RIYADH, April 25 (Reuters) - A Saudi-German plan to launch a dedicated Arabic language search engine for the World Wide Web could revolutionize the moribund Arabic Internet market, a senior official in the project said.

The new web site, dubbed "Sawafi," is planned for the last quarter of 2006 and could set a tough challenge for international search giants such as Google (Research), Microsoft's (Research) MSN and Yahoo (Research), which offer a basic Arabic search capabilities at present.

"There is no (full) Arabic Internet search engine on the market. You find so-called search engines, but they involve a directory search, not a local search. There's nothing available for overall Internet search," Hermann Havermann, managing director of German Internet tech firm Seekport, told Reuters.

"If you look at the international search engines, their functionality is non-existent. This market really lacks the support of an Arabic search engine," he said.

Seekport unveiled the project with Saudi partner Integrated Technical Solutions in Riyadh this week. The company, Sawafi, is registered in the Gulf Arab business hub of Dubai.

Sawafi is hoping to copy the success of local Chinese language search engine Baidu.com (Research), which has made huge strides in a market with over 100 million Web surfers.

Sawafi is aimed at the Arab world of 280 million people, where Internet penetration is low. There are also large expatriate Arab communities in Europe and North America.

"There are only 100 million Web pages right now in Arabic, and that's nothing. It's only 0.2 percent of the total worldwide," Havermann said.

Research commissioned from Dubai-based Internet researcher Madar shows the number of Arabic Internet users could jump to 43 million in 2008 from 16 million in 2004, Havermann said.

According to Madar, 65 percent of Arab Internet users in 2005 could not read English, which accounts for 70 percent of the material on the Internet.

Better search engines are key to a turnaround.

"There is not enough Arabic content available on the Internet. But there's no motivation to put more Arabic content on the Internet as long as you don't have a system to find the content," Havermann said.

Saudi Arabia, with an affluent population of 24 million, and Dubai in the United Arab Emirates, would be key places for winning online advertising to fuel Arabic search engines.

"Search engines are dependent on income from advertising, and for this you need partners and marketing agencies. They are in Dubai," Havermann said. "On the other side, the Arabic user market is in Saudi Arabia."

The Arabic online advertising market could grow to $150 million in 2008 from $10 million at present, he said.