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TOURISM: THE SECRET’S OUT

Capital: Muscat Area: 82,031 sq miles; slightly smaller than Kansas Population: 3,311,640 (July 2008 estimate and includes 577,293 non-nationals) Languages: Arabic (official), English, Baluchi, Urdu, Indian dialects Currency: Omani Rial GDP – purchasing power parity: $60.89 billion (2007 est.) GDP – real growth rate: 5.6% (2007 est.) GDP – per capita: $19,000 (2007 est.) GDP – composition by sector: Agriculture 2.2% Industry 38.2% Services 59.6% (2007 est.) Industries: Crude oil production and refining, natural gas and LNG production; construction, cement, copper, steel, chemicals, optic fiber Exports - commodities: Petroleum, reexports, fish, metals, textiles

An appetite for property

Disclosure and transparency define Oman’s financial sector Page 5

Oman is the latest frontier in a region-wide construction boom Page 8

Oman Thursday, January 22, 2009

At the heart of a region known for strife and tension, Oman’s calm presence

seems unworldly. Unstirred by the sound and the fury that surrounds it, the Persian Gulf sultanate has patiently crafted a quiet success story at home and voiced its non-conformist stance on the international arena

Muscat, the capital of Oman.

PHOTO: WALTER BIBIKOW/CORBIS/JAI/CORBIS/CORDON PRESS

INSIDER VIEW

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Bourse buoys appeal

A most refined reserve O

man’s geographic location at the heart of the Middle East is a blessing in disguise. Nestled at the entrance of the Persian Gulf, with Saudi Arabia at its back and facing Iran across the narrow Strait of Hormuz, the sultanate has built its modern prosperity not only on oil but also on the art of balancing interests, tolerating differences and patiently searching for mutual benefits. In his 38 years of reign, Oman’s Sultan Qaboos bin Said (who took over power from his father in a bloodless coup in 1970) has turned a once isolated and impoverished land into a wealthy and peaceful state, largely thanks to an exceptionally skillful diplomacy. “Oman, is a peace-loving country. We build our relations on mutual interest with all peoples without prejudice. This is what has placed our diplomacy on a tranquil and right path,” said Sultan Qaboos in an interview published last year by the Oman Daily Observer. Oman’s foreign policy is mindful of borders, yet Muscat retains a long history of military and political cooperation with both the U.S. and the U.K. As a moderate influence in the region, Oman often mediates on international matters between Iran and the West, and is a vocal proponent of a resolution to the Arab-Israeli conflict. The government of Sultan Qaboos bin Said maintains a delicate balanc-

ing act in this respect. Relations with Tehran are strong, and plans are in place to increase both political ties and trade agreements with its controversial neighbor, including joint exploration projects in the Gulf. While regional expediency must be respected, Oman has no wish to appear to be thumbing its nose at the U.S. by sidestepping sanctions or to be seen as taking sides against Washington. In an address last year at the opening of the fourth session of the Omani parliament, the Majlis, the Sultan said: “The features of our domestic and foreign policy are clear. We work for construction and development at home, and for friendship and peace, justice and harmony, coexistence and understanding, and positive, constructive dialogue abroad. That is how we began, that is how we are today and that, with God’s permission, is how we shall continue to be. In so doing, we wish the whole of mankind wellbeing and prosperity, security and stability, and co-operation in establishing the scales of justice and equity.” George W. Bush did not include Oman in his January 2008 Middle East tour and although U.S. diplomats played down the significance of the presidential no-show, insisting it was not possible to include every country in the region, Mr. Bush’s absence was viewed as a snub

resulting from Oman’s dialogue with Tehran. While the sultanate’s non-conformist foreign policy may irritate Washington’s diplomats, bilateral economic relations are stronger than ever. President Bush signed in 2006 the U.S.Oman Free Trade Agreement, which has been ratified by Congress but has yet to be implemented. “The FTA Agreement numbers close to 800 pages; so you can imagine the complexity and level of detail that is necessary before this is done,” explains U.S. Ambassador to Oman, Gary A. Grappo. “Since the agreement was signed, we and the Omani government have moved forward in implementing its various requirements, and we are very close to completing this. This agreement will mean that substantially all trade between the U.S. and Oman will be duty free.” “We hope that we will further strengthen our relations with other people and nations,” says Sayyid As’ad bin Tarik bin Taimour AlSaid, the representative of Sultan Qaboos bin Said. “We have done very well so far and will continue to strive to maintain Oman’s favorable position and image. We are friendly to all, cooperate with everyone, always taking a positive but cautious stance with other

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Southern Oman: Dhofar, so good istorically, Dhofar was the world’s chief source of frankincense – once one of the world’s most valuable substances. Today, the region aims for more diversity in its sources of income. “With all the resources in our company, I think we can play a major role in the economy, especially in the Dhofar region, promoting new projects and development in a number of business lines,” says Sheikh Khalid Bin Mustahail Al Mashani, chairman of the Dhofar International Development & Investment Holding Company (DIDIHC), a driving force in the provincial economy. A region in southern Oman, mountainous and green Dhofar is unlike the more arid northern parts of the country. The province and the bordering AlMahara region in Yemen are the only parts of south Arabia exposed to the summer monsoon of Khareef and its rains, which give way to lush green vegetation, fresh water springs, waterfalls and rivers, creating a stark contrast with the barren landscape of the Empty Quarter Desert just north of the Omani region. Indeed, Dhofar’s rich, fertile Salalah

H

Continued on page 2

With a strong cultural heritage, hospitable people and diverse natural scenery, Oman is a unique tourism destination.

Once Arabia’s most prominent maritime center owing to its strategic location on the Arabian Peninsula, Salalah has played an important role in international trade for many centuries. Today, Salalah is one of Oman’s leading industrial hubs with a world-class port and infrastructure. Since its establishment in 1987, Dhofar International Development & Investment Holding Company (DIDIHC) has grown at a tremendous place and is now one of the most active and successful investment companies in Oman. With a wide reaching clientele base that includes a diverse range of partnerships both domestic and foreign, the group is playing an integral role in the diversification of Oman’s economy. Dhofar the place to be.

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Oman

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A most refined reserve Continued from page 1 nations. We assess a situation and try not to take sides, especially when friends clash. We aim to maintain balance.” Domestically, the Sultan’s government is pursuing economic diversification in order to reduce the country’s dependency on oil, which still represents 75 percent of Oman’s export earnings and 40 percent of its gross domestic product (source: U.S. Energy Information Administration). But with reserves that are but a fraction of those of Saudi Arabia and Kuwait, and a declining crude production that should peak at 760,000b/d in 2010 before falling steadily to 561,000b/d in 2018 (according to a report published in November by Companies and Markets), planned economic diversification is at the heart of Oman’s development strategy. Influencing this strategic direction is the Omani government’s Vision 2020 economic charter, a multi-billion dollar blue-

Sultan Qaboos bin Said of Oman at the opening of the Gulf Cooperation Council summit in Muscat, on December 29, 2008. The GCC (Oman, Saudi Arabia, Kuwait, Bahrain, United Arab Emirates, and Qatar) includes the world’s major oil producers. During the summit, leaders approved an agreement to create a central bank and a single currency for the Gulf region to boost trade and strengthen monetary policy. print encompassing a series of five-year business and development plans, supported by heavy investment in infrastructure, services, health and education, and reforms aimed at broadening private sector participation in the economy. Education is a top priority and in 2007

the government dedicated 30 percent of the annual budget to schooling. This focus on education has resulted in a young population of highly educated graduates able to work in a wide variety of fields and to act as a catalyst for further diversification of the sultanate’s economy.

