Bin Laden Group & Kingdom Holding back in business: Detainees to darlings
After three months of detention…
Saudi Prince Al Waleed bin Talal was seen relaxing on the beach with his grandchildren last weekend.
Bakr bin Laden, Saudi bin Laden Group’s (SBG) Chairman who reached a deal with the government is managing the business behind the scenes.
Both leaders are back in business and at the helm.
Big projects in the pipeline
Reuters reported Thursday that construction of Jeddah Tower, the world’s tallest skyscraper, is going ahead.
Kingdom Holding Co, has a 33% stake in it, and SBG 16.6% part owner, is also the project’s main contractor.
Reuters said the government is trying to prevent the purge from disrupting major economic development schemes, even after authorities seized $107 billion in cash and or assets from detainees in settlements over corruption charges.
“We have faced delays. In projects of this magnitude you always have delays – I hope we’ll recover the delays we’ve had. We will be open for business by 2020, hopefully,” Mounib Hammoud, chief executive of project owners Jeddah Economic Co (JEC), said in an interview to Reuters.
The tallest building is heading vertical again and SBG is rocketing with NEOM, which struck a deal with the contractor.
Saudi began to award contracts for the development of NEOM, a $100bn city by the Red Sea, 100% renewabl, fully robotic.
The contract asks local construction companies to build five palaces there.
According to the Strait Times, a news website in Singapore, SBG has been mandated to build one of the palaces in a sign that it retains the government’s support despite the detention of its owner.
NEOM has recently sparked some concerns that has to do with Saudi unable to shed an image of one which has a history of delays in big projects.
Jason Tuvey, an economist for research group Capital Economics, said that “Saudi Arabia has a patchy record when it comes to fulfilling mega-projects,” pointing to the $2.5bn King Abdullah Economic City (KAEC) near Jeddah that has faced repeated delays and four masterplan revisions.
Why the timing of these announcements?
Saudi at a crossroads
The anti-corruption initiative in the kingdom sparked concerns among foreign investors.
The Kingdom is keen on changing investors’ perceptions about the kingdom.
This is why Saudi Crown Prince, Mohamed bin Salman will be visiting the United States in the coming weeks in a bid to attract investors to the kingdom.
CNBC quoted experts saying that one of the biggest challenges facing the Crown Prince is to explain the detention of dozens of princes, officials and businessmen.
“The swift and unexpected crackdown spooked investors just days after the Saudi sovereign wealth fund hosted a major investment summit in Riyadh,” it said.
It added that analysts believe it’s too soon to determine the corruption campaign’s long-term impact on investor sentiment.
Reuters interviewed a Gulf banker who deals with Saudi Arabia who said the authorities appeared keen to conclude the probe partly because foreign investors were concerned their assets or local business partners could be targeted in the wide-ranging crackdown.
“The government is signaling that it wants to move to a new phase now, away from the crackdown and into other economic reforms,” the banker said.
Reuters said that Saudi authorities are keen on preventing the probe from slowing inflows of foreign direct investment, keys to the government’s effort to diversify the economy beyond oil exports.
According to CNBC, Saudi Arabia’s immediate concern is Saudi ARAMCO’s IPO which aims at raising $100 billion, while creating create the world’s largest sovereign wealth fund and underwriting Salman’s plan to diversify the oil-dependent economy.
However, Amin Nasser, president and CEO of the nation’s state oil giant, Saudi Aramco, said at Davos that Saudi Arabia’s anti-corruption campaign has bolstered investor confidence in the kingdom.
“Anything that is tackling corruption should be creating a healthier environment for the investment community,” he said.
“There is a lot of appetite for more investment, and we don’t have any issues so far.”
Prince Turki Al-Faisal, Saudi Arabia’s former ambassador in Washington and London, was also an anti graft campaign supporter.
“I cannot accept the proposition that fighting corruption will drive away investors. It will attract them, because they know they will not have to pay the extra 5 or 10 percent for bribes,” he told Davos delegates.