Oman - November 2013 by BUSINESS FOCUS

OMAN 01

An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content

Sunday 17th November 2013

For futher information on this report, please visit: www.businessfocus.org.uk

Logistics

Manufacturing

Business

Building transport links to become a hub for the region.

Home to Special Industrial Zones that provide all facilities.

Excellent incentives for those setting up in the country.

BusinessFocus 29th Floor, One Canada Square Canary Wharf, London E14 5DY United Kingdom Tel. +44 20 7712 1699 Fax +44 20 7712 1501

OMAN

An untold success story Written by Niki Thornton

02 OMAN

Embracing the future Always enchanting, Oman is capitalising on its excellent location to become a manufacturing, logistics and tourism hub for the Gulf region

esource rich and politically stable, Oman survived the Arab Spring without incident, except to continue on its path to achieving sustainable growth. Having set out a blueprint to reduce its dependence on oil by 2020, the country has pulled out all the stops to entice investment in non-oil sectors in order to build a diverse economic base that will see the growing number of young people involved in new lines of business, and its industrial base take off. In the past three decades, this beautiful country that borders Yemen, Saudi Arabia and Abu Dhabi has transformed from a fledgling business base flanked by oil revenues to become a thriving hub for investment opportunities. Characterised by stateof-the-art road, schools, hospitals and other important infrastructure, the Sultanate is today on course to deliver a new, multi-billion-riyal international airport by 2015 and is enhancing its maritime, rail, and tourism infrastructure.

re focused on increasing economic cooperation, spurring the growth of investment opportunities and enhancing communication in order to promote the mutual and sustainable growth of both the Omani and U.K. economies.

Forward together

As well as being one of the most open and religiously tolerant countries in the Gulf, Oman is also business friendly. Oil-related industries remain the backbone of the economy and there have been long and successful links established between Oman and British oil companies, such as BP and the 50% British-owned Shell. Production and exports of crude oil continue to rise and new reserves are being discovered in upstream fields. The blueprint for diversification, known as Vision 2020, was launched in 1995 and sets out to reduce the contribution of the oil sector by 9% by end of the decade. Vision 2020 also aims to raise the contribution made by the gas industry from 1.5% in 1995 to 10% by 2020. With an estimated 34.6 trillion cubic feet of proven gas reserves, the government is focused on growing gas-related and energy-intensive industries like downstream petrochemicals, fertilisers and aluminium production, but there is also a huge focus on developing export-oriented and processing and manufacturing businesses. As Minister of Commerce and Industry Dr. Ali Masoud Ali Al-Sunaidy tells Business Focus, the country is both logistically and regionally a natural choice for investors: “We overlook three seas: the Arabian Gulf, the Gulf of Oman and the Arabian Sea and therefore have a strategic location that we will continue to utilise,” he says. Dr. Ali Masoud Ali Al-Sunaidy Minister of Commerce and Industry “We are spending a lot of money on our ports and airports and we want to ensure our young workforce becomes integrated into the future growth of the country. “We believe we can complement many countries in the Gulf by allowing them to Under the leadership of His Majesty Sultan Qaboos bin Said Al Said, Oman has have access to international markets cheaper and faster and, of course, insurance achieved immense success on its journey towards economic diversification and is incosts come down when doing that. creasingly becoming a globally-connected, business-friendly, technologically-advan“The Arabian Sea opens out to the Indian Ocean, with a variety of spots to enjoy. ced and growth-oriented country. It is an untold story that deserves to be shared. Tourism has been, and will always be, one of our product differentiations. Another Although the histories of Oman and the U.K. have been bound together for hunindustry that has strong potential is fisheries. We have a clean environment with a dreds of years, official visits from Queen Elizabeth in 2010, Prime Minister David very strict code and we have started now issuing fish farming licenses. A large farm Cameron in December 2012, the Lord Mayor of London Alderman Roger Gifford in will be developed over the next few years in order to expand this sector. January 2013, and Prince Charles and Camilla, Duchess of Cornwall in March 2013 “We are situated close to the Strait of Hormuz, which is considered a congestion have signified a new era in cooperation, and a strong desire to build on existing ties. area. As the Gulf is growing, Oman can become an alternative logistics hub. We The U.K. is the largest foreign investor in Oman, and the Sultanate, with its ecohave just launched a feasibility study to see if this is a possibility. nomic growth rates predicted to reach 4.2% in 2013, and 3.5% in 2014, is expec“The diversity of the weather is another thing that ting to draw strong attention to the sectors poised sets us apart: the beauty of Salalah Khareef—the Salato capitalise on this newly revitalised momentum. lah autumn, when the landscape of this usually brown Transport, logistics, healthcare, education, and the landscape is transformed into lush greenery between financial and tourism sectors all stand to benefit as July and September—for example, cannot be bought the country opens for business in an exciting and POPULATION: 3,154,134 and is the reason we are building a hotel there. Salalah unprecedented way. is the second-largest city in the country. In transport, for example, there is a plan to build LAND AREA: 309,500 sq km “Often governments look at their advantages in a six ports, a new international airport in the Omani competitive light, but I look at them as complemencapital of Muscat, as well as five regional ones, and CURRENCY: Omani rials (OMR) tary. We don’t want to fall into a situation of mass a new Gulf Cooperation Council (GCC) rail network tourism with thousands and thousands of people that is expected to be operational by 2018. INDUSTRIES: coming from abroad, for example. We believe in enPlans are also afoot to build a new logistics cencouraging selective tourism and ecotourism, and precrude oil production and refining, natutre to serve Muscat business and a new £1 million serving our clean beaches, fish farming and maritime ral and liquefied natural gas (LNG) promedical complex. Other opportunities exist in the environments. Ports Salalah and Duqm for example duction, construction, cement, copper, financial sector—HSBC Oman merged with the will always be the easiest points to reach from ansteel, chemicals, fibre optics Oman International Bank this year—there are ywhere in the world. Last year, Salalah had more abundant fish supplies in the neighbouring Arabian cargo with fewer ships, because the liners now want EXPORTS: Sea and BAE Systems recently supplied jets to the to use it for the biggest ships in the world. They are petroleum, reexports, fish, Sultanate at a cost of £2.5 billion. addressing the issue of efficiency. It is better to have The visits of the British dignitaries have therefometals, textiles

