IMF endorses Saudi plan for $500bn Neom zone

Visitors watch a 3-D presentation during an exhibition on ‘Neom,’ a new business and industrial city, in Riyadh. (Reuters)
Updated 01 November 2017

IMF endorses Saudi plan for $500bn Neom zone

DUBAI: The International Monetary Fund (IMF) has endorsed an ambitious Saudi Arabian plan to build a $500 billion business and industrial zone extending into Jordan and Egypt, saying the project could benefit the whole region.
Jihad Azour, head of the IMF’s Middle East department, said Riyadh would need to balance the huge cost of the zone and other economic projects with its drive to cut a big state budget deficit caused by low oil prices.
But the plan to develop the zone, known as Neom, could stimulate trade and allow the Middle East to capitalize on its location as a bridge between Asia and Europe, Azour said in an interview.
“It is a signal that greater regional cooperation is back on the table,” he said.
“We see value and necessity in regional cooperation.”
The Neom scheme, unveiled by Saudi Crown Prince Mohammed bin Salman at an international conference in Riyadh last week, would develop industries such as energy and water, biotechnology, food, advanced manufacturing and entertainment in a 26,500 square-kilometer (10,230 square mile) zone with its own laws and judicial system.
The project has been welcomed by Jordanian officials but so far there has been little public response from the Egyptian government, a diplomatic ally of Saudi Arabia. Riyadh has indicated that much of the huge cost of the zone will be borne by the Saudi government, but a large, though undisclosed, portion would come from domestic and international private investors.
Azour said major private sector participation would be important for Neom’s success, with the Saudi government providing land and regulation rather than trying to be closely involved in most investment decisions.
Governments in the region are starting to look outward again after having spent the past five or six years focused on coping with political instability and a plunge in oil prices, he added.
“Authorities in various countries are now reassessing more and more the need to do reforms and projects to grow faster and to address the issue of job creation.”
Neom could fit in with two other international economic schemes, Azour said: The Belt and Road Initiative, Beijing’s drive to win trade and investment deals along routes linking China to Europe, and the G-20 Compact with Africa that aims to promote private investment across the ­continent.

US-Saudi business council reports $13bn in contracts

Updated 24 May 2019

US-Saudi business council reports $13bn in contracts

  • Improved oil prices, combined with a government focus on spending, contributed to the rise, the council said

LONDON: The value of joint Saudi-US contracts rose to $13 billion in the first quarter of 2019, according to a business council report.

That marked the highest value of awarded contracts since the first quarter of 2015, the US-Saudi Arabian Business Council said.

The value of contracts awarded during the first quarter amounted to about half of the total value in all of last year, it added.

The contracts “included many vital projects, notably in the oil, gas, water and transport sectors,” Abdallah Jum’ah, the co-chair of the council, was reported as saying by Asharq Al-Awsat.

Energy was the top sector, with $3.1 billion of the value of contracts awarded, with many struck by Saudi Aramco. 

Improved oil prices, combined with a government focus on spending, contributed to the rise, the council said.

The construction sector also looks set for a recovery after many projects were put on hold due to the oil-price crash.

“If the pace of awarding construction contracts witnessed during the first quarter of 2019 continues for the rest of the year, the index of awarding construction contracts may return to the range we witnessed before the canceling and postponing of mega projects due to lower oil revenue,” the council said.