Welcome to the latest edition of Riyadh Bureau, a newsletter for people interested in Saudi Arabia — written by me, Ahmed Al Omran. If you are not a subscriber, please use the button below to subscribe. Send your feedback to alomran@hey.com or via Twitter: @ahmed
For many years, Saudi Arabia has rejected the term “religious tourism.”
Prince Sultan bin Salman, the king’s son who has served as tourism commissioner for nearly two decades, told the United Nations in 2010: “The kingdom…does not consider hajj and umrah as tourist activities, it has always sought to separate them totally, and it is not allowed to use the term religious tourism when it comes to recording and publishing tourism data…”
The kingdom takes great pride in hosting the the pilgrimage —the monarch’s official title is “Custodian of the Two Holy Mosques”— and views its success in organising the ritual as integral to its claim of leadership in the Islamic world.
However, the aversion to that term has dissipated in recent years as the government identified tourism, including the religious variety, as a main pillar of its strategy to diversify the economy under an ambitious reform programme led by Prince Mohammed bin Salman, a younger half-brother of Prince Sultan, who was promoted to heir apparent in 2017.
As part of “Vision 2030,” Saudi Arabia aims to increase the number of foreign umrah pilgrims to 30 million over the next ten years. That’s why the decision about the fate of this year’s hajj season amid the coronavirus pandemic has been difficult and agonising, coming months after authorities suspended umrah —also known as the “lesser pilgrimage” that can be performed year round— in late February.
After a long wait, the government finally announced last week that the hajj pilgrimage won’t be cancelled altogether, but instead will be limited to a small number that remains unclear. Hajj Minister Mohammed Benten said authorities have yet to make a call on the exact figure, but it could be around 1,000, a tiny fraction of the nearly 2.5 million people who performed it last year.
“We do not expect tens of thousands or hundreds of thousands,” he said during a press conference along with the health minister Tawfik al-Rabiah. The criteria of who would be selected to perform hajj are still being finalised, but Benten said priority would be given to members of foreign diplomatic missions in the kingdom and first responders from healthcare workers and security forces.
Rabiah said the pilgrimage would only be open to Saudi-based people under 65 years of age and without any pre-existing chronic health conditions. They would be tested for coronavirus before arriving in Mecca and later required to quarantine at home for two weeks, he added.
While Saudi Arabia has fully reopened on June 21 after months of lockdowns and strict curfews, international travel is still banned. The number of coronavirus infections and deaths in the kingdom continues to rise, with more than 186,000 confirmed cases and 1,600 fatalities so far, but the government appears keen to restart the economy because the current indicators are bleak.
The International Monetary Fund said the kingdom’s economy will shrink by 6.8% this year. That’s a much sharper fall than the 2.3% contraction estimated in April. Government data shows that GDP shrunk by 1% in the first quarter and central bank governor Ahmed al-Khelaifi said the second quarter “certainly won’t be any better,” but he added they are less pessimistic than the IMF.
The pessimism is probably warranted considering the tough austerity measures taken by the government to cope with the impact from low oil prices and the coronavirus pandemic. The decision to increase value-added tax from 5% to 15%, which comes into effect tomorrow, is particularly notable. Local consumer spending was down 34.6% in April compared with the same month last year. For comparison, many other countries have cut or deferred VAT as part of their coronavirus stimulus packages.
“Saudi consumer sector is expected to shrink due to reduced purchasing power of the people as a result of the increased VAT and removal of [cost-of-living] allowance,” said a research note from Al Rajhi Capital. The investment bank added in another note that “the travel and tourism sector may take some time to revive as people will tend to avoid, both inbound and outbound, traveling for the next few months.”
Despite the economic crunch and cuts to spending, the government has insisted that its tourism strategy remains on track and projects backed by the sovereign wealth fund are moving ahead. Construction is said to continue at the Red Sea Project and Qiddiya, while the ultra-luxurious resort Amaala unveiled its airport design by Foster + Partners.
The Ministry of Tourism has launched a tourism development fund with an initial $4 billion investment and announced a summer programme to encourage local tourists to visit ten destinations around the country.
“When we polled people on whether or not they wanted to leave the kingdom for the summer, 81% replied in the negative, despite the fact that about 63% of them wanted to go out and have fun,” said Fahad Hamidaddin, a senior official at the ministry. The same survey suggests that 85% are still planning to take a break of around ten days this year and 78% are curious about exploring their own country.
Tourism officials seem to hope that at least some people want to breathe after the virus kept them inside for months, but it is hard to see how many of them would be able to overcome the combined economic and health anxiety to enjoy a holiday for now.
In case you missed it:
National Commercial Bank is in talks to acquire Samba Financial Group for up to $15.6 billion in a merger that would create the Gulf’s third-biggest lender by assets. The PIF owns 44% and 23% of NCB and Samba, respectively.
Saudi Arabia has approached Germany’s Bundesliga over acquiring the football league’s television rights in the Middle East. Qatar’s beIN Sports is the current rights holder and remains in negotiations about renewing the deal.
That is all for this dispatch from Riyadh Bureau, coming to you this month with a little facelift. The image featured above is the latest version of Saudi Arabia’s official map, released by the kingdom’s General Commission of Survey earlier this month. Thanks for reading! You can send your feedback by email: alomran@hey.com