We overlook three seas and therefore have a strategic location that we will continue to utilise.

OMAN AT A GLANCE

An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content

OMAN 03

L. Port of Muscat. R. Expressway from Muscat to Nizwa

a larger and more efficient ship than many inefficient ships; the costs are less and transfers becomes faster. That is the reason why we are reaching 4 million TEU in Salalah. Port of Sohar received 20% more ships last year, thanks to our good manufacturing base. “In 2018, when we have the GCC rail network, all the ports will be connected to each other, providing the Gulf with a chance of being more efficient and less expensive to do transfers of good and commodities, and that will make it more attractive. We will get fresh food much faster, and there will be less congestion on the roads and on the Strait of Hormuz. We don’t compete in these areas with anybody, it complements growth; and the GCC will always be the fastest-growing region.” With a young population of just over three million, the government in 1988 laid down a quota system that mandated foreign industry-leaders to actively engage Omani personnel in their employment ratios. Omanisation, as it is called, has been a hugely successful initiative, ensuring that Omanis are trained and employed and therefore have a stake in the country’s future. “We have a young society, and we are also at the latest stages of development, and our economy will continue growing at a high rate. Sustainability and growth are the main attractions for the investors who want to come to Oman,” Masoud Al-Sunaidy explains. “The cleanliness of the country, the sea and the beach, and the safety and tolerance are the main attractions for most Europeans who come to Oman. The Opera House is a good example of our open-minded society—there you can find Italians, French, British and Omanis and an ambience that shows the real Oman. “There is a growing appetite for consumption among Omanis now too, so we are engaging with the private sector more and promoting a more synchronised relationship between Government and the private sector. We have also implemented a great programme for SME development, and in the oil and gas field, we will be working more on the manufacture of downstream petrochemicals.”

