Saudi Arabia's Mohammed bin Salman (2nd L) on April 19, 2017 in Riyadh, Saudi Arabia. Getty Images

Saudi Arabia announced on Tuesday a $500 billion plan to build a business and industrial zone that links with Jordan and Egypt, the biggest effort yet to free the kingdom from dependence on oil exports. The 26,500 square km (10,230 square mile) zone, known as NEOM, will focus on industries including energy and water, biotechnology, food, advanced manufacturing and entertainment, Saudi Crown Prince Mohammed bin Salman said. Speaking at the Future Investment Initiative in Riyadh, the crown prince said people with vision would see the opportunity. "This place is not for conventional people or conventional companies, this will be a place for the dreamers for the world," he said, speaking on a panel at the conference Tuesday. "The strong political will and the desire of a nation. All the success factors are there to create something big in Saudi Arabia," he added. Saudi Arabia's economy, though rich, has struggled to overcome low oil prices. Prince Mohammed has launched a series of economic and social reforms -- such as allowing women to drive -- to modernize the kingdom. Officials hope a privatization program, including the sale of 5 percent of oil giant Saudi Aramco, will raise $300 billion.

Riyadh is cutting red tape and removing barriers to investment; on Sunday, it said it would let strategic foreign investors own more than 10 percent of listed Saudi companies. NEOM could be a major focus of new investment. The Saudi government, the PIF and local and international investors are expected to put more than half a trillion dollars into it in coming years, Prince Mohammed said. Adjacent to the Red Sea and the Gulf of Aqaba and near maritime trade routes that use the Suez Canal, the zone will serve as a gateway to the proposed King Salman Bridge, which will link Egypt and Saudi Arabia, the PIF said. "NEOM is situated on one of the world's most prominent economic arteries ... Its strategic location will also facilitate the zone's rapid emergence as a global hub that connects Asia, Europe and Africa." There was no immediate comment on the plan from Jordan and Egypt, which are close allies of Saudi Arabia. Riyadh said it was already in contact with potential investors and would complete the project's first phase by 2025. Prince Mohammed appointed Klaus Kleinfeld, a former chief executive of Siemens AG and Alcoa Inc, to run the NEOM project.

Huge resources

Saudi Arabia will need huge financial and technical resources to build NEOM on the scale it envisages. Past experience suggests this may be difficult. Bureaucracy has slowed many Saudi development plans, and private investors are cautious about getting involved in state projects, partly because of an uncertain legal environment. The zone, which will have its own tax and labour laws and an autonomous judicial system, is to power itself solely with wind power and solar energy, PIF said - a goal which may be hard to achieve in practice.