KAEC: A dream yet to materialize

Around a decade or so ago, a new city was planned in the Kingdom. Back then, one of my good friends with a confident smile on his face and eyes glittering with hope and ambition confided in me: “I will spend around five years in Riyadh to get the required experience then I will return to the new city looking for a higher position.”
“It will be filled with opportunities I tell you, a lot of international companies looking for young Saudi talents are planning to move there. Can you imagine it? A new city with a modern infrastructure and tons of opportunities for knowledgeable workers like you and me, that would be heaven, man,” he concluded.
The future of my friend did not go as planned, it faced a tiny twist. He did not move west from Riyadh to follow his dreams instead he moved eastward, to Dubai, occupying a good position in an international company.
The city, around which my friend and many like him had spun their dreams, has yet to achieve its true potential. He was actually referring to the King Abdullah Economic City (KAEC) in Rabigh.
The announcement of this new city had raised hopes not only of my friend but also of the entire country. We believed then and continue to believe that upon realization its true potential, this city would help herald dawn of a new era of economical and social progress in the Kingdom.
The mega-project was announced in 2005. It came with a full package of hopes, dreams and imaginations. Around 175 square kilometer of land (almost the area of Washington D.C.) was supposed to host the largest seaport in the region, an industrial zone meant to attract international manufacturing giants, a modern residential area divided into villas, apartments, commercial and recreational areas, a sea resort to attract international tourism and a business district meant to host international financial institutions and global service providers of different sectors.
The release of these plans back in 2005, with the breathtaking computer-generated footage of the future city was exciting, to say the least. It was a long awaited step on the path to diversifying the country’s income, of rebranding it as the new destination for foreign investments in the region. Big names were targeted as potential investors in the city; names like the pharmaceutical giants Sanofi-Aventis and Pfizer, Emal International, the joint venture of Abu Dhabi’s Mubadala Development and Dubai Aluminum, in addition to a number of food and technology manufacturers.
Moreover, a big science and research center, a branch of Columbia University, a health care city, a media city and an environment protection center were also part of the project’s blueprints.
Now that was the dream but the truth is not so glamorous. The city was scheduled to be completed by 2020. The reality on the ground is that the city is merely a fraction of the dream. When you pass the gates leading you into the city, there is nothing but empty lands, a desert, not until you reach the city center that you feel you are back to civilization, and even then, it is still not matching the dream.
The whole project is facing so many problems and obstacles to the point that I am not sure if there is anyone who is closely monitoring its progress or if it is on course to achieve the goals it was initiated to accomplish.
The project was hardly hit by the 2008 economic slowdown. Emaar itself, the company building and supervising the project, faced a financial crisis back then and it was unable to fund its activities in the city, the Saudi government stepped in and provided Emaar with a SR5 billion loan to jumpstart the project; still, the project is crawling.
“It remains to be seen whether this will incentivize the private sector to get involved,” said John Sfakianakis, the chief economist at Banque Saudi Fransi, while speaking to a regional daily back in 2011.
“Without the state’s involvement, the private sector might not have had the appetite (to finance the project).”
Aside from the finance, the real big hit for the project is most probably the local regulations governing foreign investments in the country. The plans marketed by the Saudi Arabian General Investment Authority (SAGIA) did not pay off as expected. Foreign investors are still hesitant, finding it hard to make up their minds about the situation. “They need to get more clarity for the regulatory environment they are proposing,” said John Harris, the co-head of the Saudi Arabia office of the property services company Jones Lang LaSalle as reported in a regional newspaper.
With the movements we had seen recently to revive Jazan Economic City project, I believe we also need to focus on KAEC in Rabigh.
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@smaldosari