A more diversified economy With manufacturing and industrial production proving to be the key to wealth and employment, the Public Establishment for Industrial Estates (PEIE) is hard at work. Its mission is to attract industrial investments and provide continued support

through globally competitive strategies, good infrastructure and value added services and is a boon for business in the country. Established in 1983, PEIE has to date set up nine industrial zones across the country and has enjoyed more than $10 billion worth of investments. As well as industrial and manufacturing units, the company manages an ICT knowledge zone and a small free zone on the border of Yemen. “We have an industrial innovation centre that provides systems to businesses and an established national business centre that helps entrepreneurs, offering occupational programmes and financial and technical assistance for example,” says Hilal Hamad Al-Ahasani, CEO of PEIE. “There are some very good examples of Omanis who have established their own businesses. We also have very attractive incentive packages for investors. Today, we have more than 41% foreign investments in our territory. The GCC represents 15%, but the balance is mostly from Europe, the U.S., the Far East and the Indian markets.

We have an industrial innovation centre that provides business systems and a national business centre to help entrepreneurs. Hilal Hamad Al-Ahasani, CEO, PEIE

“The financial crisis started in 2007, and at that moment moment we achieved an investment growth rate of 300%, it jumped from 1.9 billion OMR (£3.1 billion) to almost 3.5 billion OMR (£5.7 billion). It the last few years, it has grown to almost 5 billion OMR (£8.2 billion). We have our own statistical data and those are the actual figures that we are achieving.” While the flagship industrial zone at Al Rusayl is fully occupied, Sohar, which covers an area of more than 21.5 million square metres, has been earmarked as the

04 OMAN

The ports are a vital part of Oman’s economy

manufacturing hub of the future. Sohar Port handles the export and import of all goods and there are other petrochemicals and steel industries that handle downstream products and can provide related businesses and services. Plastics and aluminium are also coming on stream, thanks to the Oman Oil Company. “We provide land with full access to services,” the PEIE chief continues. “The government is offering tax exemptions for another five years, as well as customs duty exemptions. We are competitive on utilities terms and we have the land to expand. Sohar is midway between Muscat and Dubai, and Sumail is about 45 kilometres from Muscat Airport and almost 60% occupied. We are also planning to set up three new industrial zones in Samayil, Ibri (which is close to the Saudi border) and Musandam. Two of them will most likely begin implementing their infrastructures before the end of this year.

Anyone who has the chance to stay in Oman will realise there aren’t many places that have such an idyllic life as we do. Prem Maker, Executive Director, AVOD

“Our expansion strategy goes up to 2025. Our aim is to create more business and employment opportunities and stabilize the industrial area. Today, most of Europe, America and Far East are relocating their industry in order to be close to the markets and also to share some areas with us, as we are close to Africa through the Salalah Port.” The contribution of the industrial sector to Oman’s GDP is increasing beyond 10%, and the target is to reach 15% by 2020. “Foreign investment plays a big role,” Hilal Hamad Al-Ahasani says. “Sohar, for example, has received between $14-$20

Doing Business in Oman

billion (£8.8-£12.6 billion) in investment. That is helping to boost the Omani economy and build jobs. The innovation centre can help us develop other levels of the management. We do have today many Omanis who are leading as CEOs the heavy manufacturing industry. Oman is moving in the right direction and the vision for 2020 is supported by the provision of all these new infrastructures: ports, airports, roads and legal framework.” The number of Omani exports is also growing. The total export amount for the non-oil and gas sector is beyond 3 billion OMR (£5 billion), and out of that figure, PEIE has contributed almost 1 billion OMR (£1.6 billion). There are almost 13,400 Omanis involved and this is part of the company’s value addition: PEIE has succeeded in developing the socioeconomic aspect of the country. “There has always been a transfer of knowledge and human capital between the U.K. and Oman,” Hilal Hamad Al-Ahasani says. “Some of the niversities in U.K.— Cambridge for example—have programmes and exhibitions that are helping to support us. As far as manufacturing is concerned, there are many U.K. companies who are really investing in Oman with local companies and exporting some of their goods into other regions. DP World has just launched a new gateway port in London that will increase the distribution of goods within Europe and other areas, so that can play a major role in the export Omani products, especially with multinational companies. “Petrochemicals is one of the richer areas Oman is currently developing, and there are many U.K. companies that are keen to be involved. Our country, through both the Minister of Commerce and Industry or Duqm, has organised several business opportunities and investment events in London to attract international and U.K. business groups. In some areas of Europe inflation is rising, which makes it difficult to produce. There is an integration into setting up the industry or buying technology and services from Europe and U.K.”

