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When Saudi Arabia announced last year that its decades-long ban on cinema had been renounced, it became clear that the Kingdom was taking its plans to make entertainment “indispensable to quality of life” seriously. The announcement also acted as a clear sign to foreign investors that the Kingdom is indeed open for business. Entertainment is a sector that has previously received little attention in the country. However, its potential to further stimulate the nation’s ever-growing economy is significant. The Kingdom has certainly recognized the power of possibility that a flourishing entertainment sector can command, so much so that Saudi Arabia has set itself an ambitious mission to transform into a major entertainment and cultural hub by investing $64 billion in culture and leisure projects over the next decade.
Saudi Arabia’s ambitions are indeed impressive, but what does it take to cultivate a flourishing entertainment sector from the ground up? And, how do you make this sector competitive at a global scale and when compared to countries whose very identities are intertwined with entertainment and tourism? Until now, the Kingdom has certainly made an impressive start. Cinemas officially opened in April of last year with a screening of the super hero film, “Black Panther,” American rapper, Nelly, performed in Jeddah for an all-male audience in December 2017 and Cirque de Soleil made its debut in the Kingdom at the end of 2018. Attracting world-class acts and sporting events (such as the first formula-e race of the 2018/19 calendar held in Riyadh at the end of 2018) to Saudi Arabia is of course an important first step. However, building an infrastructure to support the fledgling industry is perhaps the greatest challenge. Interestingly, this is the area where the Kingdom has made the most notable progress.
Although the Public Investment Fund (PIF) is expected to drive the country’s entertainment growth, the Saudi government has announced that 40% of plans will be funded by the private sector. These plans are part of the aptly named “Quality of Life” program, which aims to generate an impressive 300,000 jobs by 2020 and deliver a wide range of entertainment and leisure facilities to cities throughout the Kingdom. Key current projects as part of this program include 16 entertainment complexes, an aquatic center and three additional leisure hubs. The plans also present a number of opportunities for foreign investors who are eager to enter the Saudi market.
Planned reforms to the country’s laws on Public-Private Partnerships (PPPs), including those that greatly reduce the time it takes to source business visas, will certainly make Saudi Arabia considerably more investor friendly. And, as more opportunities continue to arise, more and more foreign investors are sure to take full advantage of the chance to invest in the GCC’s biggest economy. Since the beginning of the year alone, a number of international cinema operators have signed agreements to launch their brands within the Kingdom, whilst more than 5,000 events, many by international operators, were held in 2018.
With more than 60% of the country’s population being under the age of 35, the nation’s demographics will play a significant role in transforming the Kingdom’s entertainment landscape. Younger generations of Saudis have traditionally travelled to other Gulf nations for entertainment and leisure purposes, but if Saudi Arabia is successful in creating a thriving entertainment hub, domestic spending on entertainment, leisure and even tourism is expected to increase. The food and beverage and retail sectors are also set to enjoy sustained growth due to tourism and investment in the entertainment sector.
One cannot doubt the seriousness of Saudi Arabia’s plans to become a tourism hub and an entertainment powerhouse. In fact, the entertainment sector comes third in funding, after only the petroleum sector and security. Challenges do exist: The country has only recently announced that it will soon welcome tourists, thus it will take time for those living outside of the nation to understand the country’s changing entertainment and hospitality landscape. However, the current reforms are certainly helping to change perceptions.
Opportunities in the enter tainment sector are indeed bountiful, and the Saudi government has clearly demonstrated its support in transforming the nation into a world-class entertainment hub. Other nations may have had a head-start, but if Saudi’s success in the past year alone is anything to go by, it certainly appears that the country is well on its way to achieving its ambitious goals.
* The writers is Strategic Advisory Expert at CBRE MENAT
