Saudi Arabia has led the way in developing pristine new cities devoted to specialized industries through a proposed public/private endeavor. The intent is to have the government serve as regulator, facilitator and promoter while private industry would provide capital, land ownership and development. Under the patronage of His Majesty King Abdullah, the Saudi government undertook the 10 x 10 program in 2006 to enact reforms and promote targeted investments in order to position Saudi Arabia among the world’s ten most favored investment destinations.
Owing to the economic slowdown, private investment has been slow in reaching anticipated goals, but development is nonetheless in process.
The Saudi Arabian General Investment Authority (SAGIA),[1] established in April 2000 as a vehicle for investment in Saudi Arabia for the purpose of sustaining economic growth, is consigned the role of attracting and processing foreign direct investment. Management of the development has more recently been placed in the hands of the Economic Cities Authority, which is designed to regulate but not develop the new cities. Each of the new cities has a different private developer.
The projects are intended to bring in modern technology, management skills, corporate governance and new industries so that the Kingdom is no longer dependent on oil and gas.
Under development are the following Economic Cities: (Map courtesy ©SAGIA.)
- King Abdullah Economic City (KAEC) in Rabigh
- Prince Abdul Aziz Bin Mousaed Economic City (PABMEC) in Hael
- Knowledge Economic City (KEC) in Medinah
- Jazan Economic City (JEC) in Jazan
Except for King Abdullah Economic City, each of the cities has its own area of specialization being developed around at least one globally competitive cluster or industry. They are also being developed according to environmental guidelines using state-of-the-art greenfield solutions. The aim is to create opportunities for the private sector by way of jobs and attractive lifestyles and to provide a business-friendly atmosphere. The original intent was to have each city developed by the private sector, promoting private investment opportunities in developing infrastructure, real estate and industry. Core jobs are expected to be created, which in turn will spur supporting ancillary jobs.
King Abdullah Economic City (KAEC) is divided into six main components: industrial zone, seaport, residential areas, sea resort, educational zone and central business district.[2] Located along the Red Sea coast, it will have a total development area of 66.8 miles.
The industrial zone is expected to cover 11,000 acres and will consist of industrial and light manufacturing facilities; research and development; business and office space; services; hospitality; and education and community services. The seaport will be the largest in the region, covering 13.8 square kilometers. The residential areas are expected to include apartments and villas – eventual homes for a half million residents and 10,000 tourists, along with parks and green spaces and many public amenities. The sea resort will become a major tourist destination, accommodating tourists with an 18-hole golf course, equestrian club, yacht club and a range of water sports. The educational zone is planned to consist of a multi-university campus flanked by two research and development parks.
Prince Abdul Aziz Bin Mousaed Economic City in Hael, covering 156 million square meters, is on the hub of transportation routes in the Middle East. Its focus will be on transportation, logistics, petrochemicals, agribusiness, minerals and construction materials. It will also feature a knowledge center. It is expected to have a population of 80,000. [3]
Knowledge Economic City in Medinah, covering 4.8 million square meters, is near the holy mosque of the Prophet and focuses on knowledge-based industries with an Islamic theme and Islamic civilization studies, as well as a park themed around the prophetic heritage. It will also house a complex of technological and administrative colleges as well as one for medical studies, biological sciences and health services. Besides being the home of a multi-modal transportation center and business district, it will contain a major retail establishment and hotel complex. It is expected to create many new jobs and attract a population of 200,000. [4]
Jazan Economic City will be located in the southwestern region of the country on the Red Sea and occupy 100 million square meters. Its focus will be on energy, agriculture and labor-intensive industries. Besides agriculture repackaging and distribution and power and water desalination plants, an industrial park will occupy two-thirds of the city. Fisheries will play a dominant role. It will also be a major business and cultural center.[5]
In the April 2011 issue of The Metropolitan Corporate Counsel, Yusuf Giansiracusa of Jones Day stated, "There are two general objectives in developing the economic cities; one is to spread opportunities throughout the Kingdom. Our land mass is four or five times the size of France, and the government wants to provide employment opportunities and economic development to areas of the Kingdom beyond the three major metropolitan areas. The other is to create islands of excellence where the Kingdom can attract foreign investment and create an environment that facilitates high-value ventures.”[6]
N.B. We have updated this article published originally in the February, 2013 issue of The Metropolitan Corporate Counsel as a result of receiving current information from Saudi authorities as to the following matters:
- by royal decree, the Economic Cities Authority was spun off from SAGIA as the current regulator and supervisor of the Economic Cities.
- there are now only four Economic Cities planned;
- the financial island is no longer a part of KAEC; and
- estimated job creation numbers have been updated.
[1] See http://www.oecd.org/mena/investment/38906206.pdf.
[2] See http://en.wikipedia.org/wiki/King_Abdullah_Economic_City.
[3] See http://www.oecd.org/mena/investment/38906206.pdf.
[4] See http://www.green-destinations.com/docs%5csbasa.pdf.
[5] Ibid.
[6] See http://www.metrocorpcounsel.com/articles/13701/saudi-arabia-popular-business-destination.
Published February 6, 2013.