Making a solid contribution to the world As befits a land of natural treasures, Oman is also a large producer of world-class marble, with the International Marble Company at the head of the pack. IMC is

(Source: Oman Chamber of Commerce and Industry)

Oman grants soft loans against an interest of 3% for investment projects amounting to 250,00 OMR or less. The Sultanate has a strong and fixed local currency. The Sultanate’s laws allow the free transfer of capital and profits, and access and departure of expatriate workers to and from abroad. Duty-free import of machinery, equipment and spare parts for industrial investment during the periods of construction, expansion or replacement, the exemption on priority and semi-manufactured materials for production processes not currently covered in the Sultanate. Tax exemptions for navigation companies which are either fully Omani-owned or acting in Oman through an approved agent. Omani investment law provides income tax exemptions to corporations for five years inception. It is renewable. For Omani companies, joint stock companies and mixed-companies, where non-Omani citizens own 70% or less of their capital, the first OMR 30,000 shall be exempted. Industrial land planned for industrial investors is being provided and equipped with the necessary services and facilities required for the construction of projects and there are plants of various sizes ready for lease for 25 years, with the option to extend for a further 25 years. The range of services includes: roads, water, electricity, gas, telecommunications and facilities for solid waste collection and disposal.

An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content

OMAN 05

L: Industrialisation in motion R: Oman’s high-quality marble

one of the few marble companies in the world to have achieved the accreditation of ISO 9001 Quality Management System and the first in the GCC to have achieved ISO 14001 in Environmental Management. The company exports to 55 countries around the world, including Argentina, Spain, and the U.K, and produces 14,000 square metres of marble per day. Its main projects are installed in China, India, the Far East, the Middle East, South American and Eygpt, as well as closer to home at Muscat International Airport. As Sheikh Ali Bin Hamed Al Kalbani, IMC’s chairman explains: “Production started in 1999, and in 14 years, we have become the biggest marble company in the world. Our main advantage lies in the quality and strength of our materials. Our second advantage is cost. By having a high level of output, we can control costs and that allows us to market our materials at a reasonable rate. As we are located in the centre of the world, we are close to the countries that buy our materials so the transport costs are cheaper. “Dealing with 55 countries means dealing with 55 agents and they will talk about Oman to others because of our marble. Every week we have international agents visit us and we are present at all international exhibitions. The government is also working on promoting Oman. Countries like Qatar and Dubai are smaller than we are, but they brand themselves through their airlines. We believe that when our airline reaches that level, we will grow faster. “Speaking as the chairman of one of the country’s largest companies and its largest exporter, I would like to add that the friendship between Oman and the U.K. has always been good. Most of the British population knows about our country. There are good opportunities to build a business here for many reasons, low taxes and inexpensive electricity being just two.” Prem Maker, executive director of Areej Vegetable Oils and Derivatives (AVOD), who lived in London during the 1980s, has witnessed first-hand the immense changes that have happened in Oman over the last 30 years and urges British investors to visit for themselves to see how open and forward thinking the country is. He told Business Focus: “If you had visited me 30 years ago, all you would have seen here was a single track road. Today, we have the Muscat Expressway, which is as

good as any expressway in Germany. We have an oil-based economy and the fishing industry. These two natural resources had to be galvanised and the investment in the petrochemical industry is going to be fantastic. We can see the industrial hubs developing as well. In terms of volume, Oman is a small place. We have a local population of two million and an expat population of one million. But in terms of area, most of it is desert. We are, therefore, building an infrastructure and industry sufficient for the local population to make a significant impact on the rest of the world.

