Fahd al Rasheed, CEO King Abdullah Economic City HARDtalk

Macro HARDtalk. Welcome to a special edition from Saudi Arabia with me,

Stephen Sackur. I have come to one of the world 's biggest construction

projects, King Abdullah Economic City. It is projected to be home to

2 million people, a global city here in the kingdom of Saudi Arabia. My

guess is the CEO of this place, Fahd Al-Rasheed. -- guest. Good his dream

be about to turn to gust? -- could -- dust.

Fahd Al-Rasheed, welcome to HARDtalk. Thank you for inviting me

onto this extraordinary project. Tell me, how do you feel every day

when you come on to what must be one of the biggest building sites in the

world? It is wonderful. I get a rush every time I am here. How quickly

are things happening? When the visitors come, they see the big

stuff. I see the small stuff, a little bit of concrete poured here,

a little piece of law. I see everything. It's important to give

people a sense of the scale of this. It's a city that is going to be the

same size as Washington, DC. You say it will have 2 million residents. It

is extraordinary to build that from scratch? Absolutely. At the moment,

65% of our population is under 30. Because of population migration, we

have some of the fastest growing cities in the world. We need more

urban centres like this. We get people to move here by offering

jobs. It seems to me that when history was hatched, Saudi Arabia

was the dominant player in the oil market in the oil price was going

up. There was a sense that Saudi Arabia could do anything it wanted.

Things are very different now? King Abdullah Economic City, when it was

launched ten years ago, the idea was to prepare for a time like this when

oil prices were not so high. We are here. Despite all of the economic

news about oil prices and the economy of Saudi Arabia, we have

signed up 23 new companies in 2015. When you talk about being an

international hub, you have to persuade people that Saudi Arabia is

a great place to do business. I'm not sure the wild really believe

that right now. It is a great place to do business, it is more of an

image. In the US, it takes six years to get the permit for a

construction. Here it takes three weeks, and if it takes any longer,

we complain. What you think is the biggest priority? You have talked

about a port which you believe will be one of the biggest ports in the

world. There is also talk of and industrial base. What is the biggest

selling point? The first year we will focus on global logistics and

manufacturing. The port we build will be one of the largest in the

world and the biggest in the Red Sea by this year. We have 120 companies

from around the world, so we know how it works and it will continue to

the future. We are focusing on the retention sector, tourism and

education. You think Saudi Arabia is going to be a magnet for tourists? I

am confident. Our numbers show we will have 1 million people by 2020

and three and three and a half million by 2025. Way? An interesting

question. -- Why? The government intends on doubling the number in

the next five years. You have laid out some of the vision, let's go to

your office and perhaps we can challenge you a little bit more.

Saudi Arabia is entering an age of austerity. It seems to me this

extraordinary project is about extravagance? I think it is about

fundamentals. If you see what we've built, everything we've built is

what Saudi Arabia or the region needs. Infrastructure, industry, we

have two build 4 million housing units in the country in the next ten

years. We are looking at the potential of the country. Think back

to when the project was conceived. It was a different era, talking

about 2005. King Abdullah was on the throne. Saudi Arabia could be

guaranteed to be the dominant oil producer in the world for ever in

the world would always be reliant on Saudi Arabian oil. That is not true

today and it changes everything? The government wanted to create a new

era of development in the private sector. I think that the KAEC was

launched for this exact moment, when the government can do everything and

the government needs to rely on the private sector. I think it's

working. You can't divorce yourself from the economic picture of the

country as a whole. If the Saudi economy is going to slow down,

fundamentally, because the oil price has plummeted, it doesn't look like

it is going to rise anytime soon. Then you have a problem. I don't

mind being in the Saudi economy today. You sit in the middle of a

region that is full of turbulence, turmoil, war and uncertainty about

the future. That is also a terrible problem. I think that people forget

that the Middle East have had challenges for the past few years.

The war in the 1980s between Iraq and around, with the US in the

1990s. The second Gulf War in 2000 and the Arab Spring. We are kind of

use to it -- KAEC. Saudi Arabia has been stable throughout all of it.

You've been in the country, you've seen it. Does this look to you like

a country in turmoil? I have talked to a lot of people who talk about

uncertainty and challenges facing the kingdom unlike any they have

seen before. It comes back to the point about whether investors will

see this as the time to get involved with a speculative venture such as

this? I think what you are seeing today is a different era for Saudi

Arabia. It will see reform, a restructuring of the economy. I

think what people are most worried about is the pace of change. We are

seeing a dynamic government that is willing to take the hard decisions.

