The Crown prince of Saudi Arabia, Mohammed Bin Salman has announced plans to build a new city on the Red Sea coast, promising a lifestyle not available in today’s Saudi Arabia as he seeks to remake the kingdom in a time of dwindling resources.The prince, who made this statement on Tuesday at an international business conference in Riyadh, said that the city project,“NEOM,” will operate independently from the existing governmental framework with investors consulted at every step during development. The project will be backed by more than $500 billion from the Saudi government, its sovereign wealth fund and local and international investors.
The NEOM project would be led by Klaus Kleinfeld, the former chairman and chief executive officer of Siemens AG and Alcoa Inc. Also,Soft Bank Group’s vision fund signed on Tuesday an initial agreement with the kingdom’s wealth fund to buy a “significant” stake in state-controlled Saudi Electricity Co., and will provide energy for the new city.
NEOM will be powered by clean energy, he said, and will have no room “for anything traditional.”The project “seems to be broadly modeled on the ‘free zone’ concept pioneered in Dubai, where such zones are not only exempt from tariffs but also have their own regulations and laws, hence operating separately from the rest of government,” said Steffen Hertog, a professor at the London School of Economics and longtime Saudi-watcher. “In Dubai, this has worked well, but attempts to copy it have done less well in the region.”
The new project is likely a new strategy employed by the crown prince as he seeks to prepare Saudi Arabia for the post-oil era. In less than two years, he’s revealed plans to sell a stake in oil giant Saudi Aramco and create the world’s largest sovereign wealth fund, and has ended a long-standing ban on female drivers.
The kingdom has already announced a plan to transform hundreds of kilometers of Red Sea coast into a semi-autonomous world-class tourism destination and governed by laws “on par with international standards.”