King Abdullah Economic City: A glimpse in the future

May 8, 2017 in Infrastructure

Strong investment in innovative new construction projects is one of the ways that the Kingdom of Saudi Arabia is looking to diversify its revenue stream, through diversification.

One of the best examples of recent times has been the creation of King Abdullah Economic City (KAEC).

Located in the Makkah region of the Kingdom, KAEC was announced as a megaproject in 2005 by Abdullah bin Abdulaziz Al Saud, the then King of Saudi Arabia.

The city is one of 5 economic cities planned as part of an ambitious “10×10” program to place Saudi Arabia among the world’s top 10 competitive investment destinations and  the whole city is going to be fully completed by 2035.

The city will help diversify the oil-based economy of the Kingdom by bringing direct foreign and domestic investments. The city will also will help create up to a million jobs for the youthful population of the country, where roughly 40 per cent of the population are under the age of 15.

It is a vision that is starting to take a strong hold now. In March of 2017, KAEC and Petro Rabigh announced the launch of the Saudi Sustainable Development Association.

The association is an innovative, pioneering initiative to combine the resources of national corporations and channel them efficiently toward better economic and social development in the Kingdom in general, and in the Rabigh area in particular.

This initiative is unique within the Kingdom, creating a partnership among corporations and institutions in the private sector in the field of social responsibility and sustainable development.

The announcement ceremony was attended by Ayman Al-Mubaireek, deputy governor of Rabigh, and more than 30 representatives of government agencies and senior corporate officials.

In addition to KAEC and Petro Rabigh, the consortium includes the Cooperative Insurance Co. (Tawuniya,) the International Medical Centre, DHL, SANKYU Saudi Arabia, FAL Holding, RAWEC, Al-Tamimi and Co., GEMS — Global Environmental Management Services, and Arabian Pipes.

Fahd Hamidaddin, chief commercial officer at KAEC and vice chairman of the association, said the city’s partnership in the association is part of its commitment toward the local community.

“Our foremost initiative was the Tomouh program, which aims to train and qualify national talent,” he said. “The latest iteration of the program saw 1,000 young men and women from the Rabigh area trained. Many of them have already found jobs, including some who are now working in the control room at King Abdullah Port.”

This initiative is very much in keeping with the spirit of developing a sustainable, city where people want to settle.

In April of 2016, Deputy Crown Prince Mohammed Bin Salman announced Vision 2030, a 15-year master plan of policy changes tailored to ensure that the Kingdom remains prosperous without oil.

Long-term, Saudi Arabia is looking to reduce its reliance on fossil fuel revenue streams from 85 per cent to less than 50 per cent. It hopes to achieve this by developing other types of industries, such as manufacturing, tourism, and “downstream” chemicals.

KAEC compliments this vision and in time, is set to play home to some two million residents.

CEO, Fahd Al Rasheed recently stated that the “master plan remains on track” for completion in 2035.

He very much views KAEC as a non-oil economy, stating: “The city is privately funded and receives no direct oil revenue to fund its development.”

KAEC’s burgeoning economy already boasts a number of non-oil ventures, including: pharmaceuticals, refrigeration, shipping, and chocolate. More than 100 national and international firms have set up shop so far.

Further endorsement of KAEC’s green and growing shoots came in March of this year, when it was announced that Trane and Dallah Trading Company have signed a joint-venture (JV) manufacturing agreement relating to the production of heating, ventilation, and air-conditioning (HVAC) products.

Under the terms of the deal, the two companies will develop a production facility in King Abdullah Economic City (KAEC), Saudi Arabia.

The Trane Dallah Manufacturing (TDM) plant will be used to manufacture customised and catalogue air-handling units (AHUs) and fan coils for HVAC customers in the Middle East and Africa (MEA) region.

The project is due to be completed before the end of 2017.

Commenting on the JV agreement, Johan Samuelsson, Trane’s MEA vice president and general manager, said: “Our expanded relationship with Dallah will bring us closer to our customers, which increases our responsiveness, speed-to-market, and competitiveness.

“We expect the facility to be completed in late 2017, and are excited about the opportunities it brings for the future.”

Ayman M Kamel, chairman of Dallah Trading Company, added: “We are pleased to establish a manufacturing facility in the Kingdom of Saudi Arabia with our long-term partner, Trane.

“Our customers will appreciate the benefit from Trane quality products made in the region. This is one step closer towards our goal of making Dallah Trading the first-choice distributor for HVAC solutions in KSA.”

The demographics for the Kingdom are remarkable, with 50 per cent of the Saudi population aged under 25 – but roughly half of that figure is unemployed presently. KAEC will aim to help address that statistic, attracting young Saudis to private sector jobs in the new city.

The city will also have a big focus on energy conservation and will feature a solar air conditioning and refrigeration system that will reduce up to 40 per cent of the current annual energy consumption. Other green elements include solar-powered street lights and CCTV systems.

KAEC has a long way to go to its completion, but it is already providing a glimpse into the future of the Kingdom.