Analysis: Saudi Arabia’s Brand New Futuristic City
By Ramanath Jha
In 2017, the Crown Prince of Saudi Arabia, Mohammed bin Salman, announced the launch of the nation’s futuristic and fully automated business zone, NEOM. This hi-tech business hub, to be located in the Tabuk province in the northwestern part of Saudi Arabia along the Red Sea coast, is to be established at a cost of US $500 billion (INR 37.5 lakh crore). The region has been selected in view of its relatively mild climate. Most of Saudi Arabia has a desert climate with extremely oppressive day temperatures of above 45° Celsius. The project’s total area is slated to be 26,500 square kilometre and will link Jordan and Egypt via Saudi territory. The project is expected to generate 380,000 jobs and contribute US $48 billion (INR 36,000 crore) to the kingdom’s GDP by 2030.
More recently, in Jan 2021, the Crown Prince also announced that, as part of the NEOM project, a zero-carbon city called ‘The Line’ would be set up. The Crown Prince labelled the city project as a “civilisational plan that puts humans first”. ‘The Line’ is crafted as a linear city for one million people, running 170 kilometre long, with a width that would be walkable in five minutes. It is anticipated that people from all over the world would be drawn by the city’s excellent environment, state-of-the-art infrastructure and superior quality of life.
‘The Line’ is not designed to be a conventional city but a futuristic one. A city’s usual amenities such as schools, hospitals, and gardens will be carefully crafted in view of the residents’ expected proclivity towards the availability of top-quality education, health, and recreation. Additionally, the city would position itself as a top tourist destination. The Saudi administration also seeks to dispel any misgivings about the governance model that ‘The Line’ would follow. The entire NEOM area, including ‘The Line’, will be a free trade zone with its own tax structure and an autonomous legal system.
The technological and environmental plans of the “zero cars, zero streets, and zero carbon emissions” city have drawn the most attention. Drawings of ‘The Line’ show the city infrastructure and services arranged in three layers. The top layer, above ground, will be a pedestrian layer. It will be supported by two underground layers. The one immediately below ground will be the service layer of physical infrastructure. And further below the service layer will be the spine layer for transport. Project proponents stated that “High-speed transportation, utilities, digital infrastructure and logistics will be seamlessly integrated in dedicated spaces running in an invisible layer along The Line”. The high-speed transit is being designed to reach people anywhere in the city within 20 minutes. Alternately, people could walk to conveniences within five minutes. Artificial intelligence will have a critical role in the city. ‘The Line’ would be powered by 100 percent clean energy, rendering the city pollution-free, healthy, and sustainable. The city would be run totally on smart city technologies. Robots will play a key role in the areas of security, logistics, home delivery, and provision of care.
It is expected that the city infrastructure would cost between US $100 to 200 billion (INR 7.5 to 15 lakh crore). Investments are planned to be drawn from the US $500 billion allocated for NEOM, the Public Investment Fund (PIF) which is the Saudi’s sovereign wealth fund, and local and global investors over 10 years. Construction on the project’s first phase has already begun. NEOM Bay, some hotel complexes, and luxurious apartments have been completed. In 2019, the NEOM Bay Airport was inaugurated. A huge complex of palaces for the Saudi king, prince, and royal family members has also been started.
NEOM and ‘The Line’ are projects with a larger objective. As the world moves towards a non-oil-based future, Saudi Arabia, as the largest producer of oil, finds its economy threatened unless it finds alternate sources of wealth creation. Global trade and tourism would be the key areas for Saudi’s new economy. NEOM, backed by ‘The Line’ as the first fully automated city, could emerge as the leading global destination. In this, there is commonality between Saudi Arabia and the other gulf countries. Bahrain (Economic Vision 2030), Oman (Vision 2040), Qatar (National Vision 2030), UAE (Vision 2021) and Saudi Arabia (Vision 2030) are all seeking to diversify their economies and reduce dependence on oil.
Information on many areas in regard to ‘The Line’ are scarce. However, based on the material available, a broad assessment is possible. Firstly, the history of megaprojects in Saudi Arabia has not been happy. “The Saudi landscape is already dotted with failed or abandoned megaprojects”. Furthermore, such projects do not always turn out the way they are planned. Adverse turns in the global economy, cost overruns, and reduced financial returns on investment are some of the most common failings. Even if the above cited observations are dismissed as speculation, the fact is that this urban endeavour incorporates certain technologies that do not exist. Robot maids, dinosaur robots, and flying cars are still in the making. Neither are high-speed transits today capable of speeds of 512 kilometre per hour, which the city would require for end-to-end travel in 20 minutes.
