From talking robots to Silicon Valley: Saudi’s tall ambitions

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 reeffringed 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. 

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. 

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. 

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. But proponents of the projects say this time is different as the projects are directly overseen by the reformist prince, who has amassed extraordinary power and is seen as a king-in-waiting.