A project in Saudi Aribia that was initiated in 2017 recently caught my attention. The goal of the project is to create a new city that eventually will house one million people. I was intrigued by the idea of planning for a new city of the future.
It will be a very energy efficient city, a city that is nice to the environment. The project, named Neom, will be a collection of 16 Boroughs that stretch for 106 miles along the Red Sea and on into the mountains. I thoroughly enjoyed the recent futuristic vision of this project as described in the video, The Future of Technology and Digital; Discuss the Future with Joseph Bradley. Figure 1 is an illustration from the video (Bradley, 7/18/2020, link).
(Image will be insertedhere after I figure out how to do it.)
Figure 1: Location of 106 mile long linear city.
The Wikipedia provides additional information on this project (Wikipedia, 2021, link).
The NEOM project is located in Tabuk, Saudi Arabia in the northwest of the kingdom, extended along with Aqaba Gulf and 468 km of coastline with beaches and coral reefs, as well as mountains up to 2,500 meters high, ….
Saudi Arabia aims to complete the first section of NEOM by 2025. The project has an estimated cost of $500 billion. On January 29, 2019, Saudi Arabia has announced setting up a closed joint-stock company named NEOM with $500 billion. The aim of this company that is wholly owned by the Public Investment Fund, the sovereign wealth fund, is to develop the economic zone of Neom. The project is planned to be totally powered by renewable energy sources. (Bold added for emphasis.)
The planned city is arranged as clusters of aggregated urban areas along a central “spine.” Schools, shops, and other necessities will all be within a five-minute walk. The city is designed to be built in three layers: a surface layer for pedestrians, a second layer for infrastructure, and a third layer for transportation. The transportation level will include train-carrying tunnels. This reminds me of Elon Musk’s tunneling projects (McFarland, 6/12/2020, link). The intent is to preserve 95% of the region’s natural environment.
A huge data collection and analysis center is an important part of the project. The claim is that artificial intelligence will improve daily life for residents and businesses alike, with a projected 90% of available data harnessed to enhance infrastructure capabilities. Currently no city in the world collects and uses nearly so much data about itself.
Funding the Project
The $500 billion projected cost appears to me to be a great deal of money for building a city to house a million people. So, I spent some time thinking about the main source, Saudi Aribia’s sovereign wealth fund.
Saudi Arabia’s current population is about 34 million, with about a quarter of it being visitors (guest workers, and the like). Currently, the Saudi Arabia Sovereign Wealth Fund contains about $420 billion, which is about $16,500 per citizen. The fund is expected to more than double in size in the coming years, so will be large enough to cover projected costs. What strikes me as particularly interesting is that so much of a country’s (the people’s) sovereign wealth fund will be invested in a project that will directly serve only a little more than three percent of the citizens.
This figure made me think about Alaska and its Permanent Resident Fund established from oil revenues. At approximately $64 billion, it is about $90,000 per permanent resident. The motto of the state-owned investment company is, “Investing for Alaska; investing for the long run” (Alaska Permanent Resident Fund, 2021, link). The fund makes yearly payments to residents that have averaged about $1,600 per person. That yearly-dividend approach is quite different from Saudi Arabia’s approach of investing and growing its sovereign wealth fund, but not making payments from it directly to the citizens.
Both Saudi Arabia and Alaska realize that their natural resources are being depleted, and it is prudent to save for the future. Both have saved some of the wealth created by their natural resources. Saudi Arabia is investing it directly in itself, while Alaska is investing in corporations that have a strong focus in Alaska, and annually distributing income to permanent residents.
Likely when you were a youth, you were taught to save money for a rainy day. The focus was on saving money for something you would decide to be a good expenditure sometime in the future. In the United States today, a great many people are not able to do the planning and long term saving needed to secure a finically secure retirement.
It will be fun to see how the Saudi Aribia project works out in the long run.
Reference and Resources
Alaska Permanent Fund Corporation (2021). Retrieved 1/30/2021 from https://apfc.org/.
Bradley, J. (7/18/2020). The future of technology and digital; Discuss the future with Joseph Bradley. YouTube. (video: 10:31.) Retrieved 1/29/2021 from https://www.youtube.com/watch?v=o-26D066lcs&list=PLLbOT8vM3nrz0DdF5KAk_74JeBBea3Une&index=4.
McFarland, M. (6/12/2020). Elon Musk's tunnel project hit a milestone. But the future is unclear. CNN.BUSINESS. Retrieved 1/29/2021 from https://www.cnn.com/2020/06/12/business/vegas-musk-boring-company/index.html.
Wikipedia (2021). Alaska permanent fund. Retrieved 1/29/2021 from https://en.wikipedia.org/wiki/Alaska_Permanent_Fund.