Man with a plan: Dr Abdulrahman Al Shaikh

Saudi Arabia’s Deputy Minister for Town Planning Dr Abdulrahman Al Shaikh discusses the Kingdom’s National Spatial Strategy, the economic cities and offers advice to foreign companies looking to enter the market.

What is KSA’s Spatial Strategy?

The Kingdom is very big, about eight times the size of the UK – it’s almost like a continent. With this vast area and a rapidly increasing population a national spatial strategy is essential or you cannot make all the right strategic decisions to control developments, the population and commercial activities, or direct them to the right places.

So this national strategic plan was approved by royal decree about 15 years ago to create balanced development between regions, and within regions. It suggests which cities should be developed first and which resources devoted where.

And what is the result of this strategy?

Based on the study, which we spent about ten years doing, the Kingdom was divided into 13 provinces, each with its own capital city and surrounding secondary cities. In each province we encourage industries that will utilise the local characteristics or resources of the area, some areas we promote agriculture, some mining industries and others petrochemicals industries.

Following on from that we encourage establishing related downstream industries to allow the most efficient use of our resources. This is the way it works, but the implementation takes a very long time and we are facing many challenges.

What is the biggest challenge?

The increase in population is a major challenge because we are now almost 26 million people with a population growth of something like 8% per annum. This creates uncontrolled expansions to cities and rapid growth of urban centres.

Do the economic cities fit into the spatial plan?

The economic cities came later and we had to revise the spatial plan to fit them in. One important area of study was the effect these huge economic cities may have on neighbouring areas. We didn’t want to create a vacuum with the new cities pulling everybody out of the market.

This was the main concern of the government and so based on our studies we suggested where the economic cities could be integrated. So there’ll be no gaps or huge differences between them, in fact they’ll help existing cities create more opportunities.

Are these economic cities needed?

Yes, these came with a strategic objective. The economic cities aim to create economic diversification and attract foreign investors and experts. We think it will provide valuable opportunities for securing a variety of modern, technical and commercial industries and help us move away from being an oil based economy. King Abdullah Economic City (KAEC) is already attracting billions of dollars from outside the Kingdom.

Will all economic cities be built?

Yes. They have been well planned by our foreign investment agencies, there are comprehensive feasibility studies, they have been approved by the higher authorities and the major component of its success is interest from foreign investors. Each city has its own unique character based on local resources. For example, in Jizan they are using aluminium industries as the core and in Hail they are using phosphate and other mines to form the core.

Do Jubail and Yanbu industrial cities set a good example for how a city can be built around industry?

Absolutely. Jubail and Yanbu are very successful stories. When they were started in the 1980s everybody was saying ‘these people are crazy, don’t bother doing it’ – everybody was gambling about its failure and now everybody is talking about its success. It proved to be the right decision at the right time.

I know there are some people who have their doubts about the success of the economic cities, but this is the nature of people. I believe they will prevail, because the Kingdom’s economy and resources are sound and if it is the will of the government to support it, then it will go on. It is definitely benefiting from the experience of Jubail and Yanbu, but rather than being based around petrochemicals, each city has its own own core industry.

Is there more risk associated with these industries than petrochemicals?

As with any project I think there is an element of risk. But when you study things well and believe it works then you should go ahead. This hasn’t been done in a day or two, it was carefully planned and the response from investors is very encouraging. Billions of dollars have been invested in these cities and I think it will prove to be a correct decision.

What are the advantages of starting a city from scratch such as KAEC?

It gives you the chance to put in the right infrastructure and plan correctly. You can control future expansion and provide services from the start, utilising the resources that are available to that area in the right way.

What can go wrong when starting a new city?

It’s not that it goes wrong, but when you start something from scratch you need to convince people to come to it and make them like it. It takes effort and time to get them used to it and to establish their own community and society. If it is close to a major city and can easily benefit from its services, then I think it will go ahead without major problems.

How do you ensure that people come?

This is the challenge for all planners – how to make the city attractive to live in. A city is not just boxes and streets and offices, it is the place where you spend most of your life and must include attractive recreational areas.

This is something that we are enforcing for all new plans coming from the private sector. We make sure they are providing green areas, entertainment areas, places for people to meet socially and places for sport. In the past, people in Saudi Arabia haven’t liked parks, playgrounds, cafes or restaurants in their areas, but it is now becoming more common.

The whole philosophy is changing here with people spending more time outside their homes and developers are starting to see this.

How is the government making it easier for foreign investors?

We are trying to ease the regulations for foreigners now and I can see a number of huge projects coming to Riyadh which have several foreign partners. Previously no foreign investment was allowed unless they had a Saudi Arabian partner.

Now any foreigner can come and start working like any local company. The government is realising the benefits of this and changing regulations. Another thing is the softening of land ownership regulations. It was recently announced that GCC residents are free to purchase land here. It is still not allowed for other foreigners, but these rules are currently under study and changes are expected.

Should foreign companies come here?

The Saudi market is very attractive. It’s the largest and strongest market in the region for real estate development. I encourage contractors, consultants and developers to come to Saudi Arabia and look for opportunities.

Even with the financial crisis the Kingdom is still in a better position than most countries due to our good financial system. The budget that was announced last year was the biggest in the Kingdom’s history so there are still very good reasons for construction companies to come here.

What would you say to foreign companies looking to move here?

We are encouraging investors and businessmen to get involved in complete projects or communities, not just land use. It is something that is gaining momentum and something that we will ease the regulations on. If an investor comes to us and says they want to make a complete project then we encourage them and give them a chance to do it.

The atmosphere is very good for developers to come and look for such kinds of opportunities here. There is ground for these projects in Saudi Arabia and the buying power is strong in the Kingdom. Statistically many of the buyers in Dubai are Saudi; if developers were to give them something in their own country then they will respond.