Furthermore, irrespective of whatever kind of city one builds, a city’s foundational philosophy ought to remain the same. The quality of a city rests on its economy, its environment, and its equity. A city that overstates one to the detriment of the others imbalances itself and over time becomes unsustainable. The project proponents have talked profusely about the economic, technological, and environmental angles, but nothing is known about how equitable the city would be and who could afford to live there.
NEOM and The Line, as cited earlier, would be governed by a set of laws different from Saudi Arabia. But given the nature of the Saudi polity, where some of the governance practices are among the most regressive, uncomfortable incongruities for residents may surface. Since the city is looking for people to move in from the rest of the world, such concerns may not enthuse populations to move in. Saudi Arabia is not very kind to dissent; hence, very few voices of disagreement from inside the country have emanated. Some have mildly sought to remind the Saudi administration that there is no point spending billions of dollars on a totally new venture when the already existing Saudi cities were in a state of disrepair and needed fixing.
The Saudi administration highlights its environmental concerns and is planning to build a totally eco-friendly city. As the Crown Prince said, “Why should we sacrifice nature for the sake of development? Why should seven million people die every year because of pollution? Why should we lose one million people every year due to traffic accidents?” However, this does not seem to be practiced on the ground. The city’s construction is cutting “through its surroundings, forcing its way through tough terrain rather than embracing natural features such as the coast line.”
The Saudi administration also faces criticism on account of the attempt to evict the 20,000-strong Howeitat tribe from its centuries-old homeland that falls within the territory of NEOM. The tribe is resisting eviction. When leaders of the tribe protested, several from the leadership found themselves behind bars. The most vocal critic of them all, Alya Abutayah Alhwaiti, lost his life. The negative publicity was sought to be countered through a public relations exercise, crafted by an American PR company. However, much of the disquiet around the project remains.
Arina Kok of The Edge Malaysia in My Say: Sustainable finance a lever for growth, demonstrates how sustainability should be omnipresent in all development plans thinking as well as implementation.
Recent studies show that future years will be hotter than ever, and growing pressure from all sides to go beyond beautifully designed sustainability reports would be a must. Consumers and suppliers ought not to just value sustainability; they should prepare to pay for it. For instance, assets in dedicated sustainable investment strategies went over $1 trillion by June 2020.
In January, the country was badly hit by floods that displaced nearly 50,000 people. This exacerbated the impact of Covid-19 on struggling businesses, livelihoods, the healthcare system and the economy.
My Say: Sustainable finance a lever for growth
The pandemic aside, the Malaysian economy had suffered RM8 billion worth of damages, owing to climate-related events between 1998 and 2018. Given the rising magnitude and frequency of climate risks and their impact on businesses and society, the call to action is clear — strong cooperation between financial institutions and policymakers, businesses and society will be critical to drive the coordinated transition to a resilient and low-carbon economy.
To accelerate the transition, increased mobilisation of sustainable finance is needed to fund mitigation initiatives such as clean energy, energy efficiency and sustainable transport, and adaptation initiatives such as disaster management, infrastructure upgrade and sustainable land use.
Sustainable finance can be defined as any form of financial service that incentivises the integration of long-term environmental, social and governance (ESG) criteria into business decisions, with the goal of providing more equitable, sustainable and inclusive benefits to companies, communities and society.
While negative screening, such as absolute avoidance of activities, and thematic investing in selected sectors, such as clean energy, are commonly practised in sustainable finance, there is also a growing focus on diversifying sustainable financial practices into three other areas:
ESG integration — incorporating ESG information and analysis into investment decisions with the objective of enhancing risk-adjusted returns;
Norm-based screening and best-in-class (positive) screening according to defined ESG criteria.
Risk aside, climate change also presents opportunities to increase the range of financial products and services for renewable energy, green buildings and climate-smart agriculture and cities. The International Energy Agency projects the need for US$3.5 trillion (RM14.4 trillion) in annual global investments to build the infrastructure for a green economy.