Another priority is the e-Oman strategy to increase computer literacy among government employees – and greater efforts to exploit trade and manufacturing links with other countries will aid Oman’s transition from a resources provider to a services provider through the creation of a knowl-

Women: ‘the half of Oman’ and the equals of men In Oman, Renaissance is much more than the name commonly used to qualify the reformist reign of Sultan Qaboos. For Omani women, brutally repressed under the previous regime, the Renaissance (meaning rebirth in French) is quite literally that: a coming back to life. It is a name the Sultan himself chose in reference to the era of cultural enlightenment that swept through Europe between the 14th and 17th century. Women’s rights has been a key principle of the Sultan’s political program ever since he took power. “The education of girls is never absent from our mind, since women form half of our society,” he is quoted as saying on the website of the Sultan Qaboos Cultural Center (SQCC). The institution is dedicated to fostering cultural relations between the Gulf countries and the U.S. Furthermore, the SQCC voices the Sultan’s own belief that “Islam accords equal rights to women. It is the key to women’s emancipation and liberation. Islam encourages

women to seek knowledge, pursue profession, manage a business, and own property.” Sultan Qaboos also adds: “A role model for all Muslim women is Sitina Khadija, the wife and soul partner of Prophet Mohammed. Muslim nations have elected three women Prime Ministers, namely Benazir Bhutto of Pakistan, Khaleda Zia (presently Shaikha Hasina) of Bangladesh and Tansu Cillar of Turkey. They were elected by male and female voters based on their leadership qualities. These elections have demonstrated the true essence of Islam towards women.” Today, the United Nations Development Programme (UNDP) considers Oman as “one of most advanced Gulf countries in the area of women's rights.” The organization also points out that Omani women “have the right to vote and run for office in elections." And although “female participation in the workforce remains low and areas of discrimination persist, Oman stands out as a model for other countries in the Gulf. All present

Minister of Tourism Rajiha bint Abdulamir bin Ali is one of the three women holding a portfolio in Oman’s cabinet. laws and regulations in Oman give equal opportunities to women in trade, labor, civil service and social insurance." In 2004, Oman became the first Gulf state to appoint a woman as a cabinet minister. Still holding the portfolio of Higher Education, Dr. Rawiya bint Saud al Busaidiyah has spent all her career in the education system, including working at the Ministry of Higher Education where she served as under secretary. Oman's cabinet includes two other

women, Rajiha bint Abdulamir bin Ali, Minister of Tourism, and Sharifa bint Khalfan al Yahya'eyah, Minister of Social Development. Other top government jobs held by women are the ambassadorships to the U.S. (Hunaina bint Sultan al-Mughairyah) and to the Netherlands (Khadeija bint Hassan bin Salman al-Lawatiyah), as well as the Presidency of the Public Authority for Craft Industries (Sheikha Aisha bint Khalfan al-Siyabiyah.) The government also encouraged women to be candidates at the 2007 elections of the Shura, a consultative council that does not have any legislative power but does influence policy making. When none of the 21 female candidates were elected, Sultan Qaboos confirmed his determination to go ahead with his gender equality policy by nominating six women members of the State Council (Majlis Adawala), which is another consultative assembly whose members are all appointed, and includes one of the unsuccessful candidates at the Shura. “The disappointment of losing the Shura elections has been overcome because here I have been nominated by HM the Sultan," Raheela Al Riyami told Gulf News.

Southern Oman: Dhofar, so good Continued from page 1

Sheikh Khalid Bin Mustahail Al Mashani Chairman of DIDIHC mountains, Salalah is developing as a tourist resort. It is also home to Port Salalah, completed just a decade ago, which is destined to become one of

the world’s most important container terminals. Leading a number of major projects, including the development of Port Salalah, DIDIHC has invested across the board in the province from financial services to real estate to education. “DIDIHC is the leading company in the Dhofar region,” says General Manager Ali Bin Ahmed Salim Al Mashani, who believes that the city of Salalah has the potential to become a second Dubai. He says that DIDIHC has used its financial strength to help spur development through investing in other local companies. “We have shares in banking, development, services and also in Dhofar Insurance. In education, we are one of the main shareholders of Dhofar University, and we are currently supporting the establishment of a modern, private school in Salalah. We are also involved in tourism,” Mr. Al Mashani explains. A public joint stock company established in 1987 and listed on the Muscat Stock Market (MSM), DIDIHC today is comprised of a diverse group of companies that include Bank

PHOTO: DAVID FORMAN; EYE UBIQUITOUS/CORBIS/CORDON PRESS

plain, which runs along the coast of the Arabian Sea, once supplied enough food and grain to serve a large proportion of the British Army fighting in Mesopotamia during World War I. Today, just over 200,000 people inhabit the province, and while many Arabic speakers from the north now call Dhofar home, it has traditionally been the homeland of tribes speaking South Arabian Semitic languages. In Mormon culture, Dhofar is referred to as the land of the bountiful. In the book of Chronicles, the region dates back to the time of King Solomon, and is called Ophir. Today, the green plains of Dhofar are the source of the majority of Oman’s agricultural and livestock products; coconuts, bananas, sweet potatoes, lemons, papaya, wheat and corn make their way to populations in the north along with milk and meat from the province’s cattle. The coast of Dhofar, which stretches for 350 miles, is a rich fishing ground, and the province’s fishermen bring in catches of sardines, lobsters, abalone and prawns.

Dhofar is home to Oman’s second-largest city, Salalah. Lying on the Arabian Sea some 650 miles south of the nation’s capital, Muscat, historicallyrich Salalah is today witnessing the stirrings of new economic activity. Set between the coast of the Arabian Sea and a backdrop of steep, green

Surrounded by fertile plains, Salalah, the capital of Dhofar, is also the country’s main port.

edge-based economy. Part of the government strategy is to lessen the reliance of Omani companies on foreign expertise by training graduates to occupy the highersalaried positions in the sultanate’s larger companies. Although not to the extent of its Gulf neighbors, Oman does have a large expatriate labor force – now numbering some 600,000. The liberalization strategy has borne fruit: GDP growth in 2007 was 11.6 percent in spite of a decrease in oil extraction. Oman joined the World Trade Organization in 2000, and featured for the first time on the World Economic Forum’s global competitiveness index in 2007, ranking a respectable 42nd out of 130 counties listed. The World Bank’s Doing Business report ranked Oman 49th out of 178 countries for the same year. In spite of the global crisis and the steep plunge of oil prices by some $100 a barrel, between July and December, Oman has planned an increase of more than 19 percent in its budgetary expenditure for 2009, based on a price of $45 a barrel for its crude (compared with $55 in the previous year's budget). “The government is keen to carry out all approved projects to stimulate growth, achieve balance between revenue and expenditure, and give more attention to the development of human resources," declared recently Oman’s Minister of National Economy Ahmed Mecki in the online magazine Emirates Business 24/7.

