MEDINA (SAUDI ARABIA) - SAUDI Arabia is pouring billions of dollars into Medina, city of the Prophet Muhammad (s) and the cradle of Islam, to turn the city into a high-tech bastion.

The so-called Knowledge Economic City (KEC) is the fourth in a series of projects launched by the oil powerhouse in December 2005, aimed at attracting foreign investment and bolstering development.

It is being promoted by the Saudi Arabian General Investment Authority (Sagia), and financed by the private sector. The KEC is located several kilometers from the center of Medina and the Mosque of the Prophet, a top Muslim pilgrimage destination.

Sagia governor Amr al-Dabbagh said the plan to build ‘Economic Cities’ was inspired by some 3,000 special economic zones that exist worldwide to promote investment.

‘In our case, we call them ‘Economic Cities’ because they have more ingredients,’ he said. ‘They are places where people can work, enjoy life and make money.’

The KEC is the latest in a series of mammoth development schemes in the kingdom. The first such project, known as the King Abdullah Economic City, is being built at Rabigh, in Mecca province.

The KEC, a US$8 billion (S$11 billion) project, is being built to promote knowledge and the sciences.

Among the strategic alliances it has established is one with IT giant Microsoft. Signed in February, the deal is to set up a Microsoft academy that will include a library with IT books, trial software and other learning materials.

A center for Islamic studies is also being planned.

The rich history of Medina was one of the reasons why it was chosen to host the KEC.

The project’s backers hope that Medina’s rich past will attract Muslim scientists as well as companies wanting to do business with the Arab and Muslim world, bolstering development on all fronts.

But there are also question marks over the real aim of these artificial cities and over their long-term viability.

‘They are into buildings. They are into real estate. Real estate is something they do well,’ an Asian professor teaching in a Saudi university said about the promoters of the KEC and other such cities. For him, it is just a real estate project rather than a bid to develop scientific knowledge or boost the economy.

‘So they do it in different places under different names,’ he said, asking not to be named.

The construction drive also coincides with an unprecedented economic boom generated by colossal oil revenues for Saudi Arabia, the world’s top crude oil exporter.

The country earned US$194 billion in oil income last year, and it is estimated that combined revenues for this year and next year will amount to US$700 billion because of the rocketing cost of crude.

But the head of the state-run Sagia insisted that the projects ‘are all developed by the private sector’.

‘Our role is to iron out any obstacles and ensure that the environment is pro-business,’ Mr Dabbagh said.

At the core of the ‘Economic Cities’ project is the question of job creation for Saudis, according to a report by the Saudi British Bank.

Once completed, the KEC is expected to house 130,000 people. By 2020, the new cities that would have mushroomed in the Saudi desert could be home to 4.8 million people and generate 1.2 million jobs.

Employment generation is a high political and economic priority for the authorities of the kingdom, which has a population of 23 million.

Creating jobs is a must in order to achieve sustainable development as the private sector is highly dependent on foreign labor.