Saudis’ NEOM project – 2 years later

In recent decades, Saudi Arabia has been continuously taking big steps towards diversification from oil as its sole resource for the sake of both sustainability and economic growth. The Kingdom has wisely expanded its energy goals, notably into the natural gas, nuclear, and renewable sectors. However, the biggest and most costly step they have taken is the $500 billion NEOM mega-city, which has been named “The World’s most ambitious project”.

The construction of this futuristic urban area aims at placing Saudi Arabia at the forefront of the fields of technology, innovation, tourism as well as business-friendliness in the region. In this article, we will present a brief overview of its beginning, give an update on where the NEOM project currently stands, and examine its implications on the economic and geopolitical landscape of the region.

An overview of NEOM

The NEOM project started when Saudi Arabia’s Crown Prince Mohammed bin Salman announced the construction of this futuristic megacity during a conference named “Future Investment Initiative” in Riyadh on 24 October 2017. The origin of the name was a combination of the Latin word “neo” meaning “new,” and the first letter “m” of the Arabic word “mustaqbal” which means “future”.

The Project’s aspiration was to brand a new land where a variety of unique development opportunities would contribute to make NEOM a global hub for trade, innovation, and knowledge. The creative class around the world has been invited to participate in building NEOM, with promises of a new life in a beautiful high-tech green place combined with an independent economic zone with its own laws, taxes, regulations, and few restrictions.

Future technology in transportation, food production and processing, healthcare, internet of things and digital air should all contribute to providing NEOM’s residents a unique lifestyle. The project, which has been described as “the destination for the future of living,” will stretch across the Egyptian and Jordanian borders. The city’s location, spanning over these three nations, should enable Saudi Arabia to strengthen its economic ties with countries in both the Middle East and Africa.

Expected challenges

The project is expected to face plenty of challenges and obstacles, that would either extend the construction period or leave the project indefinitely abandoned. Such obstacles include the abstention of investors’ participation after the decline of global oil prices, resistance from conservative factions inside the Kingdom, uncertainty over the support of neighbouring countries, and finally the time challenge.

There were also fears of repeating the past’s failed experiments, as the Saudi kingdom would not be able to bear its costs. In 2017, analysts considered the project a high mountain to climb in a country where most members of the royal family were ultra-conservative clerics who vied for power and influence in various domestic affairs.

Furthermore, after reviewing the promotional videos and the available information on the completed project, there were doubts about the acceptance of the portrayal of Saudi life that was alien to many: men and women mingling in the streets, more robots than humans, and renewable energy powering everything. It was a substantial change that had the potential to draw considerable opposition.

Steffen Hertog, an associate professor at the London School of Economics, voiced his scepticism. In an interview with Mimi Kirk, a reporter for CityLab , he declared that “Investors will want to see more detail before moving forward, but because Saudi Arabia is more financially constrained than it used to be, it may not be able to make large up-front investments until private money comes”. As portrayed by Steffen Hertog, the project is ambitious, maybe even too much; due to the lack of information and detail on how it is supposed to succeed. However, since 2017, the political and social landscape in Saudi Arabia has changed; as well as the practicality and likelihood of the project’s success.

Change of landscape

Since King Salman installed his son Mohammed Bin Salman as Crown Prince, a series of reforms and changes in policies have taken place in Saudi Arabia, removing many of the obstacles that were in the way of completing the NEOM project.

Among these reforms are the Monarchy’s announcement of ending the ban on female drives, which became effective in June 2018. Another wide-scale change was the plan for social and economic transformation called Vision 2030, which was approved before bin Salman’s appointment. Other reforms include reopening cinemas and allowing both sexes to attend concerts.

Furthermore, in January of 2019, Ipsos conducted a survey in the Kingdom of Saudi Arabia to explore the perceptions and attitudes of residents towards the NEOM project, the impact that they believe this project will have on the Kingdom, and future considerations regarding living, working, and vacationing in NEOM.

This Survey displays the series of projects and initiatives taken by the Saudi government to change Steffen Hertog’s perception of the lack of information. This is highlighted in the survey, which states that overall awareness towards NEOM in Saudi Arabia is quite high, with 3 in 4 people having heard of the project; driven by TV, Online, and Social Media sources.

However, a sizable percentage reported not being too familiar with its details. In addition to this, the survey shows that perceptions towards the NEOM project were very positive, with 9 in 10 people reporting that NEOM puts Saudi Arabia on the right track for the future, and the majority also feel that the initiative will make Saudi citizens proud, will create new job opportunities, and will enhance the Kingdom’s image worldwide.

When compared to other cities across the region, where Dubai is currently seen as the leading city in terms of living and economic conditions, NEOM was predicted to supersede the top cities in the MENA on numerous aspects; including technological advancement, education, tourism, and providing the best work and business investment environments. These results indicate how the Saudi changes implemented under the supervision of Mohammed Bin Salman have opened gateways for the realistic completion of the NEOM project, with positive implications now on display in both social and economic terms.

However, despite the reforms, many people are concerned about the project’s implications on the loss of Saudi identity and about the high costs of living in NEOM. However, these are issues that can be solved; and considering that other major obstacles have been overcome, it is reasonable to expect that the construction of NEOM will begin soon.

Latest developments

In late January, Saudi Arabia created a company to develop NEOM. The closed joint-stock NEOM Company will be fully owned by the PIF and will develop the vast project, which will include multiple residential areas, airports, a seaport, tourist zones, industrial complexes and “innovation centres.

According to Nadhi Al Nasr, CEO of the NEOM project, work is set to officially begin “within weeks”. To celebrate the beginning of the works, the government of Saudi Arabia hosted an extreme sports event at the site of the first phase. In collaboration with MISK, a non-profit foundation established by Saudi crown prince Mohammad bin Salman in 2011 to develop and empower Saudi youth to become active participants in the future economy of the region, the “DREAM NEOM” competition took place recently and engaged Saudi citizens to present innovative construction ideas for various aspects of the project offering a sizeable reward.

Al Nasr pointed out that the NEOM and MISK initiatives were the first of many to attract Saudis who are capable of being an integral part of the construction process of this dream city. He said the partnership between NEOM and MISK will not be the last, but will be carried on a long-term basis by the moment that they have the same goal; and other major initiatives will soon follow.

In conclusion, Saudi Arabia’s ambitious NEOM project, along with the Qiddiya and Red Sea projects are a part of efforts towards economic, social and cultural diversification. These developments are part of the Crown Prince’s Saudi Vision 2030 plan that aims to diversify the economy, reduce dependency on oil, and offer society a varied and rich experience of a quality lifestyle including world-class tourism. With construction set to begin in the coming weeks, it seems that Mohammed Bin Salman’s grand plan is set to succeed; but there is still much work to be done, and new developments could hinder the project’s completion.