RIYADH • The US$500 billion (S$681 billion) megacity planned by Saudi Arabia will be floated on financial markets alongside oil giant Saudi Aramco as part of the kingdom's drive to diversify away from oil, its Crown Prince told Reuters in an interview on Wednesday.
Crown Prince Mohammed bin Salman also said Aramco's initial public offering (IPO) is on track for next year and the national oil firm could be valued at more than US$2 trillion - a sum some investors have said appears unrealistically high.
His surprise announcement about the listing of Neom, a 26,500 sq km zone that will extend into Jordan and Egypt, is the latest and most extraordinary in a slate of privatisation programmes led by the floating of Aramco.
The futuristic high technology hub looks set to become a flagship of reforms to create jobs, encourage entrepreneurs and permit new freedoms among Saudis steeped in religious puritanism and dependence on the state.
"The first capitalist city in the world... this is the unique thing that will be revolutionary," said Prince Mohammed, heir to the throne of the largest Arab economy, an absolute monarchy. "Without a doubt, Neom will be floated in the markets. The first zone floated in the public markets. It's as if you float the city of New York."
The 32-year-old was speaking on the sidelines of the Future Investment Initiative conference, which has attracted nearly 4,000 delegates from around the world to Riyadh this week. Switching between English and Arabic, sometimes in the same sentence, the Prince seemed most excited discussing his plans for the new city.
Adjacent to the Red Sea and the Gulf of Aqaba and near maritime trade routes that use the Suez Canal, Neom will serve as a gateway to the proposed King Salman Bridge, which will link Egypt and Saudi Arabia.
Aramco could be valued at more than this figure in US dollars, ahead of its IPO on track for next year.
The zone will be fully owned by Saudi Arabia's sovereign Public Investment Fund (PIF) until its listing, and will attract investments from companies in renewable energy, biotechnology, advanced manufacturing and entertainment, PIF said.
"It won't be listed in the markets until the idea is mature enough," said Prince Mohammed. "It might be after 2030, it might be before, but the idea and the strategy is to float it eventually."
The new city will not follow the rules and regulations enforced in the rest of Saudi Arabia, which imposes syariah law based on a strict Wahhabi interpretation of Islam.
It will offer residents a more liberal lifestyle, allowing musical concerts and entertainment in a remote corner of the desert kingdom. Saudi Arabia has already started to relax some longstanding rules, including what was an effective ban on women driving.
Prince Mohammed said the city could appoint a board of directors and a governor (chief executive) whose only responsibility would be to stimulate economic activity.
"In New York, the governor is appointed to meet certain needs, including growth, but in Neom the governor doesn't have to deal with any of those problems. He has only growth in mind," he said.
The new city is part of the Crown Prince's ambitious Vision 2030 plan to overhaul the economy of Saudi Arabia, the largest producer in the Organisation of the Petroleum Exporting Countries, and provide jobs for an overwhelmingly young population in the face of a global oil price decline since 2014. He has pledged new rules and regulations to overcome past pitfalls.
An undeveloped legal system, sluggish bureaucracy and poor labour productivity have deterred foreign investment and frustrated Saudi economic plans in the past.