plan is the creation of The Line, an intelligent city of 170 km and composed of hyperconnected futuristic communities, without cars or roads and built around nature within the NEOM commercial area.
According to the Saudi authorities, this project is the cornerstone of Vision 2030 and an economic engine for the country. NEOM aims to house 1 million people, contribute 380,000 jobs and generate $48 billion to the national GDP by 2030. The plan will be a further boost to achieving the desired economic diversification.
The high-tech economic zone known as NEOM, planned for an area like Brussels, will be built inside the intelligent city. It will also include an entertainment park outside Riyadh called Qiddiya, which is bigger than Disney World, and a luxury resort off the Red Sea coast, which will cover a total of 50 islands
The NEOM project was announced by Mohamed bin Salman himself in 2017. However, since that first announcement there has been little new to report. Until this week, when the Crown Prince announced his plans.
The construction of The Line smart city will begin in the first quarter of 2021 with infrastructure costs close to $200 billion, according to the Saudi authorities' announcement.
Saudi Arabia, the world's leading oil exporter, cannot afford to pay the full cost of the project. Even less so following the fall in oil prices. For this reason, the House of Health is expected to borrow tens of billions of dollars this year to fill the state coffers and thus increase the liquidity of the FIP.
