Formula One could see a new team racing in 2006 after plans for the launch of Team Dubai F1 were announced.
Sheikh Ahmed bin Saeed al-Maktoum is a key backer
The state-backed initiative will have to start from scratch after plans to buy an existing team fell through.
"The acquisition of an existing team would never enable us fully to demonstrate our own commitment and excellence," said spokesman Tim Fulton.
"Success would inevitably have been linked with the existing team's brand and values."
The new team plans to build development facilities, including a wind tunnel, in Dubai, while the manufacturing centre will be in Britain.
With the future of Cosworth up in the air, engine supply deals are hard to come by, but the group has begun talks with Mercedes.
Sheikh Ahmed bin Saeed Al Maktoum, president of Dubai Civil Aviation and a key backer of the team, said: "Dubai is committed to developing and supporting world class expertise in carefully-targeted high-technology industries.
"Formula One, with its focus on technological and engineering innovation, provides us the perfect environment in which to develop and demonstrate our skills in these cutting edge areas."
Earlier this month the Russian-backed Midland team announced it intended to join the Formula One grid in 2006.