What used to take 12 months is taking one month to get done. I

think we are just not used to this pace of change, internally or

externally. You say this is a private-sector project, but there

have been several occasions, such as in 2008 with the DSE and in 2011,

when you have had to go to your government and plead for emergency

loans because you were running out of cash? This is what is called a

public-private partnership. You cannot build a city without the

government. No project of this scale can work without working with the

government. If I may say so, that is exactly the point. This is a leaked

memo from King Salman's office. It is marked highly confidential. It

gives strict instructions for the stopping of all new projects for all

public sector purchasers, including new vehicles and other equipment.

That is the mindset of the government today, a government that

you ultimately rely on. I think that today, if you look at the private

sector, despite all of the challenges, we have signed 23

companies. Our residential figures are healthy. In the first ten years

we developed 30 projects. Our projects for the next ten years are

137. Numbers prove it, it's not about... You like numbers, here is

another one. The marine traffic index that I looked out for November

of last year, it showed that on any given day, you have an average of

three or four vessels in port, whereas the port Jeter, just down

the coast from us, that had 44 vessels in port with another 42 en

route. Then if you go to the UAE, they are also much busier than your

new port. These numbers don't show the potential of our port. We have a

3 million container port today, aiming to be over for by the end of

the year. We have a number of the top shipping lines, I am very

confident about the future to make this one of the top 20 ports in the

world. Lets switch focus to the political, cultural climate in Saudi

Arabia and in Yoreli new city. Is your biggest problem that the

outside world's perceptional Saudi Arabia is that it is deeply

conservative and repressive? That is not in our sphere in which people

want to invest, live, or establish new lives. I think that is the wrong

picture. I think Saudi Arabia has been seen with a static lands. I see

a dynamic Saudi Arabia, it is changing quite rapidly. I don't

think we in the country understand the pace of change. Talking about

women, ten years ago there was no woman allowed on board, you could

not be a CEO. He could not be in Parliament. All of this change very

rapidly. Today, 20% of our counsellors are women. That was a

bit of a showpiece collection. It doesn't indicate real fundamental

change. Friendly, the biggest change of all would be if my female

colleagues on this same programme were able to come to your city and

drive themselves here, but that is not possible because you cannot

separate yourself from the deep conservatism in this country. I

think to say that elections that have been held, women have been

elected... Local council elections, this is nothing to do with who holds

real power. It is progress. There are more graduating women than men

from college. The world does not understand Saudi Arabia easily. I

would put it to you that you are a very particular kind of Saudi

Arabian. You are educated in the United States, you have been to

business school. You are open-minded and you are not representative of

the religious establishment in this country and not of the mindset of

the ruling family. I don't think I am representative of anyone but

myself. Saudi Arabia is a zero one form of person, we are very

different. Talking about people who are graduating from the US, there

are 160,000 graduating youth. They will change the country

fundamentally. Talking about change, let's be specific. You are

telling international investors to come and live here, to make this

place their future. Will there be a presence of the religious police

here? I don't think that's the issue. It's an important issue. A

talented young businesswoman, she wants to come here as part of a team

establishing a new company. She wants to believe she will have a

good life. Will she be able to integrate herself from the rules

that govern life in Riyadh, for example. Can she do the things that

she would do if she lived in the United States or Europe? You need to

remember that we are still in Saudi Arabia, Saudi Arabia today is very

dynamic. We are struggling between modernity and tradition. We have the

highest use of social media today in the world per capita. I don't know

what the country will look like in 30 or 40 years. What would you like

it to look like. I think we will have a lot of

youthful energy coming back into the country, women will take a stronger

place in society. But what it means to be Saudi is still not clear,

because we are, we have a different strata of people on income, on

religion. 30% of the population is not Saudi. So the country itself is

a young country and what it will look like in the future will be the

dynamism. Think maybe you are being a bit diplomatic, a little tactful,

but is your message to the rulers of this kingdom that they need to

accept change? I think they are leading change, to be honest with

you. Really? Hang on, you often say in public, we are going to be an

island of change. We are going to bring the world to Saudi Arabia and

Saudi Arabia to the world, and you compare yourselves here in this new

city to do by. But in Dubai, the authorities there have accepted all

sorts of different lifestyles. They have attracted Western money,

Western tourists, Western business people, because they have been so

flexible. Are you telling me that you can achieve that here? Well,

Dubai is different because it has to attract people from all around the

world. Producer you want to do that? We do, we want to attract foreign

direct investment, and we have done so. But my point is, we have huge

potential in the country, huge needs in the country for the Saudi

population. We don't need to attract people and tourism here, these are

not the same people that go to Dubai. We will have about 30 million

visitors who are already coming. They have visas and they want a

Conservative, family-oriented approach. That is exactly what we

are going to do. The other targets are Saudis themselves. They also

