[Apartment] "Money-Making Project? Is This Possible Within 7 Years?"... '650 Trillion Future City' in the Middle of the Desert (AlphaGo Part 2)

Shin Ji-eun : Let's begin Part 2 of the Apartment Economy Hotspot with Alphago reporter.

Q Why is Bin Salman obsessed with Saudi 'Vision 2030'?

Shin Ji-eun: In Part 1, we talked extensively about Crown Prince Bin Salman. This time, we want to take a closer look at Bin Salman's policies. Speaking of Bin Salman's policies, one reason he recently visited Korea was because of NEOM City. You briefly mentioned that NEOM City stems from 'Saudi Vision 2030.' Since Saudi Arabia makes money from oil, they realized they can't rely on oil alone to prepare for the future. So, they want to create a way to live without oil and prepare for the future. That sounds great, but the problem is that Vision 2030 aims to achieve this by 2030. There are only 7 years left, so is it really possible even with all that money? I'm curious if Bin Salman knows this and why he is so obsessed.

*NEOM City Project

A project led by Saudi Arabia's de facto ruler, Crown Prince Mohammed Bin Salman. The total construction cost is $500 billion (about 650 trillion KRW). It consists of 'The Line,' a 170 km long self-sufficient linear city; 'Oxagon,' an octagonal advanced industrial complex floating on the sea; and 'Trojena,' a large-scale eco-friendly mountain tourism complex. Plans also include the world's widest twin towers reaching 500 meters in height.

Alphago: First, you need to understand that Mohammed Bin Salman became Crown Prince about two years ago alongside his father and took a high position. In 2015, he was Minister of Defense, and in 2017, he became Crown Prince. Until 2015, King Abdullah was the monarch. He distributed a lot of welfare benefits, so if you visit Saudi Arabia now, prices are somewhat high. Until 2004, prices in Saudi Arabia were not that expensive. The current high prices are because of King Abdullah due to the large amount of money he distributed.

Shin Ji-eun: Is it because there was more money?

Alphago: When there is a lot of money, prices tend to rise. Also, Saudi currency and most Middle Eastern countries' currencies are pegged to the dollar. They have a fixed exchange rate. Korea, on the other hand, has a floating exchange rate.

Shin Ji-eun : Floating exchange rate system.

Alphago : Korea has a floating exchange rate system, but Saudi Arabia and the UAE have fixed exchange rate systems. Because of that, prices rose during that period due to excessive welfare spending. Since there was no income other than oil revenue, when King Salman became king, it was like, 'What? The country will go bankrupt in 2-3 years?' This is a point that Korean media often overlook. When King Salman became king in 2015, the most urgent issue was to prevent the economic crisis that was coming.

Shin Ji-eun : So it was about 'We need to make money.'

Alphago : At that time, Mohammed Bin Salman pushed hard, though we don't know who exactly pushed him, to start collecting taxes.

Shin Ji-eun : Now they want to collect taxes.

Alphago: Middle Eastern countries traditionally have no taxes. Oil-producing countries have no taxes.

Shin Ji-eun : People would dislike paying taxes.

Alphago : Right. But interestingly, I heard from young people, "Alphago, when Mohammed Bin Salman said we should collect taxes, young people were so happy!" "Why happy? Are they giving you money?" "No, finally someone with a brain is in power!" "Yes! Taxes are necessary for running a country." Young people understand that if things continue as they are, the country will collapse. The country has limits because it has to operate on oil revenues and pilgrimage income, but normal countries collect taxes to operate.

Shin Ji-eun : Exactly.

Alphago : So Mohammed Bin Salman started to collect some taxes, reduce welfare a bit, and cancel some existing welfare programs. The economic crisis was coming, but he stopped it.

Shin Ji-eun : So people say, 'He's a better figure!'

Alphago : Young people say that.

Shin Ji-eun : Older people might dislike it.

Alphago : Slightly, yes. But through this, Mohammed Bin Salman began to reform the economy. At that time, Dubai was doing well, and Qatar, which we often dislike, was hosting the World Cup. So what would we do? That's how Vision 2030 was created. It set a deadline for certain goals and aimed to achieve them by then. Vision 2030 came from the desire to prevent the economic crisis and succeed in 2015.