Our World in Data, publisher of research and date of the world’s largest problems, found that the cost of solar and wind power plummeted at a staggering rate between 2009 and 2019, with the price of new solar falling by 89% and the price of onshore wind by 70%. It is now cheaper to invest in new renewables than in new coal power in every major energy market in the world, and soon it will be cheaper to build new renewables than to continue operating existing coal plants.
As markets advance in factoring ESG into risk-adjusted returns and more sustainable funds build competitive performance records, the lingering doubts about sustainable finance will diminish. According to S&P Global Trucost, over the past six years, the Standard & Poor’s 500 SDG (Sustainable Development Goals) portfolio increased by 136.2%. This compares with the S&P 500 portfolio, which generated a return of 125.8%. The research also indicated that companies with a higher proportion of their revenues coming from SDG-related products and services tend to outperform those with a lower proportion of their revenues.
The challenges in driving sustainable finance lie in having a clear direction and incentives to pivot from traditional investing strategies. The availability of quality ESG information is also an ongoing challenge, as most businesses are at different maturity levels in managing and reporting on ESG practices. While regulatory and market standards continue to be developed, a coordinated transition requires a system-wide engagement and effective reporting policies to be implemented.
In response to the need for common industry standards and frameworks, Bank Negara Malaysia is collaborating with the local financial industry to issue Value-based Intermediation Financing and Investment Impact Assessment Framework (VBIAF) guides for the different sectors.
The sectoral guides will facilitate the practical implementation measures pursued by the Joint Committee on Climate Change, including the Climate Change and Principle-Based Taxonomy that will be finalised soon. The first set of VBIAF sectoral guides on palm oil, renewable energy and energy efficiency was issued on March 31, while the second set for the oil and gas, manufacturing, construction and infrastructure industries will be issued by year end.
The right strategy
With increasing pressure from the regulators, investors, organisations and society need to clearly define their sustainable finance strategies, resilience to emerging risks and their role in the global transition to the green economy. Successful sustainable finance strategies will be those that are actionable.
Setting the right strategy starts with defining just where and how organisations should engage in sustainability. It is not just a matter of figuring out the right policies, but of identifying the right actions to make sustainable finance a lever for growth. The board and senior management will have to think about the organisation’s purpose and mission. The right answers will help define sustainability goals that suit the organisation — those that are measurable, authentic, achievable, meaningful and aligned with stakeholders’ needs.
The right strategy is essential because greening the economy has huge potential upsides and may be the greatest commercial opportunity of our age.
This article first appeared in Forum, The Edge Malaysia Weekly of 10 to 16 May 2021.
Arina Kok is a director of Ernst & Young Advisory Services Sdn Bhd’s climate change and sustainability services (CCaSS) practice. The views expressed are those of the author and do not necessarily reflect the views of the global EY organisation or its member firms. This is the second of a three-part series on sustainability in conjunction with Earth Day 2021.
What Is the Internet of Taxes? A question answered by Toby Bargar in his article dated May 13, 2021, explains how in this day and age, the Internet generally is gradually spreading wider and wider to cover most daily life. But to this extent, who would have thought so?
So, let us see what it is all about.
What Is the Internet of Taxes?
According to a McKinsey Global Institute report, IoT could have an annual economic impact of $3.9 trillion to $11.1 trillion by 2025. Adoption is accelerating across several settings, including factories, retailers, and even the human body. In fact, smart cities will reportedly create business opportunities worth $2.46 trillion by 2025, and by 2030 more than 70% of global smart city, spending will be from the United States, Western Europe, and China. With AI and the rollout of 5G facilitating faster speeds and scalability, we will see even greater demand across sectors for IoT solutions.
An oft-repeated phrase says that nothing is certain but death and taxes; however, in the case of IoT, we can say that nothing is certain but growth and taxes – we don’t yet know how it’s all going to shake out. The demand for IoT is going to tempt federal, state, and local jurisdictions to tax it. With voice communications taxable revenues declining, taxing IoT is an attractive option to replenish their coffers.
In 1998, Congress passed a moratorium banning state and local governments from taxing internet access. This ban was extended several times. The Permanent Internet Tax Freedom Act (PITFA) converted the moratorium to a permanent ban and was fully implemented nationwide on July 1, 2020. Since the initial moratorium, the internet has risen to be a critical communication tool over other more highly taxed wireless and landline voice options, which continue a steady decline.
The ability to tax IoT may require changing laws and regulations. This process could take some time, but there is a complicated web of laws, regulations, and tax liabilities surrounding IoT in the interim. As we continue to adopt smart solutions, companies have to get smart about the nuances and risks of IoT taxability.
