RAIL UPDATE - KINGDOM OF SAUDI ARABIA
ensure that member nations agree and adhere to a timeframe for completion.
Passports and visas Abdulla Al Nuaimi, the UAE’s minister of public works, said in January 2014 that a proposal has been made to allow passportfree travel across the network for all passengers, including both expatriates and locals. If the proposal is approved, it would mean that from 2018, when the tracks are due to be completed, passengers would be able to travel carrying their national identity cards rather than passports.“The idea of introducing the railway is to ease travel across the region,”Al Nuaimi said. In the UAE, Al Nuaimi said that a new law was being passed in time for the launch of the service that would cover various legal aspects relating to travel, including fares, Customs, border crossings and passport control. Muscat in the south, and from the border with Yemen to the border with Jordan. The wider integrated GCC network, first agreed on by transport ministers of the six countries in 2008, will not only offer an alternative to air or sea journeys and avoid road blocks at border crossings, it will also open up the possibility of more porous borders for each country’s citizens.
Mega-Projects Across the GCC region, hydrocarbons wealth is being poured into mega-projects, with new airports, sea ports, industrial hubs, urban transit systems and skyscrapers being built to drive and accommodate more diversified economies and growing populations. The rail network is designed to speed up these advances, and to allow the countries to share collective benefits. “Saudi Arabia is a huge market in the GCC and investors will want to tap into it,” said Fahad Al Turki, the head of research at Jadwa Investment.“There is a demand for Saudi products, whether it be milk or petrochemicals, in the GCC, so greater integration will help to open up the market for these.” There will also be benefits for other countries within the bloc. According to Dubai Customs, Saudi Arabia was the top destination for its re-exports in 2012. The rail network will also give GCC citizens an
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alternative route to events such as the World Expo 2020 in Dubai, which is expecting 25 million visitors, and will need 45,000 rooms to accommodate arrivals. Two years later, the FIFA World Cup in Qatar will provide residents of the GCC with another attraction that will be within easy reach if the rail network is completed on schedule by 2018. Efficient freight services linking the Red Sea with the Gulf, along the Saudi Landbridge being built from Jeddah to Dammam, will help shield the Saudi Arabian economy from any supply crises should any of the three seaway choke points of the Suez Canal, Bab El Mandeb or the Straits of Hormuz be threatened. The GCC rail network will also enable Saudi goods to be imported and exported from the Port of Salalah in neighbouring Oman, the only facility between Singapore and Europe that can accommodate S-class container vessels. Shipping is the cheapest way to move freight, but rail will be faster as soon as the new network is up and running. With just four years to go, only Saudi Arabia and the UAE have started building so far. Oman’s section of the network is set to be 2244 km long and it will go through some of the harshest terrain on the peninsula. It is still in the design stage as of 2014, with construction not due to start until 2015. An overarching authority to oversee the GCC project is due to be formed in 2014, and part of its role will be to
Customs and currency A Customs Union was first established by the GCC in 2003, creating a free trade area with common external tariffs, but there is an ongoing debate as to how to divide up the revenue from those tariffs across the bloc. The deadline for a solution is 2015, but before that happens, trade policies across the bloc must be unified. Speaking to the press after a May 2014 GCC meeting, Kuwait’s finance minister, Anas Al Saleh, said an agreement had been reached on the mechanism for distributing Customs revenues, although further studies needed to be carried out and would be reviewed at the meeting in September 2014. The bloc is also working to fully implement the GCC Common Market, which was launched in 2008 to allow free movement of factors of production. Citizens might also find that a new sense of interconnection will enable them to look further afield for work. A 2011 study found that only 21,000 GCC nationals were employed in another member state. -Originally published by Oxford Business Group (OBG) in The Report: Saudi Arabia 2014, published in August 2014, Economy Chapter. For economic news about The Kingdom of Saudi Arabia and other countries covered by OBG, please visit http://www.oxfordbusinessgroup. com/economic-news-updates