October 30, 2017, 7:31 pm
From a holographic lion to talking robots and flying taxis, Saudi Arabia has dazzled investors with plans for hi-tech "giga projects" but sceptics question their viability in an era of cheap oil. The kingdom has revealed plans to build NEOM, a mega project billed as a regional Silicon Valley, in addition to an entertainment city in Riyadh that would rival Walt Disney and the Red Sea project, a reef-fringed resort destination.
The blueprints for the projects were on display to 3,500 corporate honchos at this week's Future Investment Initiative (FII) dubbed "Davos in the Desert" that sought to project the insular kingdom as a business destination. But serious questions remain about Saudi Arabia's ability to execute such projects, funded in part by its sovereign wealth fund, as it scrambles to diversify its economy amid a protracted oil slump.
"The initiative is overambitious, involves immense execution risks, and will not help effectively address employment challenges," said analysis firm Eurasia Group, referring to NEOM. "Saudi Arabia's continual roll-out of new initiatives and investment plans... conveys the image of dynamism. However, the government does not have the capacity to carry out multiple ambitious programs."
The projects, unprecedented in their scale and ambition, could create funding pressures at a time when the government faces a yawning budget deficit and growth in the kingdom's non-oil economy has nearly ground to a halt. "We have seen nothing like this before. We'll have to see" how the projects unfold, he told AFP.
The projects, worth hundreds of billions of dollars, are the brainchild of Crown Prince Mohammed bin Salman, a self-styled liberal change agent who is the chief architect of the sweeping "Vision 2030" reform programme.To demonstrate the change he envisions, he held up an old Nokia in one hand and a stylish iPhone in the other at the FII summit, a comparison that resonates with gadget-obsessed millennials. He is seeking a support base among the kingdom's youth but faces a real challenge convincing the population that his reforms will lead to job creation at a time of staggering unemployment.
The $500-billion NEOM, which means "new future" in a combination of English and Arabic abbreviations, will be a biotech and digital hub spread over 26,500 square kilometres (10,000 sq miles) in an area facing Jordan and Egypt. In a slick promotional video featuring the project, women were seen jogging in sports bras and working alongside men in laboratories, an image that contrasts with the country's notorious dress code.
Its service economy will be staffed by robots, it said. And in a move to display that ambition, Saudi Arabia this week granted citizenship to a robot named Sophia. But the kingdom has "poor form" when it comes to implementing large-scale projects, research firm Capital Economics said in a report. It cited the example of the King Abdullah Economic City near Jeddah, which was supposed to rival Dubai as a trading hub, but the project has been dogged by repeated delays.