Shin Ji-eun : I see.

Q Goals of Saudi Vision 2030

Shin Ji-eun : Are there specific visions?

Alphago: There are several. One goal of Vision 2030 is to create an economic structure not dependent on oil. Another is to develop the entertainment industry so it can operate independently and, if successful, become a country that exports entertainment. Also, improving women's rights is a goal. Women's rights can be seen as human rights but also as labor force and economic power. Mohammed Bin Salman pressured companies by saying if they don't hire women, they will be taxed, but if they do, they will receive benefits. This enabled women to work, which prevented Saudi capital from leaking abroad. Previously, many foreign workers came because women couldn't work. Although many foreign workers still remain, improving women's rights has greatly helped the economy. So women's rights are not just human rights but also money.

Shin Ji-eun : Bin Salman is smart in that regard.

Alphago : It's more about courage than intelligence. Everyone knows this, but it takes courage to implement it. There is an accumulated system, atmosphere, and environment that need to be broken down.

Q Costs of Vision 2030 and benefits for companies

Shin Ji-eun : Yes, even as Crown Prince, it must not be easy. You mentioned 'The Line' earlier. I saw a video you posted on your YouTube channel. It really looked like a movie. Glass walls, plants inside, and The Line is 500 meters high? Then artificial islands and tourism complexes. You mentioned entertainment, and Saudi's sovereign wealth fund is investing in game companies. To build all this, money is needed. Is the budget raised by taxes, their own money, or the sovereign wealth fund?

Alphago : Of course, their own money is used. At the same time, foreign companies are invited to participate first with certain benefits. They use various methods to make the NEOM City project successful. But they definitely spend their own money.

Shin Ji-eun : So they came to Korea to attract Korean companies like Samsung?

Alphago : Korea is one of them. They invite large companies with technology and money from Korea, Germany, the US, the UK, India, and China.

Shin Ji-eun : So those companies gain a lot as well.

Alphago : Regarding NEOM City, what I really don't understand about Korean media is that there are only two extreme narratives and no middle ground. The first narrative is 'NEOM City is a money party' and 'Korean companies are excited.'

Shin Ji-eun : That's how it comes out.

Alphago : That's a strange narrative. The second is 'NEOM City? Saudi is scamming people' and 'They will be tricked by Arab scams.' There's no middle ground. Why such extremes?

Shin Ji-eun : Probably because they don't know much. They haven't been there and don't know.

Alphago : I went there in January 2023. At that time, no one from Korea had been to NEOM City yet.

Shin Ji-eun : How much is built? Has construction started?

Alphago : I visited the area where the film studios are being built, the airport area, and the large studio area. When you say you want to learn about NEOM City, they provide accommodation and a two-day tour for foreign journalists and investors. NEOM City is about the size of Gyeonggi Province, so it can't be covered in one day. Construction is progressing. One feature of NEOM City is that it is entirely renewable energy-based. They are removing existing cables and laying new electrical cables suitable for renewable energy.

Shin Ji-eun : It's an enormous project. Do you think Korean companies will gain a lot?

Alphago : It depends on the agreement and which part of the project they handle. But to repeat what I said earlier, if you go thinking "Arabs are throwing money around, let's grab a bundle!" you will definitely be scammed. If you think "This is all a scam," other companies will go and profit. NEOM City is a huge project with many components; some will fail, some will succeed. I compare it to Dubai.

Shin Ji-eun : Dubai?

Alphago : Vision 2030, right? Dubai also had something like Vision 2010. They said, "By 2010, we will make Dubai like this." In the early 2000s, there were no skyscrapers like those in Taipei, and the tallest building was the Petronas Towers.

Petronas Towers is a Malaysian landmark with 88 floors (451.9m), first conceived in 1992 and completed in June 1996.

Dubai said, "We will build Burj Khalifa." At that time, no building exceeded 500m. "We will build a building over 800m" and "We will build artificial islands, not small ones but Palm Jumeirah." People said, "They're crazy! This will all fail," "Many people will die," "The building will collapse."

Shin Ji-eun : I've been there. I visited the artificial islands, and they were amazing.

