Saudi Arabia's Red Sea Project, Future of Energy, Environment, and Global Capital Markets Among Day 2 Highlights at Future Investment Initiative 2019

RIYADH, Saudi Arabia – Saudi Arabia’s Red Sea Project, the future of energy, the environment, renewable energy, global capital markets, entertainment and sports business, were among key topics discussed on the second day of the October 29-31 Future Investment Initiative (FII) in the Saudi capital Riyadh.

Some 6,000 delegates from around the world are scheduled to attend FII over its three-day course, including world leaders and top officials, leading investors and global experts. Wednesday’s roster of notable attendees, speakers and panelists included Brazilian President Jair Bolsonaro, Nigerian President Muhammadu Buhari, Kenyan President Uhuru Kenyatta, President of Congo Denis Sassou Nguesso, U.S. Energy Secretary Rick Perry, U.S. Treasury Secretary Steven Mnuchin, and UAE Minister of State H.E. Dr. Sultan Ahmed Al-Jaber.

Key world figures who attended on opening day on Tuesday included Jordan’s King Abdullah II, Indian Prime Minister Narendra Modi, White House advisor Jared Kushner, among others, along with the CEOs of leading global banks and financial institutions.

FII is held under the patronage of the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al-Saud, and the attendance of HRH Prince Mohammed bin Salman bin Abdulaziz, the Crown​ Prince, Deputy Prime Minister, Chairman of the Council of Economic and Development Affairs and Chairman of the Public Investment Fund​ (PIF), Saudi Arabia’s main investment arm.

Taking place at the Ritz Carlton and the King Abdul A​ziz Conference Center, FII is hosted by PIF, one of the world’s leading sovereign wealth funds. FII is organized around the overall theme of ‘what is next for global business?’ and will focus on three key pillars: sustainable future, technology for good to help everyone, and the development of societies, according to PIF.

One of the key participants on Day 2 was U.S. Treasury Secretary Steven Mnuchin who answered questions from Tadawul Saudi Stock Exchange Chairperson Sarah Al Suhaimi on a Q&A panel entitled ‘Global capital markets – what principles, policies and initiatives will guide their development over the next decade?’ 

Commenting on Saudi Arabia’s Vison 2030 roadmap for a more diversified future economy,  Mnuchin said: “It’s a hugely important opportunity for the KSA economy, and capital market reforms are crucial to the whole process of transformation. You need proper regulation but not too much.”

‘ARAMCO IPO TO COME SOON’

Earlier on Wednesday, Perry took part in a panel discussion on the circular carbon economy​​​ with H.R.H Prince Abdulaziz bin Salman Al Saud, the Saudi Minister of Energy; H.E. Dr. Sultan Ahmed Al-Jaber, Minister of State of the United Arab Emirates and CEO, Abu Dhabi National Oil Company, UAE; and Andrew Liveris, Special Advisor, Public Investment Fund in Saudi Arabia.

Speaking briefly about the Aramco IPO, the Saudi Minister of Energy HRH Prince Abdulaziz bin Salman Al Saud, said: “Without much ado, I hate this time around to disappoint the media, because I am not going talk about OPEC or what we should do and I am not going to talk about the IPO. It’s going to come soon .. but it will come in the right time with the right approach and definitely with the right decision. And it will be a Saudi decision, first and foremost, specifically [Crown] Prince Mohammed [bin Salman’s] decision.”

Commenting on the Aramco IPO, US Treasury Secretary Mnuchin has said earlier at FII that it will be “a great opportunity” to grow the capital markets in the Kingdom.​

Brazilian President Jair Bolsonaro took part in a plenary session entitled: Return to prosperity: Can a new global investment environment put Brazil back in business?

On the question of whether Brazil is back in business, Bolsonaro set out his plan to liberalize the Brazilian economy and what are the challenges and opportunities, and what role can investors play.

“Brazil is moving in the right direction – the government's executive and legislative branches are now truly independent of each other, while both are working towards the single purpose of development,” Bolsonaro said.

"A speech from a head of state won't convince investors, but facts and figures will,” he said.

"We have never had such a low interest rate – around 5.5% – and our #inflation rate is lower than our target of around 3%.”

Asked what can Brazil offer infrastructure investors, Bolsonaro said: “As part of our ongoing reform efforts, we will be spending less than the revenue we’re collecting in taxes – that’s our main and most important guarantee.”

‘AFRICA IS OPEN FOR BUSINESS’

Nigerian President Buhari, Kenyan President Kenyatta, and President of Congo Sassou Nguesso, spoke on a panel about what’s next for Africa and what policies are needed to promote sustainable, continent-wide growth in the continent which is eyeing economic transformation.

Kenyan President Kenyatta answered a question on whether Russia is now African’s new friend, by saying: "What China has seen in Africa is opportunity. It matched this. Russia has woken up... they want a piece of the action.

He added: "We’re telling the world: come. Africa wants to be a friend to all and is open for business."

‘AI IS GOING TO DISRUPT EVERY ASPECT OF GDP’

Speaking on a panel on investing in AI and how does the role of capital need to change to fuel the anticipated proliferation of AI across the entire economy, Rajeev Misra, CEO of SoftBank

Investment Advisers, spoke about the impact of Artificial Intelligence on the global economy in the future.