Dhofar, one of Oman’s leading banks, the Financial Services Company, also listed on MSM, Dhofar Insurance, Dhofar Tourism, Salalah Port Services, Oman Oil Marketing, Salalah Medical Supplies Manufacturing, and Omani Vegetable Oils and Derivatives. The group has also played a role in the establishment of a number of new industrial ventures such as factories and plants and is a major investor in a private power generation project in Salalah. One of the largest investment companies in Oman, DIDIHC’s shareholders are comprised in the majority of local investors and businessmen, including major Omani financial and business houses, pension funds, insurance companies, banks and stock brokerages, along with a few GCC and other foreign investors. Working in conjunction with KPMG, the group is now devising a medium-term expansion strategy that Mr. Al Mashani hopes will see it grow to three times in size within the next five years. Results over the past two decades have not been bad, however. DIDIHC has posted profits every year since its founding, never once suffering a loss. Today, it has a paidup capital of $42.86 million and an authorized capital of $51.9 million. Sheikh Al Mashani, who is also vice-chairman of Bank Muscat, believes DIDIHC can continue to contribute significantly to the diversification of Omani economy. “As a portfolio investor, we have been participating in many projects taking place in the Dhofar region,” says the chairman. “Now, we need to be more dynamic in promoting major property development and industrial projects to capitalize on the growth opportunities in Oman, and the Dhofar region in particular. For DIDIHC’s future, I think if we have the right management and the right strategy, there is no doubt that our business continuity will grow.”

For further information contact: Summit Communications 1040 First Avenue, Suite 395, New York, NY 10022-2902 Tel: 1 (212) 286-0034, Fax: 1 (212) 286-8376, E-mail: info@summitreports.com This publication was produced in Oman by: Elisa López Moriarty, Elliot Brennan, and Vivian McGuinness

An online version is available at

www.summitreports.com

‘People from all parts of the world come to live here’ n influential force in Oman’s Dhofar province, Dhofar International Development & Investment Holding Company (DIDIHC) is the province’s leading investment company and the name behind a number of its most important projects, including the Port of Salalah and Dhofar University. In 2006, the company launched Dhofar Investment & Real Estate Services to take advantage of Dhofar’s emergence as a premier tourist destination. Here general manager Ali Bin Ahmed Salim Al Mashani speaks about the potential of Oman and the Dhofar region.

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What competitive advantages does the Omani market offer over those in the region? When His Majesty Sultan Qaboos became Sultan , he promised he would make this country a modern country and that he would do his best to make it one of the best countries in the world. He has achieved a lot of things that he promised. The main thing in Oman is the safety and the security. People from all parts of the world come to live here, and they feel safer than they do in their houses in their own countries. This is also one of the reasons that has attracted people to invest in this country. The rules are very flexible for any investor that wants to come to Oman, and they are dealt with in the same way that Omanis are dealt with. Another thing is the landscape of Oman. You can see the sea, the desert and the mountains. Each area is different to the other. These advantages give Oman the chance to be a top commercial and investment destination. DIDIHC has been a keen investor in local Dhofar companies from Dhofar Insurance to Dhofar University. How do you assess the current growth of the region? It is a promising region. I believe that Dhofar and Salalah, in particular Salalah, will be the second Dubai, but in another way, with a more selective range of projects

and professionals involved. With the diversity of the area it is very promising. What opportunities does the Dhofar region offer for investors, and what further progress is needed to boost the region’s infrastructure? Right now, most investors are focusing on transport and tourism

Ali Bin Ahmed Salim Al Mashani General Manager DIDIHC investments. These two sectors, as they are catalysts for other sectors. If you want the world to come to you, you have to accommodate the world. You have to build hotels, restaurants etc. If you want a thriving tourism sector, you have to provide security, services – a lot of different things to attract people to come to you. This also includes transport services such as airlines. There is also now talk of building a new railway line. These things will solve a lot of the transport problems in this area. What role do you believe Didic will play in the economic development of Oman and its plans for diversification? We are already one of the biggest companies in the region, but if we reach our potential we can be three times as big as we are now. We have already seen a difference in the past three years with return investors. The market is also booming so people who select DIDIHC are selecting a hidden diamond.

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Thursday, January 22, 2009

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Tourism

Sports

Oman is the big buzz

Soccer is a hugely popular sport here,

with a total of 43 clubs in the country, according to FIFA. Oman has a number of promising players, alongside more established figures, and some 20 Omanis play in Qatar’s national league. Ali Al-Habsi, the national side’s goalkeeper, plays for Bolton Wanderers in the English Premier League, and young midfielder Khalifa Ayil is seen as the future of Omani soccer. Ayil was courted by Arsenal, but his club, Al Saad of Qatar, refused to sanction a move. He spent part of last year on loan at Spanish side Celta Vigo. World Cup qualification as yet eludes the sultanate – in a tight group in the Asian qualifying preliminary round, it lost out to Japan and Bahrain. However, the July appointment of Claude le Roy as national manager is a fillip for a team whose international rank is a modest 95. Le Roy took Cameroon to the final of the African Cup of Nations in 1986 and has served in advisory roles at both AC Milan and Paris St. Germain.

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of color, accompanied by the sounds and smells of countless generations of trade. Further afield, scattered oases offer verdant relief in a sprawling sandscape over which the imposing Hajar Mountains cast their jagged shadows. Jebel Shams looms 10,000 feet over winding wadis and deep ravines – a Middle Eastern Grand Canyon. The ancient capital of Nizwa, Qantab beach, the green hills of Jabal Aktar‌ all combine to make Oman a land of diversity and beauty unlike any other in the region. Visitors from the emirates come in droves to see the effect of the khareef – the rainy season – that transforms the southern desert into an emerald swath of grassy hills around Dhofar, an event as unique in the region as the country of Oman itself. For those for whom the romance of the Arabian desert remains undiminished, and in line with the opening of Oman’s attractions to the outside world, since 2007 Desert Nights Camp offers accommodation in luxury Bedouin-style tents surrounded by stunning views of red dunes. Visitors can ride camels into the sunset, take a desert safari or go dune-bashing. At dusk, a traditional Omani lamb barbeque is prepared for guests round the campfire. As Oman strives to create a diversified 21st century global economy, tourism is set to play an increasingly larger role in its future prosperity. Indeed, tourism is now the second-largest destination for incoming investment. Over the next ten years, billions of dollars will be invested in

new lavish resorts, hotels, and mixed tourism-residential developments throughout the country. One such project is The Wave, now under construction along 3.7 miles of waterfront near Muscat. Aimed at the holiday residence market, The Wave has taken advantage of the changes in law that allow foreigners to own property in certain tourism developments, and was one of the first new projects in the country to offer buyers freehold titles. The Wave’s selection of 4,000 luxury apartments, townhouses and villas stirred a great deal of interest at the first auctions. Properties were snatched up, with one waterfront villa selling for nearly $6.5 million. As the tourism industry grows, however, a watchful eye is being kept on its development, with the intention of protecting the vast treasures of this land, including its environment and traditional architecture, and to ensure that supply does not outstrip demand as has happened in other Gulf countries. Oman only receives a million visitors per year. The Ministry of Tourism has said that it would like to see the sector’s contribution to GDP double to $1.5 billion over the next decade, or to 3 percent of the total from a current and very low 1.5 percent – a reasonable goal. Creating the sector from scratch, as it were, has allowed the government to shape it as it feels appropriate, and efforts have been focused on the creation of a more upscale, rather than mass, destination. As such, and luckily for us, it appears as if Oman, the ‘pearl of mystic Arabia’, the fabled home of Sinbad the sailor, and the source of frankincense for the Queen of Sheba, will retain its exotic allure for generations of visitors to come.

