King Abdullah Economic City an example for Saudi reforms, says CEO

Fahd Al-Rasheed
Updated 17 November 2016
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King Abdullah Economic City an example for Saudi reforms, says CEO

RIYADH: As Saudi Arabia seeks to diversify its oil-dependent economy, the chief of a Red Sea “megacity” says his project is pointing the way forward.
A decade after its conception, the King Abdullah Economic City — an integrated industrial, residential and tourism center — is profitable and in line with a government push which intensified this year to develop the private sector, Fahd Al-Rasheed said in an interview.
The KAEC was one of several “economic cities” touted for development 10 years ago, during the reign of the late King Abdullah, as special zones where the private sector could thrive.
Al-Rasheed said there were “so many challenges” in the project’s early years but that the KAEC is now thriving.
“We are profitable for the last five years,” he said, “and we are today at the highest cash position that we’ve ever been.”
In April, Deputy Crown Prince Mohammed bin Salman announced an ambitious new economic plan dubbed Vision 2030 that aims to promote private sector investment.
The plan noted that the economic cities “did not realize their potential” and said some faced challenges “that threaten their viability.”
They are just one component of the wide-ranging Vision, whose scale has raised doubts over whether it can all be achieved.
But Al-Rasheed said he is convinced of “the strong fundamentals of the Saudi economy” and that, in the case of KAEC, “the model works.”
“We believe that it is time now for expansion with Vision 2030 because we believe we are very aligned” with the reform plan, he said.
Developed by Emaar, The Economic City, the Saudi-listed unit of Dubai’s Emaar Properties, the project has seen $10 billion in investment.
Rasheed said it has signed contracts with more than 120 companies, many of them French. Renault is assembling trucks, drug maker Sanofi has a plant, and Total is also established.
The KAEC is served by the King Abdullah Port, which Rasheed said will handle about 1.8 million containers this year, a figure set to increase in 2017.
The project is promoting seaside residential developments and expects to be home to 10,000 people within a few months, with more than 40,000 targeted by 2020.
“We are the largest residential developer in terms of sales in the country, although we are concentrated in a remote site” north of Jeddah, said Al-Rasheed.
A high-speed rail line will connect the KAEC with Jeddah and Islam’s holiest cities of Makkah and Medina, “which will give us access to 12 million residents in the western region within one hour,” Al-Rasheed said.
This will boost another goal of Vision 2030, which is tourism development, he said.
“We are building golf courses, theme parks, zoos, safaris,” he said, calling tourism “the most strategic sector” for the KAEC.
Home so far to a luxurious waterfront resort, the city expects to receive 150,000 visitors this year and targets 1.5 million by 2020.
The rail line, developed by a Spanish consortium, is behind schedule and is not expected to open before the end of 2017.
The KAEC development foresees investment of $100 billion at completion, but Al-Rasheed said there is no target date.
“This will depend obviously on the country’s economy, on the global economy, and on the absorption of our product,” he said.
Rasheed was speaking on sidelines of the MiSK Global Forum, which ended Wednesday and aims to link business leaders with young Saudis in a bid to inspire their involvement in economic diversification.


US poised to end waivers for 5 countries importing Iranian oil

Updated 6 min 23 sec ago
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US poised to end waivers for 5 countries importing Iranian oil

  • Japan, South Korea, Turkey, China and India were exempted from sanctions until May 2
  • Since November, Italy, Greece and Taiwan have stopped importing oil from Iran

WASHINGTON: The Trump administration is poised to tell five nations, including allies Japan, South Korea and Turkey, that they will no longer be exempt from US sanctions if they continue to import oil from Iran, officials said Sunday.
Secretary of State Mike Pompeo plans to announce on Monday that the administration will not renew sanctions waivers for the five countries when they expire on May 2, three US officials said. The others are China and India.
It was not immediately clear if any of the five would be given additional time to wind down their purchases or if they would be subject to US sanctions on May 3 if they do not immediately halt imports of Iranian oil.
The officials were not authorized to discuss the matter publicly and spoke on condition of anonymity ahead of Pompeo’s announcement.
The decision not to extend the waivers, which was first reported by The Washington Post, was finalized on Friday by President Donald Trump, according to the officials. They said it is intended to further ramp up pressure on Iran by strangling the revenue it gets from oil exports.
The administration granted eight oil sanctions waivers when it re-imposed sanctions on Iran after Trump pulled the US out of the landmark 2015 nuclear deal. They were granted in part to give those countries more time to find alternate energy sources but also to prevent a shock to global oil markets from the sudden removal of Iranian crude.
US officials now say they do not expect any significant reduction in the supply of oil given production increases by other countries, including the US itself and Saudi Arabia.
Since November, three of the eight — Italy, Greece and Taiwan — have stopped importing oil from Iran. The other five, however, have not, and have lobbied for their waivers to be extended.
NATO ally Turkey has made perhaps the most public case for an extension, with senior officials telling their US counterparts that Iranian oil is critical to meeting their country’s energy needs. They have also made the case that as a neighbor of Iran, Turkey cannot be expected to completely close its economy to Iranian goods.