Saudi Arabia – A Conservative Kingdom Invests Billions in its Infrastructure
Bernd-Dieter Fridrich (Berlin/Brüssel),
journalist specializing in business, tourism and environmental protection
There is hardly another Arab land that is so fascinating and that is constantly so breathtakingthan the Middle East kingdom that is the onlynation named after its royal family. It was unitedas Saudi Arabia on September 23, 1932, underKing Abdel Aziz al-Sa‘ud. Over 95 % of the totalof 2.24 million square kilometers of land area is desert. And what has just recently been happening onprecisely that remaining 5 % of habitable area isfascinating to anyone who has become a littlebit more involved with the country boastingsome 24 million inhabitants (86 % Saudis, 10 % Yemenites, 4 % other) and the world‘s largestoil and gas reserves, gigantic refineries andpetrochemical facilities. A huge investmentboom today marks the state ruled over by the Saudis, in which money seems to be of no importance. One industrial city popping up after the other and a building boom are leading the way to the future, a boom that has long since achieved the level of the pilgrimage business to the holy cities of Islam, the religious centers o fMecca and Medina. And the rather conservative royal family has discovered mining as a new, additional pillar for the economy.
Nevertheless, Saudi Arabia, situated between the Red Sea and the Arabian Gulf, does not see itself functioning as a trendsetter in the region. Basic changes tend to come mostly at a snail‘s pace in the hot desert state, but when they come, then at full throttle. Increasingly, it is the Arab neighbors that set the example of how a vision of the future can become reality, for example Dubai or Abu Dhabi. It became clear to the Saudi rulers visiting the rethat they can no longer continue to seal themselves off from the outside world and run the danger of missing the connection into the 21st century. This was particularly true of the desperately needed measures to improve the infrastructure; for example, the building of a seaport or airport, modernization of the road and rail networks, the construction of shopping miles or electricity and water supply. In contrast to the smaller Gulf States, the Kingdom is first and foremost building for its own population and the pious pilgrims it plays host to and not necessarily for the immigrants from neighboring countries or for shopping tourists. Among the new prestige projects, which are not least of all meant tosupport the economic activity inthe non-oil sectors, are six economic cities. These assembly-line cities, reserved for a specific economic sector, are sensibly spread out over various regions of the country to create new workplaces for the fast growing population. Show piece of the planning until now is the King Abdullah Economic City north of Jiddah on the Red Sea, forwhich 26 billion US $ have been initially allocated. The city‘s central developmental aims are in tourism, light industry and services .The core of the city is a new harbor. 27 billion US $ are planned to beready by 2020 for the developmentof a heavy industry center with anoil refinery, a petrochemical complex and a copper refinery and copper smelter near to the planned Jazan Economic City. Mining and agriculture is the focus of the new settlement of Prince Abdulaziz binMusaed Economic City (8 billionUS $); information technology on the other hand is planned for the science center Knowledge Economic City in the holy city of Medina (7 billion US $). The Jiddah Mixed-Use Development (13 billion US $) project is demarcated by a spectacular residential, commercial and industrial area.
INVESTMENT WITHOUT END
The rate of investment in the Kingdom has noticeably increased in thelast four years. As always, the state is leading the private sector. Along with the building boom, the industrial investment is greatly accelerating. According to the SAGIA (Saudi Arabian General Investment Authority), the authorities have licensed no less than 1,389 projects in 2006. The investment behind that amounts to 253 billion SaudiRiyal (SRI). According to SAGIA estimates, in the coming two decades Saudi Arabia must invest 600 billion US $ to reach its economic goals. By medium-term, 2012, SAGIA assumes investments around 265 billion US $, among otherthings, in the areas of building projects (106 billion US $), Petrochemicals (66 billion US $), oil and natural gas sector (53 billion US $), power and water maintenance (20billion US $) and the processing industries (13 billion US $). Particularly the refining capacityis planned to be enlarged in the coming five years and a massive petrochemical complex created. Export refineries will be constructed near Yanbu (13 billion US $) and Jubai (8 billion US $). Saudi Aramco and Dow Chemical want to investsome 25 billion US $ in a huge petro-chemical complex near Ras Tanura. The Kingdom wants to be a majorplayer in the world‘s fertilizer market by 2010 with the world‘s largest integrated plant. An aluminum refinery and aluminum smelter will be constructed near Ras Al Zour. The required phosphate and bauxite will be supplied by freight trainson a new 1,200 kilometer-long railway line. A 1,800 megawatt powerstation, a desalination plant, and a new harbor also are in the program, as are several hospitals and schools already under construction.