Saudi Arabia, Opec’s biggest oil producer and the Arab world’s largest economy, launched on Tuesday a specialised investment zone in the north-western region of the country called Neom, which will be backed by more than US$500 billion in capital as the kingdom continues to diversify its economy away from hydrocarbons.
The investment park initiative, focused on nine specialised investment sectors, was unveiled by Saudi Arabia's Crown Prince Mohammed bin Salman who also is chairman of the kingdom's sovereign wealth fund, Public Investment Fund (PIF).
"Neom will be backed by more than $500bn over the coming years by the kingdom of Saudi Arabia, the PIF, local as well as international investors," Prince Mohammed said in a statement on the first day of the Future Investment Initiative (FII) conference that has brought top global financial and investment professionals to Riyadh.
Investment and financing will be at the heart of Neom, which will be spearheaded and supported by the PIF. Saudi Arabia is set to bring a major global fund with access to a worldwide network of investors and major companies on board to drive the success of Neom, according to the statement.
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Spanning 26,500 square kilometres overlooking the waterfront of the Red Sea to the south and the Gulf of Aqaba to the west, the site will also become the main entrance to the King Salman Bridge, linking Asia and Africa. Neom's land mass will extend into Egypt and Jordan, making it the first private zone to cover three countries.
“All the success factors are there to create something big,” in Neom, Prince Mohammed told the Future Investment Initiative conference.
“It is the place for dreamers that want to create something new in the world. We are starting from scratch...we are planning the cities of tomorrow with the newest technologies.”
Masayoshi Son, the founder of Japan’s SoftBank Group, said the company plans to invest in state-owned Saudi Electricity company and build the world’s largest solar plant and robot in the zone. PIF is a partner in the company’s $100bn Softbank Vision Fund, and has committed to invest as much as $45bn in the tech fund.
“We made a committment, SoftBank will make a significant investment in Saudi Electricity Company...we will create the largest solar power generation in Neom, and the largest and most advanced robot in the world,” said Mr Son.
“We don’t make an investment without a great return.”
Saudi Arabia, which still heavily relies on the sale of crude for revenues, is trying to diversify its economy amid persistently low oil prices.
Privatisation, boosting foreign direct investment, broadening the domestic industrial base and increasing the participation of the private sector are the main pillars of the kingdom’s economic overhaul.
The timing of the mega-project is critical as the kingdom courts the world’s top bankers, some of the biggest wealth managers and global leaders in energy and technology sectors for possible partnerships and investment tie-ups during the three-day FII event.
Neom will focus on nine specialised investment sectors including energy and water, mobility, biotechnology, food, technological and digital sciences, advanced manufacturing, media and entertainment.
“The focus on these sectors will stimulate economic growth and diversification by nurturing international innovation and manufacturing, to drive local industry, job creation, and GDP growth in the kingdom,” the statement said. “Neom will attract private as well as public investments and partnerships.”
The project is developed to be independent of the kingdom’s existing governmental framework, excluding sovereignty.
With the ambition of becoming one of the world’s future economic and scientific centres and being the future commerce capital of Saudi Arabia, Neom is set to attract new foreign direct investment that will contribute to PIF’s long-term growth strategy, aimed at strengthening the Saudi Arabian economy.
The project is developed to be independent of the kingdom’s existing governmental framework, excluding sovereignty. Neom will adopt a regulatory framework that fosters technological as well as societal innovation and entrepreneurship in accordance with international best practices.
"Neom will be constructed from the ground-up, on greenfield sites, allowing it a unique opportunity to be distinguished from all other places that have been developed and constructed over hundreds of years and we will use this opportunity to build a new way of life with excellent economic prospects" Prince Mohammed added in the statement.