Adrian Finighan’s interview with Amir Abdullah Al-Dabbagh that ran yesterday during “Quest Means Business”
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Amir Abdullah al Dabbagh, governor, Saudi Arabian general investment authority: We have launched so far four economic cities, and these economic cities aren’t only special economic zones or possessing zones.
They are all above plus – plus quality of life, lifestyle. What we are trying to introduce there is the next generation of lifestyle and quality of life, infrastructure, government services. We are creating a work, play, live and learn environment that is second to none.
Each and every one of these economic cities would host various clusters that would attract certain industries correlated to our core competencies and competitive advantages.
ADRIAN FINIGHAN, CNN INTERNATIONAL ANCHOR: Of course, we’re in the middle of a global recession here, a massive economic downturn. What sort of impact has that had on your plans?
AL DABBAGH: A positive impact, indeed. We believe that the global economic slowdown is presenting lots of opportunities. Had you asked me six months back, what are the main challenges facing these economic cities and these mega-projects, I would have said skyrocketing prices of building materials, lack of capacities of construction contracting companies, lack of equipment, lack of human capital. All these opportunities have disappeared. Today, we are accelerating the construction of these cities to take advantage of the depressed prices of building materials. Today we can achieve 30 to 60 – 30 to 40 percent cost advantage in construction.
FINIGHAN: So, the recession has actually done you a favor. But what about the depressed price of oil? I mean, it’s at six-month highs right now. But what has the depressed price of oil done to the Saudi Arabian economy over the last few months?
AL DABBAGH: This is cyclical. Saudi Arabia does not make its economic policy and economic plans based on today’s prices of oil. For instance, in 2009, despite the fact that oil prices lost over 50 percent of its peak value, still we increased our spending by 19 percent. His majesty the king announced in the G-20 summit in Washington that we’ll be spending $400 billion on infrastructure development over the coming five years. So, we aren’t linking our economic policies to the fluctuation or to today’s oil prices. Saudi Arabia, as you know, has significant international reserves, mostly invested in fixed income. And these reserves we tap into at the time of depressed oil prices.
FINIGHAN: Saudi Arabia, of course, one of the very few nations at the moment blessed with a surplus. Have you been put under pressure by the U.S., the U.K., a few other nations in Europe who are running up huge deficits at the moment, to invest in those countries to help balance those deficits?
AL DABBAGH: Well, Saudi Arabia has always been a good corporate or a good global citizen. Saudi Arabia has always played the role of a swing producer to maintain the interest of both producers and consumers.
This year, our capacity will reach 12 million barrels per day, although this capacity is not needed. However, we are investing billions of dollars to produce a capacity that the world can tap into as and when needed, as and when demand grows.
