‘Full steam ahead’ for Saudi giga-projects

Schemes are currently buffered from conflict – but that could change, warns expert

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The continuing Red Sea conflict has not yet dissuaded investment into Saudi Arabia’s PPP projects, according to a transport and logistics expert.

“The disruption in the Red Sea is not derailing investment as it stands. It’s still very much full steam ahead with these projects,” John Manners-Bell, CEO of TI Insight, a transport consulting firm, told Partnerships Bulletin.  

However, negative investor sentiment will grow should the conflict lengthen into years, or experience contagion into wider areas of the Middle East, he warned.

Manners-Bell was speaking following his firm’s publication of the Agility Emerging Markets Index 2024, which points to potential opportunities in the region for future infrastructure development. However, these opportunities could still be damaged by ongoing conflict in the Red Sea, especially if the trouble drags on for years or widens to bring in other actors in the region and beyond.

In recent weeks, a coalition of forces led by the US and UK have bombed a number of Houthi locations in Yemen and against Iran-backed Shia militants in Iraq. The action has been taken in an effort to prevent Houthi attacks on Western ships in the Red Sea heading to and from the Suez Canal, which have escalated in recent weeks in retaliation for Israel’s war in Gaza. 

The US has since enacted direct strikes on Iran military targets across the region as retribution for the killing of three US personnel in Jordan.

Manners-Bell, who is in regular contact with investors into Saudi’s $500bn Neom project, said that investors are “watching and waiting”. 

He continued: “While the [Red Sea] situation is relatively contained, international investors are still very confident in the kingdom’s 2030 Vision.

“The fact remains the opportunities in Saudi Arabia are immense for foreign companies that want to get involved. The sums of money being talked about are eye-watering.”

The transport expert pointed out that the kingdom’s many reform efforts are helping to spur investment and drive interest in PPP projects.

“Saudi Arabia is viewed as a much safer bet now than it was a few years ago, as it continues to modernise its business red tape, customs procedures and so on,” he said. “For many years Saudi was seen as having great brochures but no proven reality. That reality is now here.”

Manners-Bell highlighted the kingdom’s specific need for PPP investment.

“The government doesn’t want to invest solely on its own in infrastructure, like energy, technology and transport. It wants to bring in resources and expertise from around the world to underpin its success. I wouldn’t call it a Western brain drain exactly, but Saudi is already attracting a lot of global talent.”

Abdulelah Aleidan, senior director of infrastructure advisory and head of transport at the kingdom’s National Centre for Privatisation and PPPs, told a Partnerships Bulletin webinar in December that Saudi Arabia is undergoing a “once-in-a-lifetime” transformation, with more than 200 approved PPP projects, plus a further 200 awaiting approval across 16 sectors.