There are two easy questions that will help you to begin to understand your IoT taxability risk.
1) Is your company selling internet access? 2) Is your connectivity embedded or over-the-top?
Over-the-Top or Embedded Connectivity
If your device is networked over a user-supplied connection, then access is over-the-top or bring-your-own Internet connectivity. The over-the-top connection can be wired, Wi-Fi, or purchased separately from a wireless service. For example, if you sell a wireless printer, users connect through their home or office network. You are not supplying the internet, but the device. In these cases, as an IoT device maker, you likely have no responsibility for the customer’s internet connection.
Different than over-the-top, an embedded connection is part of the device. If you sell a device that comes with its own data connection as a component of the sale or service plan, it is embedded. Smartphones are a great example of an embedded connection. The relationships between device makers and network operators can feature widely variable structures. The device provider may need to account for any taxes that need to be collected related to the connection.
The World Wide Web of Gray
Defining internet access may appear intuitive, but not all connectivity is considered internet access. If you are selling a service that meets the statutory definitions of ISP service, the federal law provides a moratorium against state and local taxes.
Private connectivity, however, is often taxable. Unlike the public internet, private connectivity occurs via a Local Area Network (LAN) or Wide Area Network (WAN). This type of access is considered a taxable communication service in most states. If the network is interstate, this will also subject you to the Federal Universal Service Fund fee (FUSF), which is currently 33.4%, an all-time high for this fee and growing higher every quarter.
However, there are questions about whether connections to devices that do not enable a WWW experience – you connect to the internet, but the end-user can’t log onto Facebook or perform a Google search – meet the federal definitions of ISP service. If you do not meet those definitions, then your likely tax destination could be LAN/WAN.
Avoid the Dead Zone
IoT is here to stay. As you develop and deploy IoT solutions, it will be critical to stay informed on the web of tax rules that may or may not apply to your business. Monitor federal and state agencies that have jurisdiction over internet taxation and stay abreast of any changes on the horizon.
With so much uncertainty, it can be tempting to push the envelope, but a conservative interpretation of tax guidance can proactively protect you from being caught off guard.
Finally, to avoid hitting a dead zone, don’t try to navigate the changes on your own. Consult with your tax and legal advisors to ensure that you are aware of the latest developments and plan your course of action accordingly.
Solar Panels are an effective and low-maintenance way to generate your own renewable energy. Here’s why you should consider installing them on your roof!
Why Should You Consider Solar Panels?
With energy prices rising to pre-pandemic levels, many of us have noticed that our energy bills have begun to rise in recent weeks. And if you’ve been with the same energy supplier for a long time, you’re likely on a standard variable tariff. Which means that if your energy costs haven’t increased in recent weeks, they’re likely to in the near future.
Now’s the perfect time to consider investing in photovoltaic (PV) solar panels. Today’s investment could result in decades of savings, add value to your home, and help you to drastically reduce your household’s carbon footprint. Solar power is on the rise in the MENA region, with investment reaching $1 trillion in the 2019-23 period in the region. Here we’ll look at some of the reasons why you should consider installing them on your roof.
Can solar panels really save me money?
Absolutely! Switch-Plan estimates that by installing solar panels, you can save anywhere from £85-£200 per year GBP with a full solar array. Depending on the size of your solar array and the daylight hours in your region, your solar array could become profitable in less than 10 years. If you’re a DIY enthusiast, you may be able to install your own solar panels, drastically reducing your costs.
As the solar market in the area grows, and becomes more competitive, households have more options than ever.
Don’t solar panels only work on sunny days?
The MENA region is known for its hot and sunny climate. But solar panels still work on cloudy, rainy and overcast days. As long as the sun shines in the sky, your PV solar panels will generate energy for your home.
Want to generate energy through the night as well? Solar arrays can be combined with domestic wind turbines to create hybrid systems that generate energy through the day and night.
Would you like your energy company to pay you?
Around 50% of the energy generated by your solar panels throughout the day is fed back into the grid. The good news is that your energy companies can pay you for this via Feed in Tariffs. These pay a flat rate per kWh of energy generated which can further offset the cost of the grid energy you use.
You’ve paid your energy company enough over the years. Isn’t it time they started paying you?