Our main advantage lies in the quality and strength of our materials. Our second advantage is cost. Sheikh Ali Bin Hamed Al Kalbani Chairman, International Marble Company

“Anyone who has the chance to stay in Oman for a more than a month will realise there aren’t many places that have such an idyllic lifestyle as we do in Muscat. I have travelled and worked in India, the U.K., East Malaysia, Indonesia and the Philippines, and I can honestly say Muscat has the best quality of life. My life here is far more superior than when I lived, for example, in the U.K. because I have the best of both worlds: supermarkets, Internet and Opera House, like in the U.K., coupled with domestic help, cheap services and the advantages of being in an oil and gas country where you don’t pay so many taxes. “We also have laws that protect vital interests and all the five international accounting firms are here so our accounting systems are to international standards. British entrepreneurs need to know that they would be operating in a climate that is not unfamiliar. Although the language spoken is Arabic, everything is in English.”

Managing, maintaining and operating airports and related businesses with a focus on safety, security and profitability. www.omanairports.com

06 OMAN

Living life in the fast lane New infrastructure developments are improving Oman’s connectivity and quickly bringing it up to speed with other world-class business hubs

elations could not be better between the U.K. and Oman and there is plenty of scope for joint ventures and investments, as Abdulaziz bin Abdullah bin Zahir Al-Hinai, Ambassador Extraordinary and Plenipotentiary at the Embassy of the Sultanate of Oman in London explains: “Our countries have been friends for some 400 years and had formal treaty relations for more than 200. Bilateral relations have been deep and long throughout our history and based on mutual strategic interests. Trade and investment relations were equally strong. These days, Oman and the U.K. maintain strong, productive and comprehensive bonds, and in the last two years, we have witnessed an intensive exchange of visits between the leaders of the two countries. There is currently a ministerial visit almost every month. “Britain is, by far, the largest foreign investor in Oman and responsible for more than a third of the total investments. Britain’s trade with Oman continues to rise. The U.K.’s strengths in engineering and technology related to enhanced oil recovery are the key drivers. Meanwhile, the Omani market is noted for its stability and openness to British investors and is a highly attractive option for companies looking to enter the wider Gulf market. Major projects are continuing in the tourism sector whose development forms a key part of Oman’s economic strategy. Many activities were now taking place in the tourism sector as Oman seeks to raise its international profile as a tourism destination.”

Oman has done a marvellous job in building a strong road network and overcoming geographical challenges. Ahmed Mohammed Salem Al-Futaisi Minister of Transport and Communications

One of the principal opportunities the Ambassador advocates for British interests is the Duqm Special Economic Zone (SEZ). Situated in the Al Wusta region of Oman and epitomised by stunning beaches, clear, unpolluted seas and rich resources, this beautiful slice of Oman is a godsend to investors and an enviable place to live, work and enjoy. As the website of the Special Economic Zone Authority Duqm (SEZAD) explains: “With a land area of 1,777 sq. kilometres and 80 kilometres of coastline along the Arabian Sea, the Duqm SEZ is the largest in the Middle East and North Africa region and ranks among the largest in the world. The Duqm SEZ has been envisioned as the place that will balance regional development by energising the Al Wusta Governorate in addition to diversifying sources of national income and creating job opportunities for Omanis. “The Duqm SEZ is a model of an integrated economic development comprising a sea port, industrial area, new town, fishing harbour, tourist zone, logistics centre and an education and training zone, all of which are supported by a multimodal transport system that connects it with nearby regions, such as the Arabian Gulf countries, Middle East, East Africa and Southeast Asia. The Special Economic Zone is administered, regulated and developed by SEZAD, a financially and administratively independent government entity.” Through its one-stop shop, SEZAD registers, licenses and provides environmental approvals using the best international practices. Imports into the zone will be duty-free, and tax regimes, land lease rates, and utility tariffs will be provided at competitive rates. As the authority says: “SEZAD is hereby inviting qualified private sector companies of either Omani or foreign nationality to participate in the deve-