REUTERS/NACHO DOCE/CORDON PRESS

otted with ancient forts and widelens vistas, Oman has ambled into the 21st century with considerably more style than its gatecrashing Emirati counterparts. Here, beauty is more than skin deep: it penetrates every pore of the country. Where Dubai’s skyscrapers aim to land a slap on the face of global consciousness, Oman’s allure, carried on the desert breeze, whispers into its ear. If a beach is beautiful as it is, why build another one with thousands of tons of sand from the desert? If the sands of Oman’s interior form a shifting landscape that has captivated travelers for centuries, why tilt the timer before it runs its course? This is evident upon skidding to a halt at Muscat’s Seeb International Airport. Flanked by ochre hills and lined with palm trees, the small airport is equally quietly efficient. Visitors are often surprised that their luggage is ready for collection before immigration is cleared. Once in the capital, Muscat, one can see that the description by famed Arab sailor Ahmed bin Majid al-Najdi of the city as “a port the like of which cannot be found in the whole world, where there is business and good things that cannot be found elsewhere,� is as true today as it was in 1490. Large-scale development in the Omani capital is shunned in favor of traditional architectural concepts. Whitewashed houses stand like sentinels in the surrounding hills, while the city’s commerce manifests itself in a mosaic

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ROLF RICHARDSON/ROBERT HARDING WORLD IMAGERY/CORBIS/CORDON PRESS

The last well-kept secret of the Gulf is boosting tourism, but not at the cost of its natural beauty

Ali Al-Habsi, the Omani goalkeeper of the British soccer team Bolton Wanderers, during a match against Portugal’s Sporting of Lisboa, in March 2008.

The first Asian Beach Games were inaugurated in October in Bali with as much pomp and ceremony as the Olympics or the World Cup. Spectacular opening and closing ceremonies marked the event, which drew 6,000 athletes from 43 Asian countries, competing in 11 beach sports disciplines. Indonesia, the host nation, were the overwhelming winners, with 23 golds. Oman won only one event, but it was a gratifying victory – the Omani beach soccer team beating sporting archrivals the UAE 31 in the final. The sultanate will host the next Games in 2010 and preparations are already well under way for the building of Oman’s first ever world-class sports village in Musannah, near Muscat. “The project is running on a challenging schedule, and every detail is being re-checked to ensure quality,� says Wael Al Lawati, CEO of Omran, the government’s tourism and development arm. “Implementation of phase one is going ahead at a very impressive rate, and we anticipate equal success with other phases.�

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Thursday, January 22, 2009

Oman

Muriya: developing resorts lined by palms, not skyscrapers

A feast for the (frankin) senses Muscat still offers the visitor the opportunity of an authentically Arabian experience. But it’s changing fast ome say the first thing that reels you in is the blend of aromas: the herbs and incense such as frankincense. Secondly, the flavors – desert treats such as dates, teas and spices. Lastly, it is the people that make you feel welcome. This is Muscat, political and economic capital of Oman with that laid back feel that only the combination of heat and sea can give. Not beautiful at first glance, it slowly seduces you to explore its myriad mysterious nooks and crannies, its grandiose mosques, its markets and its tumultuous history. But possibly what stands out most here are the contrasts and the idiosyncrasies resulting from the various ruling cultures over the centuries and the recent surge in wealth. In any given street, it is not uncommon to see tasteful modern structures overlooking Portuguese colonial buildings and traditional white Arabian homes, while goats are herded across the well-paved street between latemodel cars. And the people of Muscat are also surprisingly diverse. Walking through the city you’ll hear whispers of Arabic, Persian, English, Swahili and a myriad of South Asian languages and dialects.

S

Salalah Beach, Jebel Sifah, a city complex in Muscat and the Al Sodah Islands. Salalah Beach, in the lush southern Dhofar region, has long benefited from year-round tourism, and its new development will be targeting more famhile the Gulf real estate markets are ily-oriented clientele for vacations. The feeling the impact of the financial complex will include marinas and a crisis to varying degrees, Oman could well promenade for shopping, as well as golf emerge as a safe heaven for investors. The courses and a host of other leisure famost astute ones saw quite a while ago cilities. that the sultanate has something you In Jebel Sifah, just 30 miles from Musdon’t find anywhere else in the region: a cat, Muriya is developing four large luxcombination of genuine Arabian culture, ury hotels spread over 18 million square a truly exceptional climate, and a safe, feet that highlight the Omani landscape moderate, political environand adhere to traditional arment. Thus, Egypt’s mammoth chitecture. Its proximity to the Orascom Hotels Development city allows locals to have their (OHD) invested heavily in permanent residence in Jebel Oman in 2006, creating Sifah and commute to MusMuriya, a $600 million 70:30 cat. The luxury accommodajoint venture with state-owned tion will be one of the preOman Tourism Development mier real estate developments Company (OTDC). “We have in the area, catering to highplanned to invest more than end clients. $1 billion in the country over Al Sodah Island, two hours Cyril Piaia the next five years, which by boat from Salalah, will have CEO of Muriya makes us the largest tourism 40 upscale villas amongst prisTourism development company in tine beaches and stunning Development Oman,” says Muriya’s CEO Cyril scenery spread over approxiPiaia. “One of the key conmately a million square mecerns for foreign investors is the safety of ters. Each villa will have a private beach, their investment. Our location and design which will be totally secluded from the are impeccable; our services and facilities other villas on the island. “We want this are world class. All our projects will be high- to be our flagship project in Oman,” says ly sought after and highly successful.” Mr. Piaia. “An absolute luxury resort. We Muriya currently has four major pro- want to retain traditional architecture and jects in various phases of development: add five-star class.”

Muriya’s major projects in Oman are inspired by Orascom’s flagship El Gouna resort and town on the Red Sea

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Muriya’s projects in Oman are inspired by Orascom’s flagship development, the El Gouna resort on the Red Sea. This community of 10,000 people is both a residential town and a vacation destination, offering a variety of hotels, restaurants, shopping malls, education centers and an 18-hole USPGA golf course. “El Gouna proves how successful a multi-faceted community can be, and as Muriya’s majority shareholder, Orascom is in a perfect position to use its vast experience and knowledge to create this kind of unified setting in the sultanate,” said Mr. Piaia in a 2007 interview with Business Intelligence Middle East. In early November, Muriya Tourism Development signed deals with three top global hotel and resort chains – Four Seasons Hotels and Resorts, Banyan Tree Hotels and Resorts, and Angsana Resorts and Spas – to begin construction of three new hotels in Oman, adding a total of 695 rooms. “The first phase is expected to be completed over two to three years,” said Samih Sawiris, CEO of Orascom Hotels Development and Chairman of Muriya, at a press conference following the signing ceremony in Muscat. “Muriya has been pursuing alliances with premium hotels and resorts that have secured leadership positions worldwide. The alliance with leading international hotels is an indication of our commitment to bring the world's best to the sultanate and to play a fundamental role in harnessing the country's tourism potential," added Mr. Sawiris.

Intercontinental: Five-star hospitality in the capital of Oman The InterContinental Muscat is a 35-acre oasis in the heart of the city’s premier residential, government and diplomatic quarter. The business and commercial district is close by, as are must-see sights such as the Sultan Qaboos Grand Mosque, the Bait Al Zubair Museum and the Amouage perfume factory. For shoppers looking for a bargain, or just to enjoy haggling and the atmosphere, the nearby Muttrah Souk is also a “must”.

PHOTO: STEFANO POLITI MARKOVINA

A joint-venture between Egypt’s Orascom and the government of Oman, Muriya is investing more than $1 billion in tourism projects.

