Riyadh – Decypha: Saudi Arabia has been taking solid steps towards the implementation of major projects in different sectors of the economy, within the framework of its 2030 vision, to reduce the country's dependency on its natural reserves of oil. It’s ambitious plan has already been clear in several projects, some of which were already launched and others being underway, including Al Faisaliah City in the construction and tourism sector – an expansion of Mekkah, in addition to the Haramain high speed rail project in the transportation sector; both of which are expected to greatly contribute to the Saudi Arabian economy, transforming its resources significantly over the next few years.
Now the kingdom has announced that it has a plan for a major project along the Saudi coast of the Red Sea, an international tourism project in the Kingdome across a lagoon of 50 islands. Chairman of the Public Investment Fund (PIF) of Saudi Arabia, Crown Prince Mohammed bin Salman, has recently announced the launching of the project under the name "The Red Sea", according to Arab News.
The Project
The project is expected to be a resort and a calm retreat in one of the "world's last natural hidden treasures". It will be located on the red sea coast between the two cities of Umlaj and Al-Wajh, Arab News reported. It will be on a close distance from some important Saudi nature reserves and dormant volcanoes in Harrat Al-Rahat and will include the whole 50 aforementioned islands with their stunning nature. It is worth noting that the Egyptian President Abdel Fattah Al-Sisi ratified the maritime borders agreement between Egypt and Saudi Arabia in June 2017, which resulted in transferring the two islands of the red sea cost, Tiran and Sanafir, to Saudi Arabia.
According to bin Salman's announcement, the Red Sea project will span a distance of 125 miles of the reef-fringed islands, resembling the Maldives, according to CNN. It will include luxurious hotels and residences, and an airport specifically constructed for the area. The project will exceed the size of Belgium and will be supported by Saudi Arabia's sovereign wealth fund, according to CNBC.
The first phase of the project is expected to be launched in autumn 2019 and be completed by the end of 2022. This phase will include the construction of a number of luxurious hotels and residential units, the airport, a seaport and other channels of transportation.
"Launching this project as an international tourist destination comes as a confirmation of the success of the outputs of the Kingdom's Vision 2030, pointing out that this project represents great addition to the development and renaissance projects in our country," said Awad bin Saleh Al-Awad, Saudi Arabia's Minister of Culture and Information, in a press announcement, according to CNBC.
Contribution to the Economy
The Red Sea Saudi Arabian project is expected to transform the nature of the kingdom's economy as Saudi Arabia's tourism industry - which almost solely relies on the arrival of Muslim pilgrims every year visiting Mekkah and Medina- will host a new group of tourists who look for a different kind of tourism, according to Bloomberg.
The project aims to generate SR 15 billion, an equivalent of $4 billion, on an annual basis for the kingdom. It is also expected to create nearly 35,000 job opportunities, according to Arab News.
Saudi Arabia's tourism sector is expected to blossom over the medium and long term, supported mainly by the Vision 2030 investments, according to a research conducted by BMI, reported The National. BMI expects the kingdom's tourism arrivals growth of 12.8% in 2017 to reach a total of 22.6 million tourists.
"Medium term growth to 2021 will remain robust at over 15.6% annually with an estimated 41.4 million tourists expected by 2021," BMI highlighted.
Foreseen Challenges
Promising as it seems, the project cannot come without a few challenges as is the case with many major projects across the globe.
William Jackson, Senior Emerging Markets Economist at Capital Economics, said that his concern regarding the project would be represented in the high cost of developing an area this large, especially in terms of building the infrastructure. He also added that the tourism in the specified region may have to deal with strong competition from Dubai and Egypt, according to CNBC.
Another challenge expected to face the project includes the religious regulations of the kingdom, which may not be in accordance with the kind of openness this kind of tourism may require. "If you can't change restrictions on alcohol and dress, that market disappears," said Crispin Hawes, managing director at Teneo Intelligence, according to Bloomberg.
However, the Saudi state said that it will have special regulations put forward for the Red Sea project area. In addition, the project expected to be a "semi-autonomous" area governed by its own laws and rules, tourists will also either not need a visa at all to visit it, or be able to easily obtain it online, according to Bloomberg. If implemented, this is expected to ease the strict rules implemented across the rest of the kingdom.
While the project is a bold attempt by the Saudi government to improve its economy, introduce a new kind of tourism to it, and diversify its sources of income, the challenges are undeniable; however, a project as large as this certainly holds great potential for the kingdom. Vision 2030 is expected to bring about some economic and social changes with its many proposed projects and investments, and the world is waiting to see what KSA has yet to offer over the upcoming years.
By Reem Hosam El-dein
