Saudi in line for $1bn infrastructure dividend

Speaking to Arab News, experts waded in the kingdom's plans following a Strategy& report last week that said the kingdom was likely to spend $1.1tn on infrastructure between 2019 and 2038

A recent report by Strategy& estimated Saudi is likely set to spend $1.1tn on infrastructure projects between 2019 and 2038 [representational image].
A recent report by Strategy& estimated Saudi is likely set to spend $1.1tn on infrastructure projects between 2019 and 2038 [representational image].

As it moves forward with its economic diversification plans, Saudi Arabia is now in line to collect ‘infrastructure dividend’ worth billions as it localises its building efforts on megaprojects like Qiddaya and the $500bn (SAR1.9tn) Neom city.

Speaking to Arab News in a report on Monday, Monica Malik, chief economist at Abu Dhabi Commercial Bank, said Saudi Arabia has a strong population growth with a needs to upgrade infrastructure, “including providing services such as health, education and housing”.

She added: “The requirements and objectives are very broad, as is the potential.

READ: Saudi Arabia's top 10 projects under construction in 2018

“You will need foreign construction firms to come in and work with Saudi developers, to help with the requirements on the ground. There has been a bottleneck in the past, often the ability to get contractors in has – at times of growth – not been at the pace required.”

Also speaking to the news outlet, Dr Raed Kombargi, Adu Dhabi based partner at global consultancy Strategy&, part of PwC, said he thought the kingdom is capable of localising content in the building of Saudi’s $500bn Neom development, among other mega-projects in the country.

“Nigeria did it, and before them Brazil did it, and there is no reason why Saudi Arabia cannot do it,” he added.

READ: First contracts awarded for Saudi's $500bn Neom city

The Saudi-based English daily newspaper also cited a report last week from Strategy& which estimated the kingdom was likely to spend $1.1tn on infrastructure projects between 2019 and 2038.

The report found that Saudi Aramco was targeting 70% localisation by 2021 as part of its in-kingdom Total Value Add (IKTVA) program, which favours local content during the procurement process and incorporates localisation as a key condition in commercial arrangements.

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