From a distance, Muscat’s famous Corniche, a serene harbor in the old town lined with old white merchants’ houses and rocky cliffs rising up to an ancient fortress, brings Marbella to mind. A slow meander along the promenade is pleasant by day and breathtaking at night when the lights reflect in the calm waters. Beyond the Corniche you’ll find one of Muscat’s liveliest souks, where the intrepid shopper will encounter a hodgepodge of bargains. Anything from 24-karat gold and the fabled frankincense to fabric and house wares can be found in this chaotic and aromatic labyrinth of narrow passageways. A far cry from the glitz and glamour of Dubai, Muscat wears its wealth in more subtle ways. While everything new is hightech, there are few glass skyscrapers. The contrast between the symbols of the capital’s new found wealth rarely jars: it is patient, welcoming and still humble. It’s possibly one of the Middle East’s best-kept secrets, destined to join the ranks of its emirate neighbors sometime in the future. But until then, let’s enjoy this understated city of mystique and modernity.

Muscat Private Hospital: meeting a growing need from ex-pats The last few years have seen significant plastic surgery, and dental care. Other growth in the number of private clinics departments include diagnostics, emerand hospitals in the Gulf, and which are gency, obstetrics and gynecology, pediproviding an alternative to primary atrics as well as assisted conception. healthcare. Patients at clinics such as MPH’s director, Gerard Strong, says the Muscat Private Hospital, many hospital caters predominantly of them non-Omanis, prefer to the Omani upper middle to pay more for specialized class and expatriates. treatment and personalized MPH is also benefiting from service than wait in queues at the growth in medical the state-run institutions, tourism. At the same time as even though the quality of catering to the needs of forhealthcare and service in eigners looking for minor Oman is high. surgery, the hospital plans to In Oman, private clinics and strengthen its critical care, hospitals have helped raised expand ER, and man it with the bar by offering quality Gerard Strong internationally qualified staff Director of Muscat service and state-of-the-art to provide a high level of care Private Hospital equipment. Muscat Private to trauma and emergency Hospital (MPH), which opened patients. in 2000, and is regarded as Muscat’s preThe hospital clearly has a healthy mier private medical facility, says it future in Oman: “The growing need for strives to provide high-quality care private health care will increase in parallel through full time, visiting, and indepenwith the number of expatriates in Oman dent consultants. The range of services but also with the growing wealth of the meets just about anything available in Omani community,” says Mr. Strong, state-run hospitals. This includes joint adding: “The greater use of the indepenreplacements, neurosurgery, urology, ear, dent sector could help the government nose and throat surgery, cosmetic and meet its healthcare targets.”

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SPECIAL ADVERTISING SUPPLEMENT TO THE NEW YORK TIMES

Oman

Finance Markets distinguished by disclosure and transparency

Bourse buoys financial sector’s appeal Overseas investors seeking safe returns have recognized the tax freedoms and good corporate governance Oman has to offer

Gulf Baader Capital Markets tracks key trends and aims to establish a pan-GCC investment firm within five years

13.1

United Securities Co.

10.9

BankMuscat

9.5

Financial Services Co.

9.2

Vision Investment Services

8.5

FinCorp Oman Arab Bank Global Fin Investment Co.

5.0 4.3

iquidity in the GCC has been notoriously high 3.8 Middle East Brokerages since 2000. Where to invest one’s petrodollars has been tricky. IPOs have absorbed much of the 3.1 Al Amin Securities money, encouraging telecoms and utility companies to float regionally. Until the global financial 0% 5% 10% 15% crisis, the main destination for excess cash was equity markets and real estate. But with the dawn in Source: MSM Bulletin the construction industry, property is no longer seen “Market depth at the MSM has been a major conas a safe haven. Few investors are closer to the pulse of the GCC cern. But it has been easily offset by our solid corthan Gulf Baader Capital Markets (GBCM). The porate governance,” says Hatem Al Shanfari, chairOmani firm is a spinoff from Gulf Investment Ser- man of GBCM and a founding member of GIS. Transvices (GIS) and a joint venture with German-based parency and accountability have given Oman a comBaader Bank, which holds a 25 percent stake. In 2007, petitive edge over its faster and bolder neighbors. The GIS was the largest brokerage firm by trading vol- sultanate has also attracted investors with its consisume at the Muscat Securities Market (MSM), ahead tent policymaking. Mr. Al Shanfari, who also teaches economics and of United Securities and the Bank of Muscat, and finance at Sultan Qaboos University in Muscat, thinks is ISO 9001-2000 certified. even markets with strong economic funGBCM was spun off from GIS in Jandamentals can flip on very short notice. Still, uary 2008 with the goal of making headbecause the investments of key players like way into fund management, corporate fithe Oman Oil Company are well diversified, nance, equity research and consultancy the impact of the global financial crisis at services. The firm has inherited the GIS the trading floor is likely to be contained. senior management team and taken over its First Mazoon Fund, the gateway to Upbeat outlook blue-chip stocks in the GCC and Oman’s “Oman stands heads and shoulders above othbest-performing fund in the last six years. er regional markets in terms of its regulatoSo far, GBCM has lead managed eqry environment. Hence, it attracts a relauity, bond and convertible bond issues. Pradeep Asrani tively higher percentage of foreign funds in Institutional investors have placed their Managing Director relation to overall market capitalization in trust in the firm largely because it is Gulf Baader the stock market,” says Pradeep Asrani, the backed by GIS, with a net worth of $60 Capital Markets managing director of GBCM and CEO of GIS. million and Baader Bank, with another With years of investment banking expe$235 million. The joint venture with Baader Bank also allows it to reach European rience in emerging markets, including India, Mr. Asrani moved to Oman in 1999 after managing more customers and use its global trading platform. than $600 million at a subsidiary of Barclays Bank. Muscat Securities Market Despite the fall in oil prices, his outlook for the reUntil three years ago, the sultanate had a single sov- gion remains upbeat. The benchmark index at the MSM ereign fund. Now there are a number of them. In terms was up by 25 percent in the first half of 2008. of financial development, Oman has been growing For now, it is critical to track business trends in key at an average rate of 40 percent capital appreciation. markets like UAE, where GBCM can create cross-borIn 2007, it was the best-performing market in the der synergies. In 2009, Mr. Asrani intends to move inregion. Large financial institutions like HSBC have to Saudi Arabia. “We would like to capitalize on our been keen to work from here, creating new momen- leading position in Oman and create a strong pantum. The problem has been the market’s lack of di- GCC investment services business over the next five versity in structured products. years,” he explains.

