Red Sea ‘megacity’ an example for Saudi reforms: CEO

RIYADH: As Saudi Arabia seeks to diversify its oil-dependent economy, the chief of a Red Sea “megacity” says his project is pointing the way forward.
A decade after its conception, the King Abdullah Economic City — an integrated industrial, residential and tourism center — is profitable and in line with a government push which intensified this year to develop the private sector, Fahd Al-Rasheed told AFP in an interview.
KAEC was one of several “economic cities” touted for development 10 years ago, during the reign of the late king Abdullah, as special zones where the private sector could thrive.
Rasheed said there were “so many challenges” in the project’s early years but that the KAEC is now thriving.
“We are profitable for the last five years,” he said, “and we are today at the highest cash position that we’ve ever been.”
Oil makes up the bulk of Saudi revenue but a collapse in crude prices since 2014 created a record deficit and intensified economic reform efforts.
In April, the country’s powerful Deputy Crown Prince Mohammed bin Salman announced an ambitious new economic plan dubbed Vision 2030 that aims to promote private sector investment.
The scale of the project has raised doubts, but Rasheed said he is convinced of “the strong fundamentals of the Saudi economy” and that the KAEC shows “the model works.”
Developed by Emaar, The Economic City, the Saudi-listed unit of Dubai’s Emaar Properties, the project has seen $10 billion in investment.
Rasheed said it has signed contracts with more than 120 companies, many of them French. Renault is assembling trucks, drug maker Sanofi has a plant, and Total is also established.
The project is promoting seaside residential developments and expects to be home to 10,000 people within a few months, with more than 40,000 targeted by 2020.
“We are the largest residential developer in terms of sales in the country, although we are concentrated in a remote site” north of Jeddah, said Rasheed.
A high-speed rail line due next year will connect KAEC with Jeddah and Islam’s holiest cities of Makkah and Medina, “which will give us access to 12 million residents in the western region within one hour,” Rasheed said.
This will boost another goal of Vision 2030, which is tourism development, he said.
“We are building golf courses, theme parks, zoos, safaris,” he said, calling tourism “the most strategic sector” for the KAEC.
Home so far to a luxurious waterfront resort, the city expects to receive 150,000 visitors this year and targets 1.5 million by 2020.
Rasheed was speaking on sidelines of the MISK Global Forum, which ends Wednesday and aims to link business leaders with young Saudis in a bid to inspire their involvement in economic diversification.