Kingdom of opportunity

The Kingdom of Saudi Arabia has always held a key presence in the Middle East. And with a landmass covering 80% of the Arabian Peninsula, it is in possession of 24% of the world's proven total petroleum reserves.

It is on account of those vast oil resources that Saudi Arabia has emerged from being an underdeveloped desert Kingdom to one of the wealthiest nations in the region and the oil capital of the world. Yet, despite contributing to half of Saudi's GDP and accounting for more than 90% of its exports, a recent report has shown that the oil sector employs only 2% of Saudi nationals. In a country where 38% of the 27 million population are aged between one and 14 years of age, such a minimal percentage exemplifies the urgent need for the country to diversify its economy.

Consequently, Saudi Arabia has set a series of ambitious goals in order to become a global competitor in other sectors and to move away from its dependency on oil.

Most notably, the Saudi Arabian General Investment Authority (SAGIA) recently unveiled its ‘10x10' vision for the Kingdom to become one of the top 10 most competitive nations in the world by 2010.

SAGIA is the body responsible for regulating Foreign Direct Investment into the Kingdom, and it hopes to achieve this goal through three key initiatives.

The first is to institutionalise a competitiveness management process, the second to build pockets of competitiveness, and the third to become the most competitive country globally in three sectors by 2020: energy, transportation and knowledge-based industries (KBIs).

The Kingdom of Saudi Arabia is also adopting a rigorous and scientific approach to ensure these initiatives are implemented. For example, it is benchmarking its competitiveness management against 300 indicators which include the World Bank, the International Institute for Management Development and the World Economic Forum.

The second initiative, building pockets of competitiveness, is being realised through the construction of six brand-new cities whereby government-sponsored investment totals US$150bn. Each city is focused on a key industry, but it is hoped that through their combined productivity they will achieve Saudi's third initiative of becoming the most globally competitive nation in terms of energy, transportation and KBIs. Due for completion in 2026, each city will be worth around US$1bn. Each one is located in different regions of the country in order to establish international, export-oriented industries across the Kingdom.

The enormous benefits that the cities will deliver to the Saudi economy is made most apparent by the fact that the GDP of Saudi Arabia today is US$310bn, while the economic cities will contribute US$150bn to the Saudi GDP. Secondly, the GDP per capita in Saudi currently stands at US$13,000 - the economic cities' GDP per capita is estimated to be US$33,500. Thirdly, there are currently 7.5 million jobs in Saudi Arabia and the economic cities will create a further 1.3 million new jobs.

The US$26.6bn King Abdullah Economic City (KAEC), however, is the true embodiment of Saudi Arabia's drive for economic diversification and expansion. Formally launched in 2005, KAEC is to date the largest private sector initiative in the Kingdom and also the most successful - an overwhelming 10 million Saudis (approximately half the country's national population), subscribed to the 10-day KAEC IPO in August 2006, setting a new record in the KSA's capital market history.

Situated north of Jeddah, KAEC is being built on the western coast along the Red Sea, and upon completion the 168 million sq m project will be home to 4.5 million people. KAEC will be divided into six distinctive components: An industrial zone, central business district, resort district, educational zone and residential communities, and the sea port which will be the largest of its kind in Saudi Arabia. The significance of the port was recently made clear by Nidal Jamjoom, Emaar Economic City's CEO, when he observed: "The emergence of a world-class port on Saudi Arabia's west coast will be a historic turning point not only for the Kingdom, but for the entire world.

"Through KAEC's seaport, Saudi Arabia will gain the distinction of being among the few nations that traverse two global shipping routes: The Mediterranean/Red Sea route and the Arabian Gulf/Far East route," he added.

Furthermore, with the Saudi Landbridge project creating a direct road-and-rail link between KAEC and the port city of Dammam on the Gulf, Saudi will become a strategic intermediary for trade between Europe, Asia and Africa. Saudi Arabia has big plans for its transportation industry that it believes can serve as a hub between East and West, as well as a launch pad to a further 250 million consumers.

It is no surprise therefore that KAEC is being celebrated for ushering in a new era of economic prosperity in the Kingdom, and creating employment opportunities for its youthful population. Based on initial forecasts, the city's industries and service-oriented companies will generate up to 500,000 jobs. Jamjoom, however, estimates that KAEC has "the potential to create one million job opportunities".

These jobs are desperately needed in a country where more than 70% of the population is aged under 30, which suggests why projects like KAEC are so crucial. As HE Amr Bin Abdullah Al-Dabbagh, governor of SAGIA pointed out at a recent media briefing: "Investment is the oxygen of economy. Without investment there is no growth, there is no job creation.

"We truly need to inject sufficient amounts of investments into the economy to increase economic growth, and only then can we create jobs and deal with the real problem of rising unemployment."

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