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LONDON: Saudi Arabia is planning to build a $26bn "economic city" on the Red Sea as the wave of mega-projects in the oil-rich Gulf reaches the conservative kingdom.
The project, expected to be largely financed by the private sector, is part of intensifying Saudi efforts to take advantage of the new oil boom to diversify the economy and create jobs for a fast-growing population.
According to Samba, the Riyadh-based bank, Saudi Arabia's oil revenues are expected to reach a 22-year high of $163bn this year and real gross domestic product is set to climb by 6.8 per cent, the highest growth level for the past two decades.
In a recent report Samba said the growth was due to higher oil production but also to more vigorous private sector activity, which is set to continue next year. Driven by the recent accession to the World Trade Organisation (WTO), the government is also accelerating economic liberalisation and opening up sectors to foreign investment.
Sagia, the Saudi investment authority, is hoping the "King Abdullah economic city", which will eventually offer 30 per cent of its shares to the public, will help mobilise local investment and attract foreign companies.
It promises that all necessary licensing procedures in the new city will be completed within a week of application. It estimates the project could create as many as 500,000 jobs.
The city will be located north of Jeddah on 55m square metres of land and will include a new seaport as well as financial and industrial districts. The project even has a tourism angle in a deeply traditional country, promising to create a waterside resort with hotels and an 18-hole golf course.
The project's lead developer is Emaar Properties, the company that has played a leading role in developing Dubai, the nearby emirate whose economic diversification model is being emulated elsewhere in the Gulf.
A statement from Sagia this week said a group of companies from Saudi Arabia and the United Arab Emirates had been formed to facilitate investments for the project.
They include the Saudi Binladen group, one of the largest contractors.
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