Building a truly 21st century Saudi Arabia
28 November 2018
Saudi Arabia is experiencing one of its most transformative epochs since the modern state’s founding in 1932.
With an $800billion-strong economy – the Middle East’s largest – and 32 million inhabitants, the country is looking towards a bright future. An essential pillar of its vision is predicated on combining infrastructure growth with a Saudi Arabia that is a 21st century global destination for tourists and businessmen alike. Over the past three years, Saudi Arabia has embarked on a reformist path that represents a sea-change for its citizens, spanning from a host of social changes to the economic field. Never before has a member of the G20 initiated such a transformative programme in terms of depth, timing, breadth, and commitment.
Saudi Arabia’s economy stands on a solid footing. Within the G20, Saudi Arabia’s debt to GDP is among the lowest, surpassed only by Russia. As the economy is on a path of diversification away from oil, economic growth is picking up this year and is projected to over the medium term, as reforms take shape.
Considerable progress is also being made to improve the business climate. More recently, efforts have concentrated on the legal and business environment and regulation. The public procurement law, currently being updated, has a key role to play in strengthening governance, and the privatisation/PPP programme, approved earlier this year, will offer incentives for investors. Equally importantly, social change is empowering women to be active participants in Saudi Arabia’s modern economy. The country’s young people, who comprise more than 65 per cent of the population, is ambitious, forward-looking and highly skilled.
Infrastructure development is one of the country’s mainstays of change through the construction of several “giga-projects” that will reconfigure the country’s economic and social landscape. Saudi Arabia is strategically located between east and west. One of those projects is Neom. A destination that encompasses tourism, Neom is a veritable smart city operating with the assistance of robotics technology, and is at the fulcrum of the country’s diversification and growth. Its name epitomises its core ethos: from the ancient Greek prefix neo, meaning “new” and its fourth letter, an abbreviation of the Arabic world, Mustaqbal, meaning “future”. Situated in the north-west of the country and a tat smaller than Belgium, Neom aims to be the focal point of development for advanced technologies and industries. Over time, Neom should have a multiplier effect for the wider region and encourage growth and stability.
Saudi Arabia’s future also lies in tourism. Today, it is one of the world’s top tourism destinations, with 18 million visitors arriving in 2016, and the aim is to reach 30 million by 2030. Abroad, Saudis spend an estimated $30billion in tourism. The country has the opportunity to create a year-round hospitality sector while promoting cultural conservation and economic stimulation. Working towards that goal is the Red Sea project, a resort built across a lagoon of 50 untouched islands – one of the world’s last natural hidden treasures situated between the cities of Umlaj and Al-Wajh. It is being developed in partnership with the world’s leading hospitality firms.
It is not universally known that 5,000 years ago another important destination, Al-Ula, was as cosmopolitan as they come. For traders and adventurers alike it Al-Ula was an essential stop on the road between the Mediterranean and the Arab world, and far beyond to Asia and Africa. The Al-Ula valley, located 300 kilometres north of Medina, is a place of extraordinary human and natural heritage. The Wadi Al-Qura (the Valley of Villages), a lush oasis valley that runs through Al-Ula, sheltered by sandstone mountains, created a perfect environment for civilisations to flourish. The Dedanites, Lihyanites, Nabataeans and Romans all built their cities here.
The potential jewel in Saudi Arabia's heritage tourism crown is Mada’in Salih. A collection of 111 spectacular tombs carved into rocky outcrops, and one of four UNESCO world heritage sites in the country, Mada’in Salih was built by the Nabataeans, who created the much better known settlement at Petra in Jordan.
Al-Ula is expected to receive its first tourists in the next two to three years, and aims to be a world-class tourist destination. It is a long-term plan to develop and deliver a sensitive, sustainable transformation of the region, reaffirming it as one of country’s most important archaeological and cultural destinations and preparing it to welcome visitors from around the world. The Royal Commission for development work in Al-Ula encompasses a broad range of initiatives across archaeology, tourism, culture, education and the arts, reflecting the ambitious commitment to cultivate tourism and leisure in Saudi Arabia, outlined in Vision 2030. Ultimately, Al-Ula’s archaeological treasure trove will be strong enough to draw crowds to a country that has long captured the world’s imagination.
The final phase of the country’s development is in the entertainment sector. Given the economic drivers, Saudi Arabia has enormous potential to tap into the entertainment sector. The Qiddiya project, situated on the outskirts of Riyadh, will provide a place for entertainment, sports and a cultural destination where Saudis will find excitement, inspiration, creative communities and career and investment opportunities. Qiddiya – spanning an area 2.5 times the size of Walt Disney World, or 100 times the size of Central Park in New York – aims to attract 17 million visitors by 2030.
Saudi Arabia’s infrastructure buildup is unique within the G20, as it offers a reinvigorated future for those who partake, best captured in the words of crown prince Mohammed bin Salman: “the sky is the limit.”
John Sfakianakis is the chief economist of the Gulf Research Center