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15 2.1 4

Customers’ Deposits

I

I

I

1998 1999 2000 2001

I

I

43 .57

76 .27

I

32 .33

160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0I

16 .95

The question about what to do with Alliance Housing Bank arose during a board meeting. Then the deputy CEO of the National Bank of Oman, AbdulAziz M. Al Balushi proposed a strategy to the ONIC Holding, which held a 21 percent stake in the mortgage bank. Why not turn it into a fullfledged commercial institution? It was not easy turning the mortgage lender overnight into a licensed institution. Eventually, Mr. Al Balushi was asked to find a strong strategic partner who could help the bank move forward. The choice of AUB was clear. It had carried out similar operations in Qatar, Egypt and Kuwait. AUB was also a financial powerhouse that could provide Ahli Bank with the right backbone. “Banking is a very specialized field. You can build your balance sheet within three years. But if you don’t have a strong foundation by the fourth year, you have a problem,” says Mr. Al Balushi, now the CEO of Ahli Bank. For him, the secret to success is organic, prudential growth. AUB had the long-term vision to bring in the IFC, pension funds, corporate houses and private investors. This gave it a clear ownership structure from day one. In the end, Ahli Bank was

10 .17

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Organic, prudential path for Ahli Bank’s growth

3.9 8

Gulf Investment Services Co. (Currently GBCM)

Continued on page 6

2.4 2

Market Share – 2007

Since the financial crisis of 1998, the sultanate has taken steps to contain external shocks. That year, the government established the CMA as market regulator, allowing the MSM to focus solely on trading. A close relationship with U.S. regulators, meanwhile, enabled Omani staff to attend training sessions on financial development in New York and Washington. As a result, the working model at the MSM has

1.1 9

Enabling foreign investment on the MSM

improved beyond measure. Many of the GCC exchanges have been unstable in the last few years, while the MSM has maintained its growth trend. Market depth is part of the secret—the MSM now includes 134 companies. This makes it the second highest in the Gulf in terms of listings after the Kuwait Stock Exchange. The value of listed shares, meanwhile, reached OMR 6.221 billion ($16.2 billion) by December 2006. Foreign investors have been quick to recognize not only valuation, but also the tax advantages that Oman has to

CMA: best practices

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to create more mature funds,” says the executive president of the Capital Markets Authority (CMA), Yahya Bin Said Bin Abdullah Al-Jabri.

Omani Rials (millions)

hen the global credit together with Bahrain. The MSM-30 crunch crimped earnings index reached 9,035 points by endat Western stock December 2007, an increase of 62 percent exchanges in the second year-on-year and its highest level since half of 2008, investors beginning operations in 1989. A dollar instinctively turned to the GCC. After all, invested at the MSM by July 2007 had several of the regional bourses had doubled one year later. gleaned their expertise from the best regDriven largely by the boom in oil and ulators in the world. Oman, with its range manufacturing industries, foreign investof attractive funds, was one of the markets ment grew 27.3 percent in 2007. In 2005, seen as a hedge. But what lies behind its the figure was a more modest 16 percent. Yahya Bin Said Bin With a price-to-earnings ratio at 16 and robust performance in the last six years? Abdullah Al-Jabri At first glance, what makes financial good value for stocks, foreigners easily markets in Oman different is their scale. Executive President overlook other stock market measures. It Capital Markets Market capitalization at the Muscat Secuis no surprise in these days of global Authority rities Market (MSM) is relatively small from financial turmoil. the perspective of Riyadh or Dubai. With “Our priority is to distinguish this mar$27 billion, it amounts to only 3 percent of overall ket from others through a policy of best practices, market capitalization in the countries of the GCC. transparency and the introduction of new products. Still, according to a report published in 2008 by We want to be a dynamic market that continuously the Oxford Business Group, Muscat posted returns reviews and updates its regulatory framework. All legal of 14.5 percent in 2006, the highest in the region changes should encourage local and foreign investors

I

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2002 2003 2004

2005 2006 2007

Source: Ahli Bank

granted its license as a commer- ber of games. We don’t think of cial bank. Today, it not only ourselves as becoming the numcomplies with Basel II, but is ber one bank in Oman. Instead, also known for its strong corpo- we’re looking to become a rate governance and its manrespectable bank that provides agerial meritocracy. Now the solutions to its customers and challenge is to alter the mental- the best services in the market. ity of its legacy That’s what makes us employees. The different,” says Mr. results are upbeat Al Balushi. and the goals are in Ahli Bank will sight. Total assets at stick to its vision of the end of December prudential growth by 2007 had grown by focusing on its pool 75 percent. By Q1 of customers and its 2008, net profits alliance with AUB. were up to 1.6 milBy doing so, the CEO lion OMR ($4.15 aims to see the bank million). with 15-20 percent AbdulAziz M. “We want to be a of the market share Al Balushi CEO premier bank, but for deposits through Ahli Bank we’re not in a num2012.

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SPECIAL ADVERTISING SUPPLEMENT TO THE NEW YORK TIMES

Oman

Bourse buoys appeal

Know-how and technology to put Bank Sohar on the lips of SMEs

offer. Any Omani-registered commercial bank or brokerage firm can establish a special joint-stock investment account. Listed at the MSM, the accounts are tax-free. “We’d prefer to grow slowly and remain stable than overstretch our current capacity. In addition to transparency and good corporate governance, what differentiates Oman from other countries in the GCC is its fiscal regime. Tax freedoms in the sultanate are great for foreign investors,” says Mr. Al-Jabri. Large infrastructure projects in Sohar and Salalah are creating the conditions for future listings, and such schemes will underlie future growth. According to the 2008 CMA annual report, there were two new company listings in 2007: Bank Sohar and the Gulf Engineering & Contracting Company. This last one is considered a successful example of a family-owned business that was transformed into a public joint-stock company and floated at the MSM. As the economy continues to expand, corporate earnings and disposable income will increase, also raising demand for a greater range of banking products. “Naturally, we’re an oil-producing country and this will remain a strong factor in our growth,” says Mr. Al-Jabri, “but the emphasis on economic diversification remains. The CMA benefits from these large projects because of their inclusion in the MSM in the future.” In light of the current financial uncertainty affecting markets worldwide, a OMR 150 million ($390 million) investment fund was started in November to underpin the value of shares on the MSM. The Omani government pledged a OMR 90 million ($235 million) contribution and private investors OMR 60 million ($155 million) to the fund to help maintain confidence in the bourse and the investment environment.

The Performance of GCC Capital Markets in 2007 70 62% 60 52% 50

44%

Percentage

40% 40

34%

30

25%

24%

20

Capital Markets Source: MSM Bulletin

Bahrain

Kuwait

Qatar

Saudi Arabia

Dubai

Abu Dhabi

0

Muscat

10

thus turned into one of its seen as a way to enhance strong suits. customer service. The bank “We want to be the best in was quick to deploy internet the SME sector. We want banking and transactions via SMEs to want to come to SMS, thus altering the Bank Sohar. When someone domestic banking culture. It asks which bank gives the best partnered with software solutions to SMEs, we want to providers like Infosys and hear our name,” says the CEO, Oracle to provide more Nani Javeri. After working choices to customers. with ANZ Grindlays in The bank performed well Australia for 32 years, Mr. in its first year run, picking Nani B. Javeri Javeri knows how critical retail up a market share of 5 CEO banking can be for new percent in deposits and Bank Sohar businesses. assets. It raised 40 percent of Bank Sohar is modeled after any new paid-up capital through an IPO that was bank anywhere in the world. As a new oversubscribed six times in January institution, it is unhampered by legacy 2007. Operating profits have grown to platforms. Its emphasis on technology is 2.7 million OMR ($7.01 million).

According to a report by its Board of Directors, the figure for Q3 ending in September 2008 was 167 percent higher than the same period in 2007. “We’re looking to bring in the world’s best practices and introducing technology has definitely played a big role in this. We now have the best-inclass technology to support all of our initiatives,” says Mr. Javeri. A wide range of lifestyle products addresses the needs of the latest generation of Omanis, from college loans to mortgages. Meanwhile, Bank Sohar plans to expand by another four offices by 2009, including one in the port city of Salalah. The CEO is convinced that his bank’s know-how will contribute to the country’s overall financial development.

