Saudi Arabia is planning to build a new $500+ billion city on the coast of the Red Sea. The zone will be connected to Jordan by land and Egypt by a bridge across the Red Sea. SoftBank's Vision Fund will buy a stake in the state-owned Saudi Electricity Co., which will power the city using clean energy. The project is called NEOM:
Saudi Arabia has unveiled plans to build a new city and business zone - a project that will be backed up by more than $500bn (£381bn) in investment.
Crown Prince Mohammed bin Salman says the 26,500 sq km (10,232 sq mile) NEOM zone will be developed in the north-west, extending to Egypt and Jordan.
It will focus on nine sectors including food technology and, energy and water.
The crown prince has been leading a drive to move Saudi Arabia away from its dependence on oil revenues.
In August, the Gulf kingdom launched a massive tourism development project to turn 50 islands and other sites on the Red Sea into luxury resorts.
However, the extremely ambitious nature of Mohammed bin Salman's vision is sure to raise questions about how realistic it is, the BBC's economics correspondent Andrew Walker says.
What is "NEOM"? "Neo" (Latin for "new") + "Mostaqbal" (Arabic for "future").
Also at Bloomberg (alternate editorial) and Reuters.
Related: SoftBank's $80-100 Billion "Vision Fund" Takes Shape
SoftBank May Sell 25% of ARM to Vision Fund; Chairman Meets With Saudi King
(Score: 1, Insightful) by Anonymous Coward on Wednesday October 25 2017, @10:51AM (7 children)
Tourism is a very sensitive industry to external factors (world economy, terrorism, etc.). Oil is less sensitive to that, sure, oil prices could drop when the world economy cools down, but then you just pump up less (together with your other cartel buddies) in that sense it is like a currency.
Oil is something many people need. Going on holiday is optional and easily moved to some other place.
(Score: 5, Interesting) by takyon on Wednesday October 25 2017, @11:21AM (2 children)
Sure, but if they diversify, they can lower oil exports even more when oil prices are low.
However, by developing a bunch of islands as tourist destinations and housing for the rich, they run the risk of overextending themselves like Dubai [wikipedia.org] has:
https://en.wikipedia.org/wiki/Palm_Jumeirah [wikipedia.org]
https://en.wikipedia.org/wiki/The_World_(archipelago) [wikipedia.org]
https://en.wikipedia.org/wiki/The_Universe_(Dubai) [wikipedia.org]
NEOM seems to be more about making their own version of Silicon Valley (or other "innovation hubs") rather than building a few tourist attractions. Saudi Arabia has been investing a lot in education and technology companies (such as through the SoftBank Vision Fund, check the related articles).
It also appears that they aim to make NEOM a haven away from the country's conservatives. From the first Bloomberg article:
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(Score: 0) by Anonymous Coward on Wednesday October 25 2017, @09:51PM (1 child)
Do you think it will help their society get out of the middle ages?
(Score: 2) by takyon on Wednesday October 25 2017, @11:46PM
I think the Saudi royalty would genuinely like to see Wahhabism disappear and will make a sincere attempt to marginalize them as the younger generations are less conservative. But it could lead to bloodshed, which is hardly good for tourism.
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(Score: 3, Interesting) by c0lo on Wednesday October 25 2017, @12:12PM (1 child)
Mmmm... no, you can't just pump less when your OPEC frenemies what as much money as possible, and this yesterday. Why do you think the oil prices went from $120/barrel in 2012 to under $40 in 2015?
For now, they still need it bad enough for around $60/barrel.
Give it another 10 years and they won't want that much oil anymore.
What the Saudis seem to have in mind is not the "bucket list holiday destination", but rather highest luxury any 0.1%-er can find.
And those 0.1%-ers are a special breed: their vanity and sense of entitlement are as prominent a feature as baboon red asses when in heat - they simply can't and won't accept something second best. [onionstatic.com]
Or at least that's what Saudis based their business case on.
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 3, Informative) by DeathMonkey on Wednesday October 25 2017, @05:44PM
Why do you think the oil prices went from $120/barrel in 2012 to under $40 in 2015?
Fracking.
(Score: 2, Insightful) by khallow on Wednesday October 25 2017, @03:10PM (1 child)
The real problem is internal. This should be already a huge sector for Saudi Arabia. But it's not due to their conservative, authoritarian culture. They have the Hajj [wikipedia.org] and significant business travel, but that's not good enough to spark an increase in leisure travel from other cultures who don't want to have to deal with the onerous and brutal laws that the Saudis enforce.
A sector of the economy doesn't have to be risk-free to be extremely useful. That's not a useful viewpoint. Sure, don't become extremely reliant on that one sector (like say their oil industry), but a sector that has an occasional few, really good years can still contribute immensely to the well-being of a country.
(Score: 2, Disagree) by bob_super on Wednesday October 25 2017, @04:54PM
> that's not good enough to spark an increase in leisure travel from other cultures who want to drink booze and walk around half-naked women during their vacations.
FTFY.