Saudi Arabia will build $500 billion high tech megacity called NEOM

Saudi Arabia will build a megacity called “NEOM,” will operate independently from the “existing governmental framework” with investors consulted at every step during development. The project will be backed by more than $500 billion from the Saudi government, its sovereign wealth fund and local and international investors, according to a statement released on Tuesday at an international business conference in Riyadh.

Prince Mohammed bin Salman wants to prepare Saudi Arabia for the post-oil era. In less than two years, Salman has revealed plans to sell a stake in oil giant Saudi Aramco and create the world’s largest sovereign wealth fund, and has ended a long-standing ban on female drivers.

NEOM will be an independent economic zone with its own laws, taxes and regulations.

* they will be powered with concentrated solar power
* they will vertical greenhouse farms
* they will have a biotech focus (stem cell, gene therapy and more)
* they will have a focus on AI, virtual and augmented reality
* they will be pushing 3D printing and other advanced manufacturing

They plan to partner with Egypt and Jordan.

Klaus Kleinfeld, the former chairman and chief executive officer of Siemens AG and Alcoa Inc., was appointed to lead the development of NEOM. SoftBank Group Corp.’s Vision Fund on Tuesday signed an initial agreement with the kingdom’s wealth fund to buy a “significant” stake in state-controlled Saudi Electricity Co., and will provide energy for the new city. Saudi Arabia this year agreed to become a cornerstone investor in the Vision Fund.

The NEOM project aims to develop nine key economic sectors for the future, in addition to the establishment of industries that curb economic leakage in the Kingdom and the region in general. This will be achieved through the establishment of development funds, that will support these sectors, identified as:
THE FUTURE OF ENERGY AND WATER: Includes being, fully powered by renewable energy, forward looking energy storage and transport solutions as well as R&D and manufacturing. In addition, utilizing green technology in building water capabilities and maximizing usage efficiency
THE FUTURE OF MOBILITY: Includes seaports, airports, autonomous transport solutions such as autonomous vehicles/drones, and others
THE FUTURE OF BIOTECH: Includes biotechnology, human biotechnology and pharmaceuticals manufacturing
THE FUTURE OF FOOD: Includes an international innovation center for food technologies, including seawater and desert farming, aeroponics and hydroponics
THE FUTURE OF ADVANCED MANUFACTURING: Includes new materials in composites and metals, 3D printing, robotics and vehicle manufacturing and much more
THE FUTURE OF MEDIA AND MEDIA PRODUCTION: Includes the development of the television and film industry, the video gaming industry and digital content
THE FUTURE OF ENTERTAINMENT: Includes facilities, activities, sporting and cultural entertainment events and others
THE FUTURE OF TECHNOLOGICAL AND DIGITAL SCIENCES: Includes artificial intelligence, virtual reality and augmented reality technologies, data centers, the Internet of Things and e-commerce
THE FUTURE OF LIVING AS NEOM’S FOUNDATION: Includes housing, education, security and safety, green spaces, healthcare, hospitality and hotels

One of the project’s main advantages is the redirection of the Kingdom’s economic leakage back to the country:
NET IMPORTS TO THE KINGDOM: The nine sectors outlined for development will return about $70 billion in revenue back into the Kingdom, by way of commodities currently imported from abroad, through the potential of local production of vehicles, machinery and communication equipment.

INVESTMENTS ABROAD: The project will provide new opportunities in previously non-existent sectors for Saudi Arabian investors, within an environment that adopts favorable business laws and a system conducive to growth. Thus, part of the investment leakage issue will be addressed.

SAUDI CONSUMERS OVERSEAS SPENDING: NEOM will offer a new local tourist destination for Saudi citizens to visit, while ensuring that their capital is injected back into the local economy.
NEOM will be back by more than $500 billion over the coming years by the Kingdom of Saudi Arabia, the Saudi Arabian Public Investment Fund, as well as local and international investors. NEOM’s contribution to the Kingdom’s GDP is projected to reach at least $100 billion by 2030, in addition to its per capita GDP – projected to become the highest in the world.

10 thoughts on “Saudi Arabia will build $500 billion high tech megacity called NEOM”

  1. They should have been trying to diversify their economy a couple decades earlier.

    But I guess they were afraid to, it would create alternate power centers. The natural resource curse strikes again.

    • “They should have been trying to diversify their economy a couple decades earlier.

      But I guess they were afraid to, it would create alternate power centers.”

      Rather worse, it created assassins. The assassination of King Faisal in 1976, by a fanatic Wahhabist nephew, deeply shook the House of Saud. While Faisal was a bitter old Jew-hater, he was also an honest king, with wide diplomatic experience, who was moving S.A. into reform at a decent pace. His assassination brought that to a halt, and got the House of Saud to flap its lips on reform for 40 years, while backing Wahhabists as long as they were anywhere other than inside S.A. The results finally came back to bite them after 9/11. If Faisal had lived another 15-20 years, S.A. would be far better off today.

      The problem is that what lived in his stead was fear of crossing the Wahhabi clerics. Salman foresees that the end of the oil road for S.A. will come in his time. He’s trying to get his people ready, and taking some risks to do so. Still, he may have at least as much problem with the Wahhabists as Ibn Saud did when he founded the Kingdom in 1932, rather than declare a Caliphate.

  2. What a stupid way to spend half of their National fund. They are working to build an aluminum industry and that is fine. They should find other niches that they have an advantage in and develop them.

  3. The Wahabi clerics won’t like this. Wonder how they royals are gonna buy them off. And notice how close this city is going to be to Eilat, Israel?

    • The House of Saud has justified its existence for over 250 years by the doctrines of Wahhabist “Unitarianism”. Salman sees that this must end or the House of Saud will die. This is his attempt to provide some other justification for the House of Saud to exist, …”The Future!”

      It may work. If Salman can keep the bloodshed to no more than the civil war Ibn Saud had to fight against he may pull it off.

      • Epistemic Status: I read this a couple of places and haven’t seen anything contradictory but I know nothing much about the subject.

        There has been a major turnover in Saudi senior government figures since 2001 (to choose a date not at random) with most of the old princes (and the king) dying off and being replaced.

        It has been argued, by people who looked at such things, that the new guys are MUCH less OK with the nutcase religious groups and so have done a lot to
        a) Crack down on various extremist groups. And in SA, “crack down” involves actual cracking, of skulls.
        b) Cut off funding for such groups outside of the country
        c) Lighten up on the Sharia law in SA (chicks being able to drive being but the latest example. Sure it sounds ridiculous to us, but by their standards this is a big deal.
        d) And are now trying to reconstruct the society as a whole to stamp this out.

        Part of this is just generational change, and part is that the whole 9-11/Iraq War/Arab Spring thing has scared the pants …. errr robes off these guys. They can see that if they kept going as they were, then eventually either a western power or some radicalized faction of their own people would smash their palaces open and string them up.
        There is also the thing about Iran using these radical groups as foot soldiers in grabbing power in various countries through the ME/NA. And clearly SA is one of the end game prizes in such a campaign. So best to get rid of such groups ahead of time.

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