need a destination, so we will build zoos, golf courses, theme parks,

hotels, for those people. But you will do it in the Saudi way, in a

traditional way. I hope so, we have two. You are in Saudi Arabia, this

is a sense of place. On the golf course that you will build here,

will women and men be able to play together? Definitely, why not? I

know it is difficult for women to play golf in this country, partly

because of the clothing laws. We will figure that out, we are

building a new industry. Again, it is not about tactics, it is about

the direction. How can we create a new place in Saudi Arabia that is

respectful of the Saudi tradition, but at the same time is modern and

reflects the local needs and target markets. One of the key points made

by the Deputy Crown prince as he delivers what he calls his economic

transformation model, is to ensure that more jobs are done by Saudis

and fewer jobs are done by foreigners in Saudi Arabia. I think

construction is one area that he has been looking at. You have taken me

on a quick tour of construction, there is a lot going on, but I did

notice a lot of the workers I saw were not Saudis. Will that change? I

think the challenge with this is that we have opened our economy

unlike most countries in the world too expensive workers. They get paid

an amount of money that is reflective of their economic

opportunity of their country. That is below what a Saudi would make.

That is a challenge. We are going to change that overtime by training

Saudis, they are now accepting jobs that they use do not accept. To be

honest with you. You can look at our port operations, they are many

people from villages around us, and it took a long time to train them.

We are big believers that Saudis who are trained properly and help to get

a job will actually do it. It is partly about the mindset, isn't it?

You are telling us that you believe Saudis in King Abdullah economic

city will be able to do the construction work, the garbage

collection, some of the most basic labouring tasks which for decades in

this country have been done by overseas expatriate workers? I don't

see why not. Have you told this to your Saudi neighbours? It seems like

this is not a society right now that accept that. Despite the austerity

the government is talking about you still get huge subsidies, you live

off oil resources, and I don't think most Saudis feel or see the need to

do the kinds of jobs you are talking about. I think this is a

generalisation. I understand where it is coming from, but I know a lot

of Saudis who are willing to do any job. We see them everyday, we train

them, by the way, Saudis from the villages around us. Go to the

hotels, you will see them working in different jobs. It is all about the

environment you offer. If you offer the right environment and select

properly, you will see them doing their jobs. What about

sustainability? We haven't talked about that. It is an extraordinary

view here, because essentially beyond the fancy housing complex in

this beautiful office headquarters, you have desert. It does seem odd in

a building a vast new city in the middle the desert, adding goodness

knows how much carbon emissions to the atmosphere, when the world's

governments have just pledged themselves to decarbonising the

world economy. How are you going to justify this project? Actually, we

are very careful when it comes to building sustainable it. When this

project was launched ten years ago, it looked like Venice. It was

beautiful, but had nothing to do with the environment in which we

exist. Then I was in New York, during Hurricane Sandy, and assure

the gas back -- I sought the full power of nature and what it can do

if you try to concrete over the natural area. I came back and said,

this will not work. We allowed water to flow were it wanted to, and

focused on conservation a lot. I think conservation is the most

important form of sustainability, so that will cut 40% of our carbon use

if we just focus on this area. Now we are saying that the world is

changing. We just agreed that the mass of land that we have, although

it is probably the most modern, should be scrapped. I don't know yet

how the internet of things, the driverless cars, the sharing

economy, will change the way our city should look. I think we are

building great cities today, but they are not Houthi first century

cities. We still don't understand where 21st century cities should

look like. So you just scrapped your master plan? Does that mean you have

no plan at all? No, I prefer this. It should not be so exact about what

to do, it should tell you what not to do. Just coming back to this

point about how you reduce emissions and make it as close to carbon

neutral as you can, I was expecting, given that we are here in Saudi

Arabia, where the sun is pretty much always shining, I was expecting to

see vast solar arrays to power this place, but I don't see any

investment in solar at. Solo on its own is very effective, but not when

it is not coupled with storage. So, how new houses will not only have

solar panels, but they will have batteries as well. That is the idea

about it. That is not showing you -- it is not about showing you a nice

area with lots of solar panels, it is about number one, conserve, so

don't use what you don't need, and secondly, being sustainable

economically and ecologically. King Abdullah talked of six new economic

cities for Saudi Arabia. You are still going. There are one or two

others that are still staggering along, but a lot of the planning has

been shelved. You may be the last one standing, and you might not make

it either. I believe we will make it, first of all. It is happening,

so that is not a question in my mind. But building a city is not

easy, I have learned this the hard way. There are 247,000 cities around

the world, this is the most competitive space for a product, a

city. Each city has its own path, it really needs to be zooming into why

it needs to exist, and then you need committed government or private

sector developers to make it happen despite the challenges. I think this

will happen, but the others have just taken a very different path to

success. I hope I can return, but for now, thank you for being on

HARDtalk, Fido Fahd al Rasheed.