"Over the last 20 years the internet has disrupted maybe 15–20% of world GDP. By contrast, AI is going to disrupt every aspect of GDP."

A panel of experts discussed infrastructure investment ranging from China’s Belt and Road to Saudi Arabia’s giga projects, including the question of whether the global building boom strengthen regional ties and international cooperation.

Ben Way, CEO of financial services provider Macquarie Group, spoke about the scale of worldwide migration to cities: "By 2035 the world needs $50 trillion to meet the infrastructure needs of urbanization and to keep driving economic development. This will have to be funded through multilateral organizations."

Darren Davis, President & CEO of Saudi Arabia’s Maaden, said: “Saudi has resources which have been known about for a long time but never developed due to lack of #infrastructure. Through new investments, we're now developing mineral resources like gold and copper.”

Yusuff Ali, Chairman & Managing Director of Lulu Group International, noted: "This is a great time for investors to come to Saudi Arabia, as the government invests in new roads and bridges – as well as agricultural infrastructure."

Taking part in a panel on the business of sport, HRH Prince Abdulaziz bin Turki bin Faisal Al Saud, Chairman of the Saudi General Sports Authority, argued the case for sports business in the Kingdom.

“With 70% of the Saudi population under the age of 35 there's a demand for sporting events and they're a platform for growth – we aim to create 130,000 jobs by 2030,” he said.

Entertainment had its share of discussions on the second day of FII 2019.

American filmmaker, director, and writer Oliver Stone gave advice to young Saudi filmmakers: “Make a film. Make it as good as you can. You will get an audience here. You have to start with the script, actors, hard work. Put it together. Think it through. It’s easier to make, harder to be seen.”

Speaking about the growth of cinemas in Saudi Arabia, where commercial cinemas opened their doors to the public in 2018 for the first time in decades, Adam Aron, President and CEO of AMC Theatres, said: “It’s such an exciting development for Saudi Arabia to reopen cinemas after 37 years. Our long-term goal is to open 50 movie theaters across the Kingdom, in partnership with PIF.”

RED SEA DEVELOPMENT COMPANY

Among new deals announced at FII on Wednesday, the Public Investment Fund (PIF) announced it has signed a US$10 billion syndicated bridge loan. The proceeds of this syndicated bridge loan will be used for general corporate purposes and will enable PIF to accelerate the implementation of its investment program. The syndicated bridge loan will be repaid following completion of the agreed sale of PIF’s stake in Saudi Basic Industries Corporation (SABIC) to Saudi Aramco, PIF said in a statement.

H.E. Yasir Al-Rumayyan, Governor of PIF, commented: “The agreed sale of PIF’s stake in SABIC is anticipated to realise a significant level of capital to be redeployed according to PIF’s mandate, however, the regulatory requirements ahead of completion mean there is likely to be a period of delay before PIF is able to redeploy that capital. This bridge loan will enable us to accelerate the implementation of our ambitious investment program while ensuring that we maintain a conservative level of leverage.”

In other deals, the Red Sea Development Company (TRSDC), the developer behind one of the world’s most ambitious tourism development projects, has awarded Fosters + Partners the design contract for the destination’s international airport, set to serve the one million annual tourists and visitors expected by 2030. 

“Awarding the contract for the design of our airport is an important milestone and the first of the underlying infrastructure projects of the destination,” John Pagano, Chief Executive Officer at The Red Sea Development Company, said in a statement.

The airport, due for completion in 2022, will serve an estimated one million tourists per year with a schedule of domestic and international flights, and a peak of 900 passengers per hour.  In line with the company’s sustainability goals, the airport will have an eco-friendly and sustainable design. Its architecture will be informed by the natural beauty of the surrounding landscape and represent the vision of The Red Sea project.

Asked how much the company has earmarked for construction spending over the next year, he told a news conference the amount was up to SAR 12 billion (US$3.2 billion), on top of what has been spent already.

“What I say to contractors is: Saudi Arabia is where it’s happening. There’s going to be US$1.5 trillion in construction spend over the next two or three or four decades and it’s a huge amount of construction. So this is the start of that process, set up now because there’s a long-term pipeline of work. We have enough work to keep most of these contractors busy as well but it’s bigger picture for them. So it is in their interest to make the effort to set up.

“When we talk to contactors .. one of the things that we are really keenly focused on is coming up with techniques and looking at contactors that are really innovating in their construction techniques. What I mean by that, I am looking for modular construction, whether it’s 2D or 3D..” to be built off-site in order to minimize the impact on the environment, Pagano added.

He said the company has not taken out any loans to date but was in the process of finalizing more than SAR 10 billion senior debt package expected to be in place by the early part of next year.

The Red Sea Project is a new luxury hospitality project on the Red Sea. The first phase of the development will include up to 14 hotels offering 3,000 hotel rooms across five islands and two inland sites, as well as commercial, retail and leisure facilities and other infrastructure. Upon completion in 2030, the destination will deliver up to 8,000 hotel rooms across 22 islands and six inland sites.

© Press Release 2019