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Saudi Arabia's 'Neom' Megacity Worth $500 Billion Delayed By Plunging Oil Prices & COVID

The plummeting oil prices and the economic crunch due to coronavirus have delayed the construction of Saudi Arabia's futuristic megacity 'Neom' project.

Saudi Arabia

The plummeting oil prices and the economic crunch due to coronavirus have delayed the construction of Saudi Arabia's futuristic megacity 'Neom' project. The futuristic tech-hub was set to be completed in 2025 and accommodate one million people, costing an estimated $500billion (£413billion).

This megacity project is planned to be built-in Moroccan-style opulent buildings and palaces which will include helipads, a marina, a golf course and will be lit by a giant artificial moon. So far only a few palaces and helipads are reported to have been built in Neom.

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Saudi Govt increases VAT

The Saudi government has introduced austerity measures last week due to plunging oil prices and a coronavirus-led economic slump thus putting Neom's future at risk. The government has also announced plans to triple the Value Added Tax (VAT) from 5% to 15%  and halt handouts to citizens, in its new austerity measures.

The cost of living allowance will be halted from June 2020 and VAT will be raised from five per cent to 15 per cent from 1 July, Finance Minister Mohammed al-Jadaan said in an official statement. He further said the measures were necessary to support the state finances amid a 'sharp decline' in oil revenue as the coronavirus pandemic weakens global demand for crude. 

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Soon after the government's decision, a Neom contractor is reported to have cut the working hours of some staff by half. Plans for the 10,230 square mile futuristic high-tech hub were first announced in 2017 and it will function as both a tourist destination and a 'smart city'. Neom will stretch across the Tabuk region's border with Jordan and will operate independently from the rest of the country, with different laws for workers and with more freedom to visitors.

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