Zones set up to boost the remoter regions

Saudi Arabia, facing a limit to the feedstock that fuels its petrochemicals industry, is turning to copper and other minerals to bring prosperity to remote regions.

Saudi Arabia hopes to bring economic development to remote regions that have been left out of the kingdom's petroleum-fuelled growth with newly exploited mineral resources.

Population centres in the north and south of the kingdom that have until now mainly fed off agriculture, tourism and military bases are set to benefit from special economic zones, where some national laws are relaxed to encourage business growth.

"What you're doing now is more to give it a kick-start with mineral work," said Azzam Shalabi, the president of the government's National Industrial Clusters Development Programme, which is trying to woo investors.

The government's aim of relying on foreign investors to fund that development is a departure from its strategy at the coastal cities of Yanbu and Jubail, where it injected billions of riyals into infrastructure.

Three of the new industrial centres - Tabuk and Duba to the north and Jazan to the south - are set to host mines or processing facilities for titanium, copper and other mineral wealth.

"Of course, these cities are located in less developed regions," said Amr al Dabbagh, the chairman of the Saudi Arabian General Investment Authority (Sagia), a government entity that has put 214 billion riyals (Dh209.58bn) into development of residential and commercial centres.

Four economic zones are under construction near existing towns and an additional 12 are being planned.

One site north of Jeddah, King Abdullah Economic City, is being developed by the UAE company Emaar, and Sagia hopes it will attract up to US$27bn (Dh99.17bn) in investment and create about a million jobs.

In the next five years Mr al Dabbagh hopes that incentives such as tax credits for foreign companies will persuade investors to build factories, lay out transportation and launch a knowledge-based economy.

The economic zones are aimed at providing jobs for a now-teenage population band that is to enter the workforce in the next five to 10 years.

But to enable development, the government needs to create a venture-capital vehicle and a dedicated infrastructure developer, such as the royal commission that laid the foundations for Yanbu and Jubail, Mr Shalabi said.

"The private sector cannot fund the development if they don't have the income," he added. "It becomes the chicken-and-egg situation. To have the people pay the rent, you have to develop the infrastructure."

Some foreign investors say the kingdom needs to make it easier to secure funding from Saudi banks, many of which require special guarantees to minimise risk.