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Saudi Arabia’s NEOM project unlikely to match Korean firms’ expectations

Samsung Electronics Executive Chairman Lee Jae-yong, center, inspects Samsung C&T's tunnel construction for NEOM's The Line vertical city in Saudi Arabia in this October 2023 file photo. Courtesy of Samsung Electronics

Korean companies may not be able to enjoy the benefits they have anticipated from Saudi Arabia’s NEOM project, as the Middle Eastern country appears to be scaling down the urban development project amid its prolonged financial difficulties, according to industry officials, Monday.

Major construction firms in Korea initially sought to win large-scale orders for the project to overcome a recent slump in the domestic housing market.

When Saudi Crown Prince Mohammed bin Salman Al Saud visited Seoul in 2022, heads of Korea’s leading conglomerates met him in person seeking lucrative business opportunities. In 2023, President Yoon Suk Yeol visited Riyadh with business leaders to promote Korea’s capabilities in smart city construction.

After Samsung C&T and Hyundai E&C received orders two years ago for the construction of tunnels for The Line vertical city, however, there have been no additional orders placed with Korean construction firms.

Overseas news outlets also reported in April that the Saudi sovereign wealth fund’s lack of cash led to a reduction in the length of The Line to 2.4 kilometers from 170 kilometers, although the Middle Eastern country has denied 안전 the news. Last month, the planned construction of a desalination plant on Oxagon industrial city was canceled, thwarting the participation of Saudi Arabia’s Enowa, Japan’s Itochu and France’s Veolia in the $1.5 billion project.

In addition, it was reported that Saudi Arabia sold only $11.2 billion worth of shares in Aramco, falling short of the maximum amount the world’s largest oil company could have raised in such a deal, which was intended to attract foreign investments amid falling crude oil prices.

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