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Saudi announces $500b industrial zone project
October 25, 2017
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RIYADH: Saudi Arabia announced on Tuesday a $500 billion plan to build a business and industrial zone that links with Jordan and Egypt, the biggest effort yet to free the kingdom from dependence on oil exports.

The 26,500 sq km zone, known as NEOM, will focus on industries including energy and water, biotechnology, food, advanced manufacturing and entertainment, Saudi Crown Prince Mohammed Bin Salman said.

The announcement came as an international business conference got under way in Riyadh, drawing over 3,500 people from 88 countries.

Arranged by Saudi Arabia’s main sovereign wealth fund, the Public Investment Fund (PIF), the conference is labelled the Future Investment Initiative - an effort to present the world’s top oil exporter as a leading global investment destination.

The Saudi government, the PIF and local and international investors are expected to put more than half a trillion dollars into it in coming years, Prince Mohammed said.

Adjacent to the Red Sea and the Gulf of Aqaba and near maritime trade routes that use the Suez Canal, the zone will serve as a gateway to the proposed King Salman Bridge, which will link Egypt and Saudi Arabia, the PIF said.

“NEOM is situated on one of the world’s most prominent economic arteries. Its strategic location will also facilitate the zone’s rapid emergence as a global hub that connects Asia, Europe and Africa.”

Prince Mohammed appointed Klaus Kleinfeld, a former chief executive of Siemens AG and Alcoa Inc, to run the NEOM project.

The zone, which will have its own tax and labour laws and an autonomous judicial system, is to power itself solely with wind power and solar energy, PIF said - a goal which may be hard to achieve in practice.

NEOM will reduce the volume of money leaking out of Saudi Arabia by expanding limited local investment options, the PIF said.

A key source of future investment funds for the PIF, which now has about $230 billion of assets under management, is the government’s planned sale of a roughly 5 per cent stake in national oil giant Saudi Aramco, which could raise tens of billions of dollars.

Reuters

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