Saudi Arabia's Financial District gets a facelift as the economy shifts focus

Record ID: 103849

  • Title: Saudi Arabia's Financial District gets a facelift as the economy shifts focus
  • Date: 12th May 2016
  • Summary: RIYADH, SAUDI ARABIA (MAY 11, 2016) (REUTERS) VARIOUS OF EXTERIOR OF KING ABDULLAH FINANCIAL DISTRICT (KAFD ) (SOUNDBITE)(English)OSAMA AL-BARIKAN,SAUDI CITIZEN ,SAYING : 'Especially after the project of Saudi vision for 2030, I think the new orientation for the government is towered financial development in the country and specially in the funding of governmental project and this huge project of king Abdullah, Financial City is one of the milestone of that strategy.' RIYADH, SAUDI ARABIA (MAY 12, 2016) (REUTERS) TOWERS IN (KAFD) SIGN WITH ARABIC AND ENGLISH WRITING (KAFD CONFERENCE CENTER PARKING ) VARIOUS OF WORKERS AT KAFD RIYADH, SAUDI ARABIA (MAY 11, 2016) (REUTERS) (SOUNDBITE)(English)OSAMA AL-BARIKAN ,SAUDI CITIZEN ,SAYING : `I think it is a good idea to have customize visa, but I think to put some restriction criteria to those want come to here (KAFD). Yes this will make a big change a critical change.' RIYADH, SAUDI ARABIA (MAY 12, 2016) (REUTERS) VARIOUS OF TOWERS AND BUILDINGS IN COMPLETE AREA VARIOUS OF WORKER CLEANING ONE OF BUILDINGS IN COMPLETE AREA VARIOUS OF WORKERS WORKING IN INCOMPLETE AREA IN KAFD RIYADH, SAUDI ARABIA (MAY 11, 2016) (REUTERS) SUNSET WITH KAFD
  • Embargoed: 27th May 2016 15:36
  • Keywords: Saudi Arabia economy construction
  • Location: RIYADH, SAUDI ARABIA
  • City: RIYADH, SAUDI ARABIA
  • Country: Saudi Arabia
  • Topics: Economic Events
  • Reuters ID: LVA0014HI76VH
  • Aspect Ratio: 16:9
  • Story Text:The jungle of steel and glass encompassing the new King Abdullah Financial District (KAFD) rising from a patch of desert on the outskirts of Riyadh illustrates the spendthrift habits of Saudi Arabia's recent past.
    Plans to reconfigure KAFD with an easier visa regime for foreign business visitors and a separate regulatory structure point to Saudi hopes of transitioning to a more parsimonious future suited to an era of lower oil income.
    The distinctive towers that will house offices, homes, shops and hotels, surrounded by palm-shaded walkways, are aimed at emulating nearby Dubai by attracting an international business elite whose investments will stimulate the kingdom's economy.
    'Especially after the project of Saudi vision for 2030 , I think the new orientation for the government is towered financial development in the country and specially in the funding of governmental project and this huge project of king Abdullah, Financial City is one of the milestone of that strategy,' said Saudi citizen, Osama Al-Barikan.
    Whether it can do so, in a country widely seen abroad as a difficult place to live and work, and where past reforms have been obstructed by an ossified bureaucracy, may prove a litmus test for Saudi Arabia's broader hopes of change.
    Since oil prices began to rise early last decade, Saudi Arabia has spent vast sums to fatten social benefits, employ hundreds of thousands of citizens in state jobs and erect lavish infrastructure projects - on sometimes dubious economic grounds.
    KAFD is a case in point, often viewed in the Gulf as among the glossiest excesses of Saudi Arabia's oil boom profligacy: a white elephant in the making, expected to be delivered years late, costing $10 billion and lacking tenants.
    Even Deputy Crown Prince Mohammed bin Salman included a rare public rebuke for a high-profile project in the text of his "Vision 2030" reform plans, saying work on the district had begun "without consideration of its economic feasibility".
    The initial plan was to provide infrastructure and good terms for businesses to build there themselves. Then Riyadh decided to simply develop the site itself despite having few commitments from prospective tenants among the main banks.
    Worse was to come: instead of building it in phases, as is normal with big projects, the government asked contractors to work on all its 73 towers at once, along with infrastructure, delaying implementation and creating a glut of office space.
    What the governments now wants is to create a "special zone" with internationally competitive regulations, more residential space, an easier visa regime and a direct connection to the airport.
    The Public Investment Fund, which the Vision proposes to transform into the world's biggest sovereign wealth fund, will be based there, providing a draw for other international businesses.
    Walid Aliesa, chief executive of Al Ra'idah, the government-owned developer of KAFD, said he was not able to comment on the proposed changes at present.
    However, the masterplan architect, Danish firm Henning Larsen, included a lot of flexibility in its plans after researching the history of other international financial districts around the world.
    As a result, changing things now to include more residential space, which might be easier to rent than high-end offices, should be "perfectly fine" said Jacob Kurek, a partner in the firm and design responsible for the KAFD masterplan.
    A direct link to King Khaled International Airport should also be straightforward to install, via Riyadh's new metro which will have a station - designed by the late British architect Zaha Hadid - at KAFD, he said.
    How other changes, such as its special zone status with a different regulatory regime, the promised visa exemptions and any efforts to blunt Saudi Arabia's strict social restrictions might be arranged remain a matter of conjecture.
    Visas can take many days to arrange and require a complex process of invitation by a sponsor and plenty of supplementary documentation. Setting up a business means getting permissions from many government departments.
    Women must wear an ankle-length cloak in public and they are forbidden from driving. Unrelated men and women may not mingle unchaperoned. Cinemas, musical concerts and dancing are banned and alcohol and pork are illegal. All businesses must shut for half an hour during each of Islam's five daily prayers.
    `I think it is a good idea to have customize visa, but I think to put some restriction criteria to those want come to here (KAFD). Yes this will make a big change a critical change,' added Al-Barikan.
    Still, from the moment Saudi Arabia started to develop after striking oil in 1938 and bringing in large numbers of foreigners to help it build a modern state, it has found ways to accommodate them without angering powerful conservative clerics.
    Expatriate compounds, hidden behind high walls, protected by army gun emplacements, and to which Saudi nationals are usually forbidden entry, allow foreigners to dress and behave much as they do in the West.
    Such extreme segregation could not work for a project like KAFD, which is also marketed at Saudi businesses and residents. But there are other examples, like Riyadh's Diplomatic Quarter, of areas that Saudis can visit and enjoy a special status and do not require strict Islamic dress codes or forbid gender mixing.
    There being such precedents may help conservatives accept a softer religious regime in KAFD. But Prince Mohammed is also pushing for other reforms that may provoke clerical resistance and must decide which are the priorities to fight for.
    Security is a consideration too. Saudi Arabia has suffered militant attacks and a landmark project aimed at attracting foreign business, and with a lenient interpretation of morality codes, would be a prime target.
    It also strictly controls immigration, partly to stop social ruptures caused by culture clash between conservative Saudis and liberal foreigners, partly to prevent potential militants coming in and also to slow illegal immigration by low-income workers.
    Visa exemptions could work like the visa waiver programme in the United States, or like residence permits issued by free zones in the United Arab Emirates, said Mustafa Alani, a security expert with close ties to the Saudi Interior Ministry.
    "It's not a visa, but it's not a free walk-in either. There might be a geographical restriction," he said, suggesting those who enter on the special visas might be forbidden to leave KAFD, or limited to the Saudi capital.
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