The Gulf emirate of Dubai has announced it is building the world's first free trade zone for business done over the internet.

Dubai's Crown Prince Sheikh Muhammed Bin Rashid Al-Maktoum told a news conference that marketing for the $200m 'Dubai Internet City' would begin on Sunday and that operations would begin in one year's time.

"My vision is simple," Sheikh Muhammed told journalists. "In the future all commercial action will be in cyberspace. But the cyber world will need a ground base on this physical world."

The emirate is the Gulf's commercial capital

He said the world's leading computer companies have been invited to set up offices in the zone, situated just outside Dubai, and that they will be offered 100% foreign ownership and 50-year renewable land leases.

Sheikh Muhammed Al-Maktoum, who has been one of the driving forces behind Dubai's bid to diversify its income away from its dwindling oil reserves, referred to recent estimates of the global electronic commerce industry as being worth around $40bn.

Internet university

He told journalists that the planned Dubai Internet City is expected to attract all businesses in the internet-related industry, from venture capitalists to software and multimedia developers.

The city is set to include a research and development centre, a science and technology park, and an internet university, offering short courses in e-commerce, design and management.

Proposals for joining the new cybercity are likely to be discussed by many of the participants at the Gulf's largest computer show, Gitex '99, which opened in Dubai on Saturday, 30 October.

Gitex, which is the world's third largest IT exhibition, draws exhibitors from both the West and South Asia.

Telephone monopoly

Large numbers of Indian computer specialists work in Dubai. Sheikh Muhammed said that Dubai officials had visited Bangalore, India's IT capital, and that efforts were being made to lure some of the best brains to Dubai.

But while Dubai has earned itself a reputation as the commercial capital of the Gulf, business analysts point out that the United Arab Emirates, of which Dubai is a part, has one of the most restrictive internet access policies in the world.

Government officials say this is necessary to shield this Muslim country from foreign pornography and that there is no restriction on business done over the internet