Saudi Arabia’s Public Investment Fund, the country's sovereign investment fund, and Six Flags, the theme park company, will develop and design a branded theme park in Qiddiya, the kingdom’s first entertainment hub that is being created amid wide-ranging social reforms.
Details of the arrangement between the fund and Six Flags, which is part of the country's Vision 2030 reform plan, weren’t divulged. Qiddiya, which is located 40 kilometres away from the centre of Riyadh, is set to open in 2022 and the government is keen to attract local and international investors to the hub.
“Qiddiya, a key project within the Kingdom’s entertainment sector, will play an important role in the development of Saudi Arabia’s economy and the realisation of the ambitions of Vision 2030,” the Public Investment Fund said in a statement.
“The first Six Flags-branded theme park in the kingdom forms another part of the development of the sector which will help to create jobs and opportunities for young people in Saudi.”
Saudi Arabia is undergoing massive social changes including allowing women to drive and opening cinemas, which previously weren’t allowed. Saudi Arabia’s General Entertainment Authority said in February that it will host 5,000 concerts and festivals this year and invest more than $64 billion into entertainment investments in the next 10 years.
The state wants to capture up to a quarter of the $20bn currently spent overseas every year by Saudis seeking entertainment, lifting a ban on cinemas and putting on shows by Western artists.
The 334-square kilometre Qiddiya entertainment city, which will also include a Safari park, is part of the government's plan to help Riyadh make it to the list of top 100 cities that boast the best quality of life in the world.
"Innovation is synonymous with the Six Flags brand, and our international licensing business provides a unique opportunity to continue our strong global growth,” said David McKillips, president of Six Flags International Development Company.
“We see great potential in the Saudi Arabian market and look forward to collaborating with PIF to create a world-class entertainment destination for Saudi’s young and dynamic population.”
Separately, PIF said that its wholly-owned subsidiary, Development and Investment Entertainment Company, signed an agreement with AMC Cinemas, the world’s largest provider and operator of cinemas, to open between 30 to 40 cinemas in Saudi Arabia over the next five years and a total of 50 to 100 cinemas in about 25 Saudi cities by 2030. Under Vision 2030, it’s expected that the value of the cinema industry will grow to over $1bn in value over the coming years, the sovereign wealth fund said.
The Saudi government has said it expected to open more than 300 cinemas with more than 2,000 screens by 2030, building an industry that would contribute more than 90bn Saudi riyals to the economy and create 30,000 permanent jobs over the same period.
“The plan to build up entertainment parks and open up cinemas in Saudi comes as part of wider reforms to overhaul the Saudi economy and gradually liberalise its society. This plays well in terms of economic diversification and attracts increasing levels of needed foreign direct investment, further supporting overall economic growth in Saudi Arabia,” said Mohamed Bardastani, a Dubai-based senior economist at Oxford Economics.
“Developing the entertainment industry is one of the key pillars of Vision 2030, and as the most populous Gulf state, Saudi Arabia intends to create an attractive domestic tourism industry that creates jobs and caters to its young population who traditionally travelled to the UAE or Bahrain for entertainment and leisure.”
The Saudi Ministry of Culture and Information gave the Development and Investment Entertainment Company the first license to operate movie theatres in Saudi Arabia. While cinemas existed in the 1970s, they were closed down in 1979.
The plan to bolster the entertainment industry also comes amid wide-ranging economic reforms designed to lessen the country’s reliance on oil revenues. Saudi Arabia is the world's biggest oil exporter and took the brunt of the three-year slide in crude prices that began in 2014. PIF, which was set up in 1971, is undertaking investments as part of the reforms spearheaded by Mohamed Bin Salman, the kingdom’s crown prince, to promote economic diversification in Saudi Arabia. The government is also planning to sell stakes in state assets, such as Saudi Aramco, the world’s biggest oil producer. It has also reduced energy subsidies and implemented 5 per cent VAT to help bring the state’s finances into order.
“We see Saudi efforts to boost domestic consumption as central to policymakers’ efforts to diversify the economy away from hydrocarbons,” said Bilal Khan, Dubai-based senior economist for the Middle East and North Africa and Pakistan at Standard Chartered. “Higher spending by the population on services within the kingdom should boost GDP growth.”