Michel Theodoulou, The Times
08 March, 2005

MORE than 150 Saudi and foreign companies packed a recent investment conference in London organised by the Saudi Railway organization for the kingdom's multibillion dollar railway expansion project. The keen interest from investors was understandable: these are boom times in the kingdom.

Investment in the expansion and upgrading of infrastructure will be even greater than in the 1970s and 1980s when Saudi Arabia underwent huge modernization. Billions of dollars in investment will be required in the kingdom between now and 2020 for development and job creation, according to some estimated. The investment will come from the government, the private sector and foreign companies and institution.

There are plans to upgrade and integrate the transport system and to develop tourism, while the country's young and growing population means there will be heavy investment in education and housing.

"We intend to make maximum use of additional revenues coming our way to make major improvements in infrastructure, in transportation particularly, and to promote the widespread growth of small and medium-sized businesses in all parts of the kingdom," Ali Al-Naimi, minister of petroleum and mineral resources, said in a speech at Chatham house. He adds that last year the government allocated about $11 billion to projects such as healthcare, education and housing.

One of the most ambitious projects is the completion of a rail "land bridge" spanning the kingdom from the red sea to the gulf which was first envisaged in the 1940s when Saudi Arabia began developing a modern infrastructure. The first part was subsequently carried out, linking the gulf port of Dammam to the landlocked capital, Riyadh, which is the largest city in the gulf region.

The second stage is now being launched to connect Dammam and Jeddah through Riyadh, giving the kingdom's container terminals the potential to challenge Dubai's leadership in the regional shipping market. A new line will also be built between Dammam and Jubail. Another major undertaking will be the construction of a line connecting the land bridge to the far north of the country where there are huge deposit of phosphate and bauxite to be exploited.

Bids for the concession are expected to come from several consortia in the coming months and to be signed in late next year, with the land bridge set to take its first shipments by the end of the decade.

The UK has long been a leading investor in Saudi Arabia, which is one of Britain's largest trading and investment partners in the Middle East. There are 25.000 British expatriates resident in the kingdom and 150 UK-Saudi joint ventures, many involving signification British companies such as GlaxoSmithKline, Shell, BP, Rolls-Royce, Marconi, BAE system, Tate & Lyle, Unilever, Taylor Woodrow, Amec, Harvey Nichols, Marks & Spencer and Debenhams.

The rail network last year carried 1.3 million passengers and a billion tones of goods. Now nearly 1.000 km (600 miles) of tracks are to be constructed between Riyadh and Jeddah-reducing travel times between these tow cities by at least five hours-and a further 115 km between Dammam and Jubail, as well as upgrading the existing link between Dammam and Riyadh.

The expansion will enable American and European vessels to unload their gulf-bounds cargo in Jeddah, while shipper from the Far East will be able to use Dammam as a trans-shipment point to Jeddah and onwards to markets in Europe.

The rail delivery time between Jeddah and Dammam will be less than 48 hours, compared with up to seven days by sea. This would greatly reduce transport costs and save time traveling around the Arabian Peninsula, producing a Panama Canal effect on the region.

A line is also planned from the Jalamid phosphate and Zabirah bauxite mines in the remote north to connect with the landbridge at Riyadh.

The interest in Saudi Arabia's privatization and reform strategy has also been reflected in the huge demand for initial public offerings in telecommunications and insurance. Telecoms giants view the kingdom as particularly lucrative: the country has a population of more than 20 million people, more than 60 per cent of them under 25, and one in three people owns a mobile phone.