For the first time ever, the Kingdom of Saudi Arabia is opening its doors to foreign investors in an effort to gain additional sources of investment for the government’s economic diversity plan.
The Saudi government announced foreigners were allowed to own property in the King Abdullah Economic City, known as KAEC, which is one of four economic cities included in a $400 billion infrastructure plan the government hopes will extend the country’s economic reach beyond oil.
Oil export revenues currently account for about 90 percent of the country’s total exports and for 40 percent of Saudi Arabia’s total GDP, according to the Energy Information Administration.The Saudis are hoping KAEC will change that by becoming the New York or Tokyo of the Middle East. It’s conveniently located on the coast of the Red Sea, between the Holy Cities of Makkah and Madinah, and is designed to house 2 million people and create 1 million jobs.
A port and a railway are being constructed to link KAEC with existing industries like plastic and aluminum that are already in the area. The city will also feature two new water desalination plants to bring clean water and power to its residents.
KAEC is already attracting attention from the business community. Bloomberg reported this week that French oil giant Total SA and U.S. chocolate maker Mars will have operations there.
The project has sputtered some in recent years as the global crisis hit the region hard but the decision to open up the doors to foreign investors should increase capital flows and move KAEC into the next phase of development.
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