Egypt has committed more than 1,000 square kilometers (386 square miles) of land in the southern Sinai Peninsula to a planned mega-city and business zone unveiled by Saudi Arabia last October, a Saudi official told Reuters on Monday.
The territory along the Red Sea is part of a joint fund worth more than $10 billion and announced by the two countries late on Sunday during a visit to Cairo by Saudi Crown Prince Mohammed bin Salman.
Prince Mohammed previously announced plans for the 26,500 square km zone, known as NEOM, at an international investment conference in Riyadh. Officials said public and private investment in the area was eventually expected to total $500 billion.
The mega-city, with its own judicial system and legislation designed to attract international investors, is to focus on industries such as energy and water, biotechnology, food, advanced manufacturing and tourism, according to officials.
It is part of bold moves by the 32-year-old heir apparent to wean the world’s top crude exporter off oil revenues that include plans to float a portion of state oil giant Saudi Aramco.
Riyadh’s part of the new joint investment fund will be cash to help develop the Egyptian side of NEOM, which was conceived as spanning across Saudi Arabia, Egypt and Jordan.
Saudi Arabia plans to build seven cities and tourism projects, while Egypt will focus on developing the existing resort cities of Sharm El Sheikh and Hurghada, the Saudi official said.
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The kingdom will also work with Egypt and Jordan to attract European cruise companies to operate in the Red Sea during the winter season. Riyadh is negotiating with seven cruise companies and aims to build yacht marinas.
It will also set up 50 resorts and four small cities as part of a separate tourism initiative announced last August and backed by the country’s Public Investment Fund (PIF).
The Red Sea Project, made up of some 50 islands, will offer a nature reserve, diving on coral reefs and heritage sites. Authorities have said it would break ground in 2019 and complete its first phase by late 2022.
Riyadh and Cairo also signed an environmental protocol on Sunday aimed at preserving the Red Sea’s coral reefs and preventing “visual pollution”, the official said without providing details.
The Saudi government has already asked local construction companies to build five palaces in NEOM, Reuters reported last month. Some companies, including Japan’s Softbank (9984.T), have said they are prepared to invest there, but major, concrete business investments have not yet been announced.