lopment of the zone in the field of “site development, promotion and management” to enhance the readiness of the zone and its business offer towards end users and in targeted economic sectors; namely: industrial estates; warehousing and logistics villages; tourist villages and resorts and commercial, office and residential complexes There will also be a new, state-of-the-art international airport opening imminently with capacity for 500,000 travellers per year, a four-kilometre runway, a cargo terminal with an initial 50,000-tonne capacity and a tempting range of duty-free shops. The airport will substantially boost Duqm tourism—it will bring the region closer to the world and play a key role in Duqm’s multimodal transport system. It will also connect Duqm to Muscat and other regional airports within Oman, as well as a host of international destinations.

World-class transport links Minister of Transport and Communications Ahmed Mohammed Salem Al-Futaisi is clearly delighted at the infrastructural transformation taking place across the country. Speaking to Business Focus, he said: “We have taken a huge step in fast-tracking the development of infrastructure in the country. Transport, is of course, the nervecentre of an economy—the idea came from His Majesty’s vision and we have spent billions of dollars on it. “Oman has done a really marvellous job in building a strong road network in the country. There were geographical challenges of mountains and deserts to overcome, but we have managed to deal with this problem—today, road networks have been spread all over Oman and we are now connecting the entire coast. “Oman ranks third globally in the road quality sub-category, according to results released by the Global Competitiveness Report issued by the World Economic Forum. This is a very good achievement. We have built our roads to a very high level and there are now more than 17,000 kilometres of main highways. It is quite an impressive number. We have allocated a budget of 3 billion OMR, (around £4.9 billion) for new road builds over the next four or five years. The construction of a new 800-kilometre road will begin next year between Muscat and Salalah and another project of 62 kilometre road, with between seven and nine tunnels, will be starting soon, which will link Muscat to Sohar. We are now focusing on upgrading the interconnectivity between regions to very high standards.” In terms of aviation, the government is building five brand new passenger airports: two of them are in the major cities of Muscat and Salalah, and the remaining three are regional airports at Duqm, Sohar and Ras al Hadd. As the Minister points out, the airports will not be upgrades or extensions of the existing ones. “Although Muscat Airport is being built in the same place, it will be a completely new airport, able to handle 12 million passengers annually. Further expansions planned will ultimately boost the airport capacity to 24, 36 and 48 million passengers when the demand is required. The complete Muscat airport capacity is 48. However, the first phase of construction is 12 million. “The total budget for the new airports is around 2.5 to 3 billion OMR. Muscat Airport is luxurious and comfortable, with high-level finishes and it deserves to be the first impression for our visitors. It will be absolutely beautiful and we are all excited about it. It is now almost 55% complete.” The airport, the largest infrastructural project Oman has undertaken to date, is being built with British partners on board. Carillion Alawi is building the control tower and air-traffic building, while Information Technology and Telecommunications are being done by Ultra Electronics Holdings, a U.K.-based aerospace and security solutions company. Owned by the government, the Oman Airports Management Company (OAMC) is responsible for managing and operating Muscat International and Salalah Airports and the new airports when they are built. Although Dubai, Doha and Abu Dhabi are close by, Oman’s competitive advantage remains its accessibility and its proximity to the vast markets of China and India.

