Saudi Arabia must plan carefully for ‘super cities,’ says strategist

The NEOM mega-city is part of plans to transform the Saudi economy. Reuters text, Caption text. (Reuters)
Updated 22 November 2019

Saudi Arabia must plan carefully for ‘super cities,’ says strategist

  • Author and global strategist Parag Khanna held up Dubai as an example of a city that was making major progress in the drive to ”smart status”
  • In his recent book “Connectography,” he said that research by consultants McKinsey found that the minimum size for a “super city” was 4 million inhabitants

BEIJING: Saudi Arabia has the potential to develop “super cities” in the Kingdom, but must pay careful attention to the economic fundamentals behind such projects, according to global strategist and author Parag Khanna.

Speaking at the Bloomberg New Economy Forum in Beijing, Khanna told Arab News: “When you are building a city from scratch, you have to be certain of the plan. What is the economic master plan? How self-sustaining will the city be? What will people living there do for a living?”

The Kingdom is planning the mega-city NEOM on the northwest coast, as well as several other developments, under the Vision 2030 strategy to transform the economy.

Khanna, author of the recent book “Connectography,” said that research by consultants McKinsey found that the minimum size for a “super city” was 4 million inhabitants. In Saudi Arabia, only Riyadh had surpassed that figure in a single conurbation.

“The way to make up the difference is to create “smart” cities that will increase connectivity and living standards,” Khanna said. He held up Dubai as an example of a city that was making major progress in the drive to ”smart status,” adding “for the first time in a long time, other Arab cities are looking at another Arab city as a model of the kind of city they would like to live in, rather than a city outside the Arab world.”

Khanna said that he did not know enough about plans for NEOM and other Saudi projects to know whether they would be successful in reaching “super city” status. “I’d have to kick the tires,” he said, pointing to developments along the Red Sea coast like the King Abdullah Economic City and the regeneration of Riyadh as other potentially successful urban projects. 

Super cities are conurbations that drive economic growth and improvement in living standards. “Urbanization has been the single greatest factor in improving the human condition,” Khanna said.

The Arab world and South America have historically been urban dominated, but the drive to city building recently has gathered pace in China and India.

$8bn blow to Erdogan as investors flee Turkey

Updated 09 July 2020

$8bn blow to Erdogan as investors flee Turkey

  • Overseas holdings in Istanbul stock exchange are at lowest in 16 years

ANKARA: Foreign capital is flooding out of Turkey in a massive vote of no confidence in President Recep Tayyip Erdogan’s economic competence.
Overseas investors have withdrawn nearly $8 billion from Turkish stocks since January, according to Central Bank statistics, reducing foreign investment in the Istanbul stock exchange from $32.3 billion to $24.4 billion.
As recently as 2013, the figure was $82 billion, and foreign investors now own less than 50 percent of stocks for the first time in 16 years.
“Foreign investment has left Turkey for several reasons, both internal and external,” Win Thin, global head of currency strategy at Brown Brothers Harriman, told Arab News.
“Externally, investors fled riskier assets like emerging markets during the height of the coronavirus pandemic. Some of those flows are returning, but investors are being much more discerning and Turkey does not seem so attractive.”
In terms of internal factors, Thin said that Turkish policymakers had made it hard for foreign investors to transact in Turkey. “This includes real money clients, not just speculative.
“By implementing ad hoc measures to try and limit speculative activity, Turkey has made it hard for real money as well. Besides these problems, Turkey’s fundamentals remain poor compared to much of the emerging markets.”
Erdogan allies claim international players are manipulating the Istanbul stock exchange through automated trading, and have demanded action to make it difficult for them to trade in Turkish assets.
Goldman Sachs, JPMorgan, Merrill Lynch, Barclays and Credit Suisse were banned this month from short-selling stocks for up to three months, and this year local lenders were briefly banned by the banking regulator from trading in Turkish lira with Citigroup, BNP Paribas and UBS
JPMorgan was investigated by Turkish authorities last year after the bank published a report that advised its clients to short sell the Turkish lira.
MSCI, the provider of research-based indexes and analytics, warned last month that it may relegate Turkey from emerging market status to frontier-market status because of bans on short selling and stock lending.
With the market becoming less transparent, overseas fund managers, especially with short-term portfolios, are unenthusiastic about the Turkish market and are becoming more concerned about any forthcoming introduction of other liquidity restrictions.
The exodus of foreign capital is likely to undermine Turkey’s drive for economic growth, especially during the coronavirus pandemic when employment and investment levels have gone down, with the Turkish lira facing serious volatility.