Combine energy tariffs with Feed In Tariffs to optimise savings
It’s important to note that you don’t have to use the same company for your energy tariff and your Feed in Tariff. By comparing energy plans and FiTs from different companies, you can optimise your savings, offsetting the cost of your installation and helping it to become profitable faster. All while helping to reduce the MENA region’s reliance on fossil fuels and pave the way for a renewable future.
Marking five years since the passing of renowned architect and artist Zaha Hadid, Zurich’s Galerie Gmurzynska presents a celebratory and revelatory exhibition of her work entitled “Abstracting the Landscape”.
The picture above is for illustration and is of Ocula.
An Homage To Zaha Hadid: “Abstracting The Landscape” Exhibition At Galerie Gmurzynska In Zurich
I write about conscious luxury, focusing on travel, well-being & art.
Described as the “Queen of Curves”, this Iraqi-British innovator was one of the major figures of late 20th Century and 21st Century architecture and design. Her buildings and interiors always dared to be different and her global legacy reveals her creative and enduring genius. What she achieved is an influential body of work which others look to for inspiration.
Hers was a career marked by recognition for all that she contributed to the development of design and function. Her impact on the built environment was extensive and driven by her fusion of Modernism into her architectural creations. This saw her become the first woman to receive the Pritzker Architecture Prize and the only woman ever to be presented with the Royal Gold Medal from the Royal Institute of British Architects. Her numerous and acclaimed exhibitions have included “The Great Utopia” at the Guggenheim Museum and Art Basel in both Switzerland and Miami.
Her architecture always evolved as she was never prepared to stand still or to accept anything that would compromise her vision. She was always eager to challenge preconceptions bringing some much-needed refreshment to an architectural establishment that can often appear stale and inflexible. The fact that her many buildings already seem timeless is a testament to her ongoing relevance and her ability to prompt those who follow to strive to achieve such a level of authenticity.
Galerie Gmurzynska has had a long association with Zaha Hadid having highlighted her work in a number of earlier exhibitions. There is therefore an initial poignancy around this collection of models, drawings, artworks and sculptures as it prompts the thought that she has now gone. However, the sheer vibrancy of the pieces quickly dispels any feelings of melancholy and it is a joy to look at and experience what is so carefully set out here.
“When we saw Zaha’s design for the “Great Utopia” exhibition of Russian Avantgarde at the Guggenheim New York in 1992, it took our breath away. And that is what our relationship was about, to implement breathtaking projects ever since. For most she will be remembered as the female architect who broke the glass-ceiling. For her the term “female architect” was irrelevant. For us, as a gallery, her drawings and paintings could be considered works of art, while Zaha never considered herself to be an artist. Zaha was an eternaly curious and artistic minded person with a vision. It is this Zaha that we attempt to present in our current exhibition as an homage to Zaha Hadid.” says Matthias Rastorfer, CEO and Partner at Galerie Gmurzynska
Zaha Hadid’s use of non-figurative forms and shapes fuses technology with art and the clever interplay of light and color combinations show her freshness of vision, creativity and technical expertise. Elements of the exhibition are so “reach out and touch” that they draw both the hand and the eye as they fill the gallery’s floor space. The sinewy contours of many of the works on display seem irresistible and lure both our eyes and hands to discover more. The mixing of media adds depth to the exhibits and there is also the contrast between the modernity on show here as it juxtaposes with the traditional architecture of the commercial building which appears opposite.
The exhibition involved close co-operation with the late artist’s designs team who act as the guardians of her legacy and who seek to preserve and respect her artistic integrity. It is fitting that Galerie Gmurzynska has decided to incorporate key elements of Zaha Hadid’s work as a permanent element of its gallery space. This will act as a reminder and a living memorial of this great architect and artist’s depth of contribution over the length of her career.
Impressive on all levels.
I view luxury lifestyle from a conscious perspective and am most passionate about wellbeing, art and travel. I am the founder of the lifestyle blog her-etiquette.com (follow me on Instagram: @her_etiquette). I also run the consulting firm HER CIRCLE which specializes in sustainable luxury strategies and marketing concepts with purpose. Before becoming an entrepreneur I have worked in Sales & Marketing at Coutts & Co, Deutsche Bank and Hugo Boss. Based between Zurich and London, I travel the world and write about the joy of the journey.
The United Nations (UN) celebrated on May 10th, 2021, the first edition of the International Day of the Argan Tree, an endemic tree in Morocco.
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