OMAN 07

An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content

A quality of life to aspire to

Vic Allen, acting CEO of OAMC, takes up the story: “Air transport numbers have been increasing at an average of 16%-plus for some years now. There have been capacity constraints because, until recently, the national airline Oman Air was built to be small, and secondly, the main airport’s infrastructure was under capacity. In spite of those restrictions, however, we have being enjoying double-digit growth for some time. The prospects for the future are very bright indeed. “In terms of aviation, we can see that Oman has a very advantageous position. We are in a great location in terms of global travel networks and we are flanked by Dubai, Abu Dhabi and Doha, etc. In addition to that, the location of Oman is a preferred destination for the Indians and Chinese, which represents in general, half of the world population, and both the Indian and Chinese economies are growing exponentially. “In the meantime, Africa is one of the up-and-coming economies in the world, with huge growth potential. If we combine that with our historic links to the U.K. and Europe, we can see that the prospects in Oman are very bright. As soon as we are able to utilise the new airports, particularly our Muscat main gateway airport, combined with future expansion plans by Oman Air, we will see huge growth in this country. The challenge is going to be to keep the infrastructure up to speed, particularly in terms of hotels, roads, cars, public transport, and tourism infrastructure for both business and leisure visitors. “Aviation is growing at such a fast pace. There is a lot of invisible unmet demand out there, particularly with cargo. For the size of the airport and the country, we can deal with only a small amount of cargo through this airport. The new airport at Muscat will have a new cargo terminal to meet demand. At the moment a lot of air freight comes into Oman from Dubai and is extracted overland. Once we get our new facilities, however, we can begin unloading freight in our airport.” The new regional airports, will of course, have an immensely positive affect on tourism as well. “The concept of this country has always been to earn a lot of money, and by creating these wonderful new airports we will diversify the economy into tourism. There will be a lot of businesses associated with the tourism industry and tourism travel industry.” At Muscat International, things are full steam ahead for OAMC: “The main task for us is the recruitment and training staff, and the procurement of equipment and niture equipment, etc. While the project develops buildings and infrastructure, we have to fit it out, and that is quite a big project in itself. We are also procuring outsource operations, operations and management contracts, and the commercial contracts. We are responsible for the design of the hotel within the new Muscat terminal and the related retail. We are in the process of procuring operators for all these facilities. In fact a British company will do all the retail and layout for the new terminals and we are talking with a number of British companies about delivering

some of these services. We are also talking with other European and Asian companies. Duty free is a big one for example, advertising is another big one, and food and beverage. There are a lot of business selections of procurement partners who will be running the concessions for these commercial operations. Everything has to be done on time to fit with the delivery dates for the new project, but it is going well and we expect it all to be fully ready in time.”

Full steam ahead with port expansions The country is also building six commercial ports along the Omani cost, Salalah Port, Duqm Port, Sohar Port, and another 2 smaller size ports in Shinas and Musandam. Salalah Port and Sohar Port are almost operational while Duqm Port is ongoing. Muscat will become a tourism port and all the commercial activities will be shifted to Sohar Port. As Transport Minister Salem Al-Futaisi acknowledges: “Oman has a strategic location and the potential to be a sea hub port for the Asian or Indian Ocean countries. It could also become an entrypoint or a gateway to the GCC. Internally we are working as much as we can in our ports, so that they can all be integrated. Every country has different advantages and it could be better for a certain investor to choose us rather than other locations. Our main advantage is our location and being away from the Strait of Hormuz. The ships that come here don’t need to pay high insurance or fuel prices. However, our location represents only 50% of our success. We also have good services and turnaround times.

As soon as we are able to utilise the new airports and achieve our expansion plans, we will see huge growth in Oman. Vic Allen, Acting CEO, OAMC

“We are slowly converting our ports to economic zones, so they will not only do the typical trading activities, but will also be little cities. Duqm, as the Ambassador mentioned, is a good example. It will have a port and airport inside it, a railway terminal, an industrial zone, free zones and much more. Investors can see the benefits and excellent opportunities in this project.” Meanwhile an up-and-coming railway project is being built to represent Oman as the gateway to the GCC. The project will span more than 2,000 kilometres and will be built in different phases all the way from Kuwait to Salalah.

