Saudis Plan $26 Bn King Abdullah 'Economic City' On Red Sea.

Saudi Arabia is planning to build a $26 bn "economic city" on the Red Sea coast north of Jeddah as the wave of mega-projects in the oil-rich GCC reaches the conservative kingdom. The plan, to be largely financed by the private sector, is part of intensifying Saudi efforts to take advantage of the oil boom to diversify the economy and create jobs for a fast-growing population.

The Saudi investment authority SAGIA is hoping the "King Abdullah Economic City", which will eventually offer 30% of its shares to the public, will help mobilise local investment and attract foreign companies. It promises that all necessary licencing procedures in the new city will be completed within a week of application. The project could create up to 500,000 jobs. The city will be 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. The promoters are promising to create a waterside resort with hotels and an 18-hole golf course. The project's lead developer is Emaar Properties, which has played a leading role in developing Dubai. Dubai's impressive economic diversification model is being emulated elsewhere in the GCC.

A statement from SAGIA on Dec. 20 said a group of firms from Saudi Arabia and the UAE had been formed to facilitate investment for the project. They include the Saudi Binladen group, one of the largest Saudi contractors active in the kingdom and several other countries.

According to the Riyadh-based Saudi American Bank (Samba), Saudi Arabia's oil revenues are expected to reach a 22-year high of $163 bn this year and real GDP is set to climb 6.8%, the highest growth for the past two decades. Samba said the growth was due to higher oil output and more vigorous private activity, set to continue next year.

Driven by the recent accession to the World Trade Organisation (WTO), the Saudi government is also accelerating economic liberalisation and opening up sectors to foreign investment.