Saudi Arabia announces mega investment city backed by US$500 billion investments

Participants walking around during the Future Investment Initiative conference in Riyadh, Saudi Arabia on Oct 24, 2017. PHOTO: REUTERS

RIYADH (AFP, BLOOMBERG) - Saudi Crown Prince Mohammed bin Salman announced plans to build a half trillion dollar new city on Saudi Arabia's Red Sea coast, the latest mega-project in his drive to remake the kingdom in a time of dwindling resources.

The project, called Neom, will cover 26,500 sq km including an uninterrupted coastline of nearly 470 kilometres, and will extend into territories in neighbouring Jordan and Egypt, a statement released by the kingdom's Public Investment Fund said.

Authorities in Jordan and Egypt did not immediately comment on the statement.

Saudi Crown Prince Mohammed bin Salman made the announcement on the day he opened the Future Investment Initiative, a three-day economic conference in Riyadh that brings together some 2,500 dignitaries including International Monetary Fund managing director Christine Lagarde, as well as 2,000 foreign investors.

Neom, which counted more than 10,000 followers on Twitter hours after the announcement, will be independent of Saudi regulation and will adopt a "separate regulatory framework," the statement said.

The Saudi government has pledged investments into Neom worth US$500 billion. The project will also be open to local and international investors.

Klaus Kleinfeld, the former chairman of Alcoa and Arconic and a member of the Council on Foreign Relations, was appointed NEOM's first CEO. Kleinfeld has also served as advisor to the Chinese and Russian prime ministers.

Neom overlooks the Red Sea and the Gulf of Aqaba, also bordered by Jordan and Israel - a location Saudi Crown Prince Mohammed bin Salman said in a statement would be "among the top secure areas in the world".

The venture comes as Saudi Arabia vies to diversify its oil-dependent economy after revenues dwindled following the 2014 crash of the global oil market. Saudi Arabia, the world's top oil exporter, has been facing serious budget deficits since 2014.

Prince Mohammed, who was named heir to the throne in a surprise announcement in June, last year launched a massive economic reform programme in an attempt to pull the economy away from its dependence on oil.

Alcohol, cinemas and theatres are still banned in the kingdom, an absolute monarchy and one of the world's most conservative countries, but authorities in recent months have announced a string of decrees that appear to signal change in the entertainment and tourism industries.

Prince Mohammed, the kingdom's unrivalled leader, is spearheading a drive to prepare Saudi Arabia for the post-oil era.

In the course of his meteoric rise to power since 2015, he has revealed plans to sell a stake in oil giant Saudi Aramco, create the world's largest sovereign wealth fund and lift the long-standing ban on female drivers.

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