17 January 2023
A large part of PIF’s Investment is concentrated into the mega project called NEOM. The concept of self-sustainable linear megacity ‘The Line’ stretching across 100 miles, forms the core of NEOM project and comes with a capital outlay of more than USD 500 billion in tranches. Upon successful completion of the 1st phase, the NEOM is expected to generate economic benefits for the Kingdom by unlocking new sectors and creating jobs with the core concept of sustainability. NEOM’s strategy is structured around 16 sectors: energy, water, transportation, biotechnology, food, manufacturing, media, entertainment, culture and fashion, technology and digital sciences, tourism, sports, design and construction, financial services, health and well-being, education, and liveability. In general, megaprojects are exposed to three major types of risk viz., Design, Technology and Human Resource risk. Additionally, NEOM is exposed to other risk factors and challenges including legal, contractual, operational, force majeure, financial, political, environmental, and sociocultural risks . The world has never seen the design of multi-layered vertical city with futuristic technologies such as advanced artificial intelligence, underground hyper speed transit systems, zero-carbon desalination, and green hydrogen plants etc., The implementation and development of such advanced design and technology certainly requires high skilled workforce which will again be a challenge for the Kingdom. Non-Saudis form more than 80% of the total workforce in the construction sector but the project is committed to involve local workforce which is costlier when compared to the Non-Saudi workforce. This might lead to both cost and schedule overrun for the project signalling great amount of human resource risk. The Kingdom’s plan to attract global investments, technology and people through its massive tech-oriented infrastructures has greater economic benefits more than the diversification of oil revenues. Being in the strategic location of the world, OXAGON could turn into a sustainable industrial capital of the world and NEOM’s model could become an example for world in creating a self-sustainable city. The key to realizing the goal is to manage risks outlined. Either way, the pressing need to diversify the economy makes the Giga project bet of Saudi Arabia understandable. At the best, if project outcome succeed as per plan, Saudi Arabia will overtake many countries in the world in terms of economic attractiveness. At the worst, it will be status quo.
,  – PIF’s Annual Report: 2020-2021
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