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German Legal Expertise in the Middle East since 1981

Economic Cities in Saudi Arabia

Guiding Principles

In 2006, Saudi Arabia announced the establishment of the so called “Economic Cities”. With total cost of US$ 60 billion, Economic Cities are cities designed to establish modern and civilized areas to suit both practical and recreational sides of life in intention to improve lifestyle in the Kingdom. Each city is established for different purpose with common target to attract more domestic and foreign investment to the Kingdom.

A. Introduction
In 2006, Saudi Arabia has published its decision to establish five new cities under the name of “Economic Cities”. The aim of these Economic Cities is to serve as Free Zones and also as Industrial Zones in a unique way. The Economic Cities are designed to establish modern and civilized areas to suit both practical and recreational sides of life to improve the lifestyle in the Kingdom of Saudi Arabia.

Building such cities with advanced infrastructure all over the Kingdom means to implement the policy of the Government to attract more Domestic and Foreign investments. Since Saudi Arabia is depending on Oil as the main source of income the new Economic Cities shall assist in the diversification of income sources to the Kingdom of Saudi Arabia and attract such investments. .

B. Vision
With more than US$ 60 billion costs, the final goal of such cities was to increase the Non-Oil economy in the Kingdom of Saudi Arabia. The government has identified the objectives of the Economic cities as follows1:

  • The establishment of new industries2 based on the competitive advantages of Saudi Arabia.
  • The establishment of the economic cities as integrated cities where all the requirements for modern life are available.
  • Providing modern infrastructure for the cities with global standards to increase the competitiveness of the Kingdom’s economy.
  • The full implementation of the cities shall be done by the private sector3.
  • Adopt and implement a clear strategy for human resources.

C. The Economic Cities

I. King Abdullah Economic City (KAEC)4
KAEC is the largest and first Economic City in Saudi Arabia. The city is developed by a company established on 2006 especially for this purpose under the name of “Emaar the Economic City” as a Saudi Joint Stock company with a capital of SAR 8.5 billion (€ 1 = SAR 4.9) managed by Emaar Properties5. The city is located on the coast of the Red Sea near the city of Rabigh in Makkah Province.

The main function of the city is to focus on the diversion industries based on power and transport. The total cost for building the city is estimated with about US$ 80 million.
KAEC comprises six main areas, namely the Port, the Industrial Zone, the Beach Facilities including a distinguished group of hotels, the Financial Island covering 500 thousand square meters of office space, three Residential Districts and the Educational City.

2. Prince Abdul-Aziz bin Mosa’ad Economic City (PAMEC)
PAMEC is earmarked for the transport and logistics support sector. The city is located in the Ha’il Province. The implementation of the city started in 2007. At the time of being totally finished, PAMEC is funded with SAR 30 billion (about US$ 8 billion).

3. Knowledge Economic City (KEC)6
KEC is located in Al Madinah Al Munawwarah. The city is established to provide investment opportunities in the Knowledge Industries sector. Same like PAMEC, at the time of being totally finished, the Knowledge Economic City is funded with SAR 30 billion (about US$ 8 billion).

4. Jazan Economic City (JEC)7
JEC is located in Jazan city and is focusing on four sectors: the Heavy Industries, Secondary Industries (processing), Human Resources in addition to Life Style.

5. Ra’s el-Zour Economic City (RZEC)
It is intended to establish the RZEC on the coast of the Arabian Gulf, 60 km north of Jubail Industrial City. The proximity of RZEC from Jubail Industrial city and the facilities for production and shipment of oil and gas in the eastern region of the Kingdom represent a strategic and logistical advantage for the city. The city is specialized in Mining Industries and shall be managed by the Royal Commission for Jubail and Yanbu.

January, 2011

Hany Kenawi

Department of Meyer-Reumann & Partners in Saudi German Development and Investment Company, Riyadh

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