Riyadh – Saudi Arabia plans to turn around US$ 800 billion, in public and private funds, to the development and diversification of the national economy by 2020. One of the targets is to place the country among the 10 most competitive nations in the world in terms of business environment. This information was disclosed on Saturday (16) by the director general for investment promotion and international operations at the Saudi Arabian General Investment Authority (Sagia), Ahmed Osilan, during a presentation to businessmen who are accompanying the visit of president Luiz Inácio Lula da Siva to Riyadh.
The plan involves heavy investment in infrastructure, support to industrial sectors in which the country has a competitive advantage, the development of a society based on knowledge and the construction of four “economic cities”, large urban, industrial, retail, residential and tourist complexes.
“Every time we drill to find water, we find oil,” said Osilan, referring to the fact that the country has around 25% of the global reserves of the commodity, but just a small share of the world petrochemical product market.
In this respect, the Saudis want to add value to the product, providing incentives to the production of plastics and petrochemicals and to sectors that are energy intensive, like ironworks and the production of aluminium. These industries are among the three focuses of the program.
The second is the field of logistics and transportation. According to Osilan, 30% of the maritime transportation of the world crosses the Red Sea, which bathes the western coast of Saudi Arabia. Through investment in ports, airports, railways and highways, the country plans to offer faster transportation for the flow of products between the East and West.
The third focus is the development of activities that produce knowledge, like medical services, science, education and information and communications technology. Osilan recalled that for a long time Saudi families have been sending their young to study abroad. “But up to now we have not managed to make use of this knowledge,” he said. In this line, he points out that this year the country turned 25% of its Budget to education.
Cities
Within this strategy, Saudi Arabia has launched project “economic cities”, with the main one being King Abdullah Economic City (Kaec), under construction on the coast of the Red Sea, close to Jeddah, the main local economic hub. When completely ready, in 2020, it will be the third main city in the country, only smaller than Riyadh and Jeddah. “It will be the size of Washington D.C.,” he said, referring to the capital of the United States.
Part of the city may be inhabited as from September 9th this year, and he himself plans to move to the site with his family. One of the objectives of the enterprises is to “create balance” between the different regions of the country in economic and population terms.
In this respect, whereas Kaec is being installed in the Western region, Prince AbdulAziz bin Mousaed Economic City (Hail) should be built in the central region, the Knowledge Economic City (KEC) on the outskirts of the holy city of Medina and Jazan Economic City (JEC) in the south.
Whereas Kaec should be a multisector hub, with industries, financial services, resorts and a port, Hail will be turned to the sector of logistics and transportation, KEC to the production of knowledge and JEC to the heavy industry, with production of aluminium, ironworks, the auto industry and oil refining.
All of them, except for the one near Medina, should be built where there was nothing and, according to Osilan, should be entirely developed with private investment. When ready, according to him, they should add another US$ 150 billion to the Saudi Gross Domestic Product, as well as generating 1.3 million jobs and concentrating 4.5 million in habitants.
A common characteristic among them is the residential and leisure structure, so that people may establish themselves where they live. “They should attract many youths with money in their pockets and, therefore, great per capita consumption,” said Osilan, inciting Brazilian businessmen to invest in the projects. The current legislation of Saudi Arabia allows foreign investors to have 100% of the control of their companies.
*Translated by Mark Ament
