$800bn investment in Saudi over next 10 years

MASSIVE INVESTMENT: KAEC (pictured) is one of four economic cities being built in Saudi Arabia. (Supplied)

Around $800 billion will be invested in Saudi Arabia over the next decade as the oil-rich kingdom looks to develop its infrastructure and fuel economic growth, the deputy governor of SAGIA has told Arabian Business.

Awaad Al-Awwad said the investment, which amounts to $80 billion a year, will come from both the public and private sectors, but declined to give a breakdown on how much of the $800 billion the government will provide.

SAGIA, or Saudi Arabian General Investment Authority, is responsible for managing the investment environment in the kingdom.

Al-Awwad said the investment will mainly focus on the development of Saudi Arabia’s infrastructure, including the construction of new homes, academic institutions and healthcare facilities, as well as the expansion and upgrade of roads, ports and airports.

“With this booming economy and also from the money coming from oil the government is trying to take it and expand the infrastructure and prepare it for the next generation,” Al-Awwad said in an interview.

Al-Awwad said around $200 billion of the total planned investment will spent on construction of buildings alone.

A good portion of investment in Saudi Arabia will be funnelled into the development of the four economic cities under construction, the most high-profile of which is King Abdullah Economic City (KAEC).

The cities are key to the government’s plans to diversify Saudi Arabia’s economy away from oil, but questions have been raised over whether some of them will actually succeed.

Al-Awwad brushed aside concerns, stating that “they are all in very good shape”.

There have also been reports the government is poised to announce two more economic cities. Al-Awwad said there are plans for two more cities, but could not give any further details. "They are still in the pipeline," he said.

Saudi Arabia, the world's biggest oil exporter, earned around $220 billion from crude sales in the first eight months of 2008, nearly $26 billion more than its total sales for the whole of 2007, according to estimates by the Energy Information Administration.

Saudi and other oil exporters have seen sales soar this year on the back of record oil prices, which hit an all-time high of $147 in July.

Al-Awwad said high prices “are helping to rebuild the infrastructure and energise the economy”.

Asked whether the global slowdown was having a negative impact of foreign investment, Al-Awwad said the current economic downturn in the West was actually drawing more companies to high-growth markets such as Saudi Arabia.

“In general we see more investment coming into the kingdom. Companies are really trying to diversify from economies going into recession,” he said.

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Proactive Vision for The Kingdom
Posted by T Crowe Semler, Fayetteville, AR, USA on Monday 15 September 2008 at 19:32 UAE time

Congratulations on the news of additional infrastructure investment. The Saudi government and the private sector are wisely investing the windfall profits from the oil. Diversification of the economy is critical for the rapidly growing future generations of Saudis’. Proactive projects with creative vision will insure the continued success of Saudi Arabia into the future.

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