Infrastructure boost for the Port of Salalah

One of the region’s most important container transshipment terminals Long-term investments in new berths and cranes will help meet demand, increase efficiency and speed vessel turn times he Sultanate of Oman boasts more than 1,300 miles of coastline. It comes as no surprise, therefore, that it has a legendary seafaring past. The navigational feats of Omani seamen include a 17th century trade empire that stretched as far as Zanzibar and Malaysia. At the time, it was the Sultan of Oman who had price-setting power over the world spice industry. Today, container trade has become a new economic pillar for the country of 3.3 million. In the 1990s, Oman bet on the success of cargo transshipment, which entails the maritime shipment of goods from manufacturers to consumers. Typically, a mainline vessel will offload a container at an intermediate location before delivering to end markets. This is done via smaller feeder vessels that serve the subregion. According to the Financial Times, the volume of containers shipped between Asia and Europe grew more than 17 percent in 2007. Traffic that year was so intense that containerships have become 2.5 times larger than they were in 1997. Meanwhile, the Asia-to-Europe trade route has grown into the world’s second long-haul container corridor, with 12.2 million twentyfoot equivalent units (TEUs) transported to the EU in 2007. After ratifying a free trade agreement (FTA) with the U.S. in September 2006, the government of Oman has sought to clinch similar deals with China and Japan. The FTAs are important to consolidate the country’s position as a transshipment hub, as was its WTO accession in 2000. The two ports at Mina Qabus and Salalah not only provide jobs for Omanis—they also offer services that global operators demand: ever-cheaper and more reliable means of getting merchandise from A to B. When it was inaugurated in November 1998, the Port of Salalah was an untested facility. The original policy was to turn the strategically located port into a terminal for shipping lines traveling up the Suez Canal on their way to deliver goods from China and Southeast Asia. The multi-pur-

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Berth six at the Port of Salalah was inaugurated in May 2008, increasing annual throughput capacity to 4.5 million TEUs, up from a limit of 2.5 million TEUs in 2006.

PHOTO: DARREN PULLEN

Continued from page 5

When it opened for business in April 2007, Bank Sohar became the country’s sixth-largest commercial institution overnight. It was the first to be licensed by the Central Bank of Oman in 12 years. Given the small size of the country’s financial market (3.9 million, including the expatriate population), it was also a way to inject new energy into an already consolidated field. As the sultanate seeks to diversify its economy, institutions like Bank Sohar have supported the growing financial needs of nascent companies in logistics, manufacturing and petrochemicals. The bank has posted strong returns by targeting SMEs that have come of age in the years of economic bonanza since 2000. Project finance for startups has

pose port would handle bulk 1998 with only two shipping cargo and containers, in addiberths. Another two berths tion to offering services like were delivered in April 1999. bunkering, repairs and storage. At 250 crane lifts per hour, It was part of the Sultan’s Salalah set the world record for 2020 vision. productivity after two years of “Given its geography and operation. after reaching a stable and Thus, the Port of Salalah appropriate period for new made its way into shipping infrastructure in the midlore. With the completion of 1990s, the idea of re-igniting two more berths in 2007 and Abdul Aziz Ali the port in Salalah emerged. I 2008, including a deepwater Al Shanfari worked closely with the govterminal, annual throughput Chairman ernment in the initial phases capacity has risen from 2.5 milPort of Salalah and shared their view of turnlion TEUs in 2006 to 4.5 miling it into a world-class facillion TEUs in 2008, which is ity,” says Abdul Aziz Ali Al Shanfari, expected to grow another 30 percent with chairman of the Port of Salalah. A skeptic the arrival of new crane equipment. It may have brushed it off as an ambitious offers the region’s best location to access gamble. more than 2.5 billion consumers in the In 1996, Oman finally signed a contract Middle East, Indian subcontinent, East with APM Terminals to build and operate Africa, and Indian Ocean islands. the terminal. Two years later, the former The development of a free trade zone port of Mina Raysut became the cargo ter- adjacent to the port has added value to minal. With its state-of-the-art equipment, the entire operation. And although the Sulthe Port of Salalah went into operation in tan may not have price-setting ability over

manufactured goods, prices for goods such as a pair of athletic shoes sold in Rotterdam may embed their transit through Salalah. “Partnerships have been critical in the success of our world-class facility. As a public Omani company, the port is 70 percent locally owned, with 30 percent ownership in foreign hands,” comments Mr. Al Shanfari. APM and Sea Land are its largest shareholders, and they are also the best promoters of Salalah within the shipping community. The Port of Salalah is working at full capacity and needs to continue adding value to its operations. With 1,500 vessels served in 2007, it plays a role in consolidating growth through greater economic diversification. In May 2008, the Board of Directors agreed to invest $112 million to increase throughput capacity. Mr. Al Shanfari and his team have commissioned berths seven, eight and nine. A tender has been extended for the construction of Terminal 2, which will add 1,350 meters to the quays. The port authorities are also planning to install four Super Post-Panamax gantry cranes for the new 18-meter berths. By mid-2009, throughput capacity at Salalah will grow to six million TEUs. “With this expansion, we hope to become one of the premier ports in the region and a key player in global transshipping,” adds Mr. Al Shanfari.

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SPECIAL ADVERTISING SUPPLEMENT TO THE NEW YORK TIMES

7

Oman

Haya Water

Desalination and recycling water Effective water management and a strategy to maximize potable water and treated wastewater are crucial for maintaining growth in the sultanate, as well as protecting the environment and serving both the citizens of Muscat and the rising numbers of visitors to the country

A

will continue to do so. The main challenge that comes with that is where you will get the energy to produce the water, and of course energy comes from gas and oil, etc. However it’s the optimization of the use of that energy, making sure you use every kilowatt of energy wisely to produce the maximum amount of water and finding renewable and sustainable energy sources, which are important. After you have produced that water, you need to make sure you use as much as you can before finally disposing of it.” The project is very welcome news for the city of Muscat. The government is promoting the growth of its tourism sector, and needs strong infrastructure to do so. There is great competition in the Gulf and around the world for tourism; countries are finding new and different ways of making themselves unique. Oman is doing the same, and appears to be succeeding. Clean and green, water from the $1 billion Muscat Wastewater Project will be used for watering the city’s grassed areas. PHOTO: Ministry of Information

s the Gulf region grows, both in its own population and in the number of tourists it attracts each year, so do the region’s problems with scarcity of water. Oman is no different from its regional counterparts. Its water challenges have grown as a result of the rapid economic development of the sultanate since the commercial production of oil began there in the late 1960s. Since then, average family size has grown, life expectancy has increased, and the number of immigrant workers in the country has risen. In addition, the government has set out to attract an annual two million foreign visitors to the country by 2010, roughly double the amount of visitors it received in 2001. Consequently, more efficient conservation practices and better water management have been a priority. Oman has chosen the route of desalination to ensure its future potable water needs are met. The country has been a regional leader in the privatization of the water industry, with government plans to bring private sector investment and expertise in all of its desalination operations. The treatment of wastewater also forms a vital part of the country’s water strategy. The Omani government is investing heavily in wastewater treatment plants. Its aim is to achieve the highest practicable standard of treatment, which in turn enables all water used in the sultanate, to be reused for irrigation and industrial purposes. One of the largest infrastructure projects now under way in the country is the $1 billion Muscat Wastewater Project, which will serve 90 percent of the nation’s capital as well as the increasing number of tourist destinations in and around the city when fully completed over the next decade. The ambitious project includes the construction of what is expected to be the largest membrane bioreactor (MBR) plant in the world in Muscat’s AlAnsab district. An MBR is effectively a process that combines the biological and filtration steps of wastewater treatment in one stage. It uses membranes with very small pores that allow the water to pass through, whilst filtering out solids, bacteria and viruses. Thus the treated water is very clean. Overseeing the project is Haya Water, the newly launched brand of the Oman Wastewater Services Company, set up by the government in 2002 to address the urgent need for a wastewater management system. The company proceeded to draw up the master plan for the Muscat project, which aims to see 80 percent of the population in the city’s six districts served by 2014. A further 10 percent will be included three years later. Establishing an integrated approach to wastewater management for the area, the project is intended to meet the needs of the growing population to the year 2025. Omar bin Khalfan bin Nasser Al-Wahaibi, CEO of Haya Water, says that integrated water management and a strategy that incorporates complementary policies for both potable and wastewater are critical for the success of the region’s future water supply. “The future necessitates a holistic approach to water management. Unless we adopt practices which integrate all aspects of the water cycle, and manage them together as one resource, we will end up with a very big problem,” he comments. “In the future, like now, the region will depend heavily on desalination to produce its potable water and we

