Saudi ‘giga projects’, tall ambitions, high risks

RIYADH: From a holographic lion to talking robots and flying taxis, Saudi Arabia has dazzled investors with plans for hi-tech ‘giga projects’ – but sceptics question their viability in an era of cheap oil.

The kingdom has revealed plans to build NEOM, a mega project billed as a regional Silicon Valley, in addition to an entertainment city in Riyadh that would rival Walt Disney and the Red Sea project, a reef-fringed resort destination.

The blueprints for the projects were on display to 3,500 corporate honchos at this week’s Future Investment Initiative (FII) – dubbed ‘Davos in the Desert’ – that sought to project the insular kingdom as a business destination.

But serious questions remain about Saudi Arabia’s ability to execute such projects, funded in part by its sovereign wealth fund, as it scrambles to diversify its economy amid a protracted oil slump.

“The initiative is overambitious, involves immense execution risks, and will not help effectively address employment challenges,” said analysis firm Eurasia Group, referring to NEOM.

“Saudi Arabia’s continual rollout of new initiatives and investment plans...conveys the image of dynamism.

However, the government does not have the capacity to carry out multiple ambitious programs.”

The projects, unprecedented in their scale and ambition, could create funding pressures at a time when the government faces a yawning budget deficit and growth in the kingdom’s non-oil economy has nearly ground to a halt.

“My crystal ball is a bit hazy,” said Alan Lowe from the American Business Group of Riyadh

“We have seen nothing like this before. We’ll have to see” how the projects unfold, he told AFP. — AFP