Can $2 Trillion Fuel Robotics in Saudi Arabia?

January 25, 2018      

Two years ago, as a drop in oil prices further destabilized the Saudi Arabian economy, the kingdom’s deputy crown prince, a millennial aged 30, unveiled a new plan, called “Saudi Vision 2030.” The overarching goal of this plan is to diversify the economy of Saudi Arabia beyond oil — and robotics could benefit from this.

The 84-page document calls for the creation of a public investment fund that will control a massive $2 trillion allotment, which would be the world’s largest sovereign wealth fund. The plan seeks to turn Saudi Arabia into one of the world’s top 15 economies by 2030 and, by the same time, to generate 35 percent of the kingdom’s economic output from small and medium enterprises (SMEs).

Business Takeaways:

  • Saudi Arabia is actively reinvesting in modern defense, security, and infrastructure technologies.
  • The kingdom has a plan to generate 35% of the kingdom’s economic output from small and medium enterprises (SMEs) by 2030.
  • Robotics companies looking to seize opportunity in an emerging Saudi Arabia will need to consider the social and political affects of technological change.

Defense and security

Robotics is already active in a few areas of Saudi Arabia. Most of that activity has to do with defense.

In 2014, Saudi Arabia purchased its first fleet of drones from China. The so-called Pterodactyls can be used for surveillance and/or attacking purposes. Two years later, Saudi Arabia purchased more military drones from China.

In early 2017, the chairmen of Milrem, an Estonian defense company, claimed that Saudi authorities expressed a high level of interest in “autonomous weapons systems.” Milrem had already signed a letter of intent with a firm in the United Arab Emirates to develop an unmanned ground vehicle (UGV).

Saudi Arabia and China are jointly working on drone manufacturing.Last March, China announced it would open its first drone factory in the Middle East in Saudi Arabia. The agreement was signed between the King Abdulaziz City for Science and Technology and the China Aerospace Science and Technology Corporation (CASC). CASC is also the main force behind China’s space program. Last June, Saudi Arabia announced that the first phase of the factory has been completed.

It is not just for pure military purposes that robotics is on the rise in Saudi Arabia, but also for internal security. The Saudi government has used drones to monitor pilgrims walking up Mount Arafat as they took part in Hajj. The drones, which make up part of a broader Saudi “network of electronic surveillance.”

Infrastructure and innovation

“Smart cities” are also emerging in the oil-rich nation, signaling a new push to become more connected with new technologies. Since 2005, Saudi Arabia has been constructing the King Abdullah Economic City (KAEC). The megacity project is expected to cost $100 billion and to be finished by 2020. KAEC is being engineered to accommodate autonomous vehicles and the Internet of Things (IoT).

Is KAEC a pilot to see how well autonomous cars are adopted in Saudi Arabia? If it is successful, will similar technology initiatives be rolled out in Riyadh, Jeddah, and other cities? If so, this could present additional opportunities.

The King Abdullah University of Science and Technology (KAUST) is also innovating in robotics. It has designed OceanOne to help monitor coral reefs in the Red Sea. OceanOne combines robotics, artificial intelligence and haptic feedback in a way existing underwater robots do not.

In addition, KAUST has developed smart threads that can monitor and analyze the “strength and location of pressures exerted on them.” The scientists see robotics as one of the main areas that can take advantage of this technology.

In late 2015, the Department of Passports unveiled plans to bring robots to the King Abdulaziz International Airport (KAIA) in Jeddah. The robots will help passengers line up for flights and, fascinatingly, act as a supervisor for staff. At the time, these robots were already operating at King Khaled International Airport (KKIA) in Riyadh.

Social change a potential challenge

As Saudi Arabia deploys robots, the government will undoubtedly face challenges. Take self-driving cars, for example. If self-driving vehicles take off in Saudi Arabia, they could disrupt society in two ways.

First, how will this affect women’s push for greater independence in society?

Saudi Arabia is developing self-driving cars.

Traffic in Jeddah, Saudi Arabia.

Second, while self-driving cars promise to boost efficiency and reduce congestion and pollution, there is another problem: youth unemployment.

Two-thirds of Saudi Arabia’s population (30 million) is under the age of 30. The unemployment rate for Saudi people aged 16 to 29 is 29%, meaning every 1 in 4 people aged 16 to 29 is out of work.

When entering different regional markets, robotics companies should consider where robotics will be adopted and how it will affect the environment in which it is operating.

Saudi Arabia at a crossroads

While robotics is emerging in different ways throughout Saudi Arabia, the technology hasn’t taken off in a way that would establish it as a robotics power — yet. The government is still in the process of deploying Saudi Vision 2030, and this means the nation’s robotics integration remains to be seen.

Will Saudi Arabia use robotics for oil and gas, manufacturing, public safety, military, education, or healthcare? This is unknown. Riyadh will likely only invest in robotics if it translates into midterm to long-term economic growth.

Perhaps the $93 billion fund that Saudi Arabia and SoftBank launched last year will provide glimpse into how robot-focused Saudi Arabia is. Will robotics companies benefit from this fund, or will it be geared toward big data, IoT, virtual reality, and other businesses?

Indeed, Saudi Arabia is at a crossroads. For decades, it has depended on oil to grow the economy and develop. Now, oil is losing its “juice,” and Riyadh is looking for new frontiers. Parts of the country have already witnessed robotics being used in different ways, but there is still no underlying government strategy to propel the robotics industry. Only time will tell whether Saudia Arabia’s strategy will maximize the benefits of automation.