Alphago : So was it successful?

Shin Ji-eun : Yes, because it attracts many tourists. I think it's successful.

Alphago : We tend to remember only successes. There were failures in that project too. Saudi Arabia is the same. NEOM City was announced, and some parts will succeed, some will fail. We just need to choose what won't fail. For that, thorough inspection and research are necessary.

Shin Ji-eun : So just because oil money came in doesn't mean we should be blindly optimistic; we need to be rational.

Alphago : Exactly.

Q Can NEOM City really be responsible for Saudi Arabia's future?

Shin Ji-eun : We've talked about domestic issues, and finally, one more question about NEOM City. Once built, people have to come live there, tourism has to happen, and the economy has to function. Using a real estate analogy, even if you build something good, there can be vacancies.

Alphago : Right. There are such buildings in Thailand.

Shin Ji-eun: Do you think NEOM City will really be responsible for Saudi Arabia's future?

Alphago : People say, "Why did they do NEOM City? Vision 2030 alone is enough."

Shin Ji-eun : Yes, it's a bit puzzling.

Alphago : People say, "This is all image washing," "I really don't understand this." The same was said during the Qatar World Cup. Why did Qatar push so hard to host the World Cup? It's image washing. Do people say that about a country's future? If you don't investigate this question thoroughly, the easiest answer is "image washing." The reason Bin Salman wants to do NEOM City is that many renewable energy companies from the US, Germany, Korea, and other countries have developed various technologies. For example, a Korean renewable energy company I covered before produces energy from waste and operates buses using that energy. Some municipalities in T?rkiye bought that technology and changed their city buses accordingly. There are such companies in Korea and other renewable energy companies worldwide. If all these companies gather in one place and build a neighborhood entirely powered by renewable energy, people will definitely move there.

Shin Ji-eun : That makes sense.

Alphago : Also, the city itself will be an exhibition. A city fully powered by renewable energy with no gaps has economic and human living significance. Many elderly people receiving pensions in the West go to Southeast Asia to live comfortably.

Shin Ji-eun : They wonder where to immigrate.

Alphago : If there is a city like this, very clean with great air quality, and its location is in central to slightly northern Saudi Arabia where the weather is somewhat windy, that is intentional.

Shin Ji-eun : Yes, if enough people gather, money will circulate.

Alphago : Also, if they include facilities to host international events in NEOM City, they will likely hold some international event there once a year, creating an economic ecosystem. The designers of NEOM City are not Arabs. If you look inside, large renewable energy companies and construction and architectural firms from the US, UK, and Germany designed it.

Shin Ji-eun: I asked earlier about the Saudi sovereign wealth fund. Some say Bin Salman only invests where he wants. Do foreign advisors or external experts provide advice?

Alphago : Of course. Although Mohammed Bin Salman is the overall leader, the person who actually works hard there is the former head of Aramco. He is the one making decisions.

*Yasir Al-Rumayyan

Governor of Saudi Sovereign Wealth Fund and Aramco board member

Shin Ji-eun : Saying 'Saudi sovereign wealth fund is Bin Salman's slush fund' is going too far.

Alphago : Yes. Bin Salman doesn't need a slush fund. He has moved beyond that stage. Have you seen what happens when Saudi kings die?

Shin Ji-eun : No, what happens?

Alphago : They are just buried in the ground with no epitaph. When Mohammed Bin Salman's father dies, he will be buried somewhere with no epitaph. They think having an epitaph might show attachment to this world, and the princes watching this won't be greedy for money.

Shin Ji-eun : So it's like, once you die, it's over.

Alphago : So as long as Mohammed Bin Salman maintains power, he doesn't need money. He's not a politician. There are elections, but he's not someone who spends money to get votes.

Shin Ji-eun : That's right. So far, we've had an interesting discussion about Crown Prince Bin Salman, NEOM City, and Vision 2030. We'll return with Part 3.

Alphago Sinasi

- Turkish journalist, writer, broadcaster, and editor-in-chief of AsiaN
- Appeared on E Channel's 'Brave Reporters,' JTBC's 'Non-Summit,' MBC's 'Korean Foreigners,' and more