Saudi Crown Prince Mohammad bin Salman just capped off a three-week tour across the United States. He spent last week on the West Coast, meeting with tech moguls from Jeff Bezos to Richard Branson and working to clinch deals with Snap, Amazon, Google and Apple. His Vision 2030 goal is to diversify Saudi Arabia's oil-based economy and transform the kingdom into a tech and logistics hub in the Middle East.
From the detention of princes in a five-star hotel, to plans for a grand tech city in the desert, it seems every bit of news that comes out of the kingdom lately has some business relevance. Much of it is splashy and designed for media attention, but behind the scenes, serious changes are under way to create a more friendly business environment for foreign investors and companies.
Saudi Arabia is not going to transform itself overnight into the new Silicon Valley, the Detroit of the 1950s or Wall Street. It simply does not have the manpower or enough citizens who will work for laborer wages. Hollywood and Silicon Valley investments may grab headlines today, but underneath, Saudi Arabia is pursuing diversification and expansion of private enterprise in industries in which it already has an advantage.
To reorient its economy, Saudi Arabia is taking advantage of its robust oil-production business and its veteran engineers and scientists and becoming a center of petrochemical and plastics manufacturing. Aramco, Saudi Arabia's national oil company, has already partnered with leading chemical manufacturers, like DowDuPont and Total, on several petrochemical plants in the kingdom.
There is also an expectation that another American manufacturer could join them and open a new chemical plant soon. In addition, Saudi Arabia is attracting the manufacturers who use these chemicals with free or subsidized access to utilities and proximity to chemicals production plants. In fact, a detergent manufacturer is already preparing to set up shop next to a Saudi petrochemical plant on the Persian Gulf.
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Saudi Arabia is also using a government stimulus package to lure Amazon to open a data center in the kingdom. Saudi Arabia is an attractive choice for Amazon to expand its data services and cloud computing to the Middle East because its west coast is beside an existing cable running underneath the Red Sea. The kingdom can also offer attractive utility subsidies to keep electricity costs low for Amazon. Moreover, it can provide subsidized real estate. Saudi Arabia realizes that the Middle East is traditionally underserved by data centers, and the kingdom wants to take advantage.