OMAN, the main investment destination in the Middle East Dominating the market with almost 70% market share, AVOD has been for the last 30 years a great contributor to the industrial development of the Sultanate of Oman intregating the most advanced technology to provide high quality products. AREEJ VEGETABLE OILS & DERIVATIVES S.A.O.G P.O. Box 22, Rusayl, Postal Code 124, Sultanate of Oman Tel: +968 24 448 010 | Fax: +968 24 448 099 | mail@avod.com.om | www.avod.com.om

08 OMAN

A Oman is a land of culture and ornate treasures

“Our bigger vision is to have the logistics industry become a major GDP contributor to the country,” the Transport Minister says. “We cannot continue depending on the oil and gas industry. Oman has to develop other industrials like tourism, fishing or logistics. I think that the logistics industry can play a big role in the GDP and this will come through a complete integration of all of these systems: ports, railways, airports, etc. into a network of transportation systems together. “By 2020, once we finish the railway, the airports and the ports, we will have a strong logistic industry in the country that will give alternatives to the dependence on oil and gas in Oman. “It is a very ambitious plan and the most difficult part is the funding. There is a strong commitment by the government and big chances for British companies, researchers, education, training and other industries to partner this development with us over the next eight to 10 years.”

Investing in People People are, of course, the protagonists in any success story, and the drive and ambition of the Omanis is truly impressive. The Omani government is channelling extra funding into education as part of a broader attempt to provide its younger generations with the skills and qualifications needed to work in the modern economy. However, although the additional resources are a welcome step toward tackling key issues, such as improving the students’ English language skills, it will take time for the benefits to trickle down. Education and training were awarded a budget equivalent to $3.38 billion, or 10% of all projected spending for this year, an increase of 25% in real terms on 2012. The government’s decision to increase its focus on education comes at a time when the private sector is struggling to fill vacancies.“The country has managed to establish a good education system,” the Minister of Transport says. “Although we only have one state university, it is a very strong one and we are very proud of the level of gradua-

tes that come out of this institution. In the last few years, we have sent thousands of graduates abroad for study in specialisations related to the new developments. “We are sending people off to excel in airports and transport management, tourism and other sectors. We are linking both the industrial and educational needs. We are building a railway academy for training, research, and education, as railways is a very new industry and we need to develop it. Over the last 40 years, there have been certain areas that have attracted human resources: the oil and gas industry for example. “A huge number of Omanis are now leading that sector. We need gradually to have ways to make the transport sector more appealing to graduates so they can partner with us. “The biggest challenge for any government is to provide employment. If we don’t enable our young people to have jobs, it will be a big failure for us. When we put together a budget for the airports, we separated a part of that funding just for human resources in order to train our young people and send them abroad. I can say with pride that the meteorology sector and air-traffic control are now 100% Omanised. “My Ministry coordinates all activities with the Ministry of Labour and the Ministry of Education. We always share our plans, demands and the education required. This synergy is very important.” Oman is indeed a unique part of the GCC. It is a very rich country in terms of history, culture, beauty, diversify and nature and enjoys some of the most beautiful views in the Gulf. It is a perfect place for those who love tourism and culture. “We invite U.K. citizens to come and enjoy Oman,” the Minister concludes. “The ambitious infrastructure boost and new projects within the next 10 years present a major opportunity for companies, consultancies, investors, educators and institutions to come and share with us such development. We have a very transparent system of all the procedures and payments, etc. They will find Omanis pleasant people to deal with and chat to. It is the best gift that we have.”

Oman’s Import and Export Figures Oman’s Exports Profile:

Total imports, exports and trade balance (Bln US$ by year) Export

Import

Trade Balance

50 40 30 20 10 0 −10 −20

Mineral fuels, lubricants and related materials was the largest commodity group for exports in 2012. It increased by 22.7% and accounted for 75.4% of total exports. Other major commodity groups were commodities and transactions not classified elsewhere and chemicals and related products, n.e.s. with respectively 7.7 percent and 6.7 percent of exports. Excluding exports to non-specified areas, top partners for exports were United Arab Emirates, India and China. From 2010 to 2012, top export commodities were petroleum products: petroleum oils, crude (HS code 2709), petroleum gases and other gaseous hydrocarbons (HS code 2711) and petroleum oils, other than crude (HS code 2710).

−30

Source: UN Comtrade