‘The peninsula is arid; the key is efficiency and how you use water more than once’ mechanical engineer by background, Omar Khalfan Nasser Al-Wahaibi worked for Petroleum Development Oman and Shell for many years before assuming his position as general manager and later CEO of Haya Water in 2003. Here he speaks of the importance of infrastructure investment to the future prosperity of the sultanate.

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In an article published in Arabian Business, it was predicted that the amount of water available per person in the GCC region will have halved by 2050. Do you agree with this statement? We have to be realistic. The Arabian Peninsula, as you can see, is arid. It has never had enough water; otherwise, we would be a much greener land, yet we still have millions of people living here. It has always been like this and it will continue to be so in the future unless we have a big climatic change. Although natural water sources are limited here, we still have to meet the needs of our existing and growing population and we have to get the water from some- Omar Khalfan Nasser Al-Wahaibi, CEO of Haya Water where. We have been using desalination since the 1960s, and we will continue to use it in the future. of wastewater network. The objective of the project is to For these reasons, I think that the statement misses take this coverage to 80 percent by 2014, and hopefulthe key issues for this part of the world. The real chal- ly to 90 percent by 2017. lenges are how to increase the efficiency of desalination and reduce the amount of energy it consumes, How has the company contributed to the nation’s development? as well as looking to find more sustainable and renewable energy sources. It is also critical to consider how you use the water more than once to make sure that you optimize costs and maximize the use of resources. Could you give an overview of the Muscat Wastewater Project? Muscat, the capital of Oman, currently has a population of more than 700,000 people, but is forecast to grow to over one million over the next 30 years. The city is spread geographically, with more than 125 miles of shoreline and it has a mountainous interior. Currently, only about 13 or 14 percent of the population of Muscat is actually connected to any form

The Muscat Wastewater Project

What is wastewater? Wastewater is the liquid waste derived from water used for domestic, commercial, industrial or agricultural purposes. It includes what is commonly referred to as domestic and commercial sewage. What is the Muscat Wastewater Project all about? The project involves the construction of a wholly new mains drainage system serving all the Wilayats (districts) of Muscat Governorate. It comprises six major new sewage treatment plants and more than 20 smaller plants, together with some 1,550 miles of pipelines to transport sewerage from individual properties to these plants and subsequently distribute treated water around the city region for irrigation purposes. The project will bring about significant environmental, public health and economic benefits for the city as it takes its place in the global market.

How many people will benefit from the project? Currently, only about 14 percent of Muscat’s properties have mains drainage. The project will increase coverage to more than 80 percent of existing residential, commercial and institutional properties over the next ten years. How much is the overall project going to cost? This project is one of the country’s most important infrastructure projects currently being implemented. It is estimated that the total project costs will reach $4 million. What is the treatment rationale? In a dry region, efficiency in the use of water is crucial. By subjecting liquid waste to various physical, chemical and biological processes, it is possible to eliminate pollution to such an extent, that the wastewater is suitable for re-use for irrigation purposes.

How many treatment stages are there? There are three stages of treatment: the primary stage, the biological stage, and the final stage of sterilization and refinement. One of the new plants will be the biggest in the world using membrane bio-reactor technology, a process which treats water to a very high standard. How will the treated water be used? It will be used for watering parks, sports fields and other green surfaces, maintaining the city’s attractive landscaping in an environmentally and resource efficient manner. It will also be made available for use by private customers. How long will the construction period last? It is expected to take ten years. Haya Water, the company overseeing the delivery of the project, is awarding a series of construction work packages to ensure timely completion of the works.

The development of infrastructure is the development of the country. The wastewater infrastructure to us is three parts: these are the collection networks, the treatment plants, and the water reuse networks. The purpose of the first two is to safeguard the health of the public. The third part is water recycling, so that we maximize the use of what is available. It also helps in greening the city in general, making it a much more attractive and nicer place to live in. So it serves tourism project purposes as well. In the near future, we will be supplying two tourism projects with water for their golf courses. How do you believe the development of better infrastructure in Oman will further benefit the sultanate? Any country that wants to attract investment from the rest of the world needs strong infrastructure. At the end of the day, people want the electricity network to be working all of the time. They want a quality water supply, good roads, and effective wastewater services; these are all considered to be essential, so having a very good infrastructure is vital for attracting investment. This is why the government is focusing on investment in infrastructure. Our Muscat Wastewater Project is one of the major schemes that Oman is investing in, and it will deliver significant environmental, health and socio-economic benefits for everyone in the city and all of those who choose to do business here.

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Thursday, January 22, 2009

Oman

Construction Industry

Rising stock Dawn breaks over the fast-changing Muscat skyline.

Oil and gas revenues fuel across-the-board improvement in residential, retail, and office developments n the real estate boom that has been sweeping Gulf countries since Dubai took off nearly a decade ago, Oman is the newest frontier. Total investment in the country’s real estate sector in 2007 was valued at $4.2 billion, up from $750 million just two years before. In 2007, new projects under way were worth $25 billion, many of which are longer-term, mixeduse mega-projects spread across the country that are fueling a boom experts believe will continue to grow into 2010 and beyond. Indeed, at the end of June, 2007, the construction industry accounted for a third of Oman’s GDP. Significant government investment in

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infrastructure, low interest rates and high liquidity have merged with a population explosion, economic expansion, and rising wages to create an unprecedented tide of activity in the sector. Added to this is increased liberalization that has made more land available. Figures show that the increase in the number of residential plots available grew 600 percent between 2003 and 2005, while land sales jumped 74 percent in 2006 over 2005. The Central Bank has also made way for banks to increase residential lending to 45 percent of their loan portfolios. Perhaps the greatest contributor, however, have been changes in the laws regulating foreign property ownership. Non-Omanis are now allowed to purchase freehold property in designated tourism resorts for residence or investment. Now in its third year of growth, Oman’s residential property market, which is emerging as the highest income yielding investment in the sultanate (industry reports indicate that the average price per square meter for residential land in Oman increased by 253 percent,

reaching $135 per square meter in 2007 compared to $38 in 2005), is leading the construction boom with a number of multibillion dollar projects. As strong oil and gas prices fed a more affluent Oman’s appetite for improved residential developments and more and larger retail complexes, the expansion and diversification of the economy brought an influx of foreign workers and companies who increased demand for high quality residential, commercial, and office properties. The boom attracted developers from throughout the Gulf, who are constructing the super-size developments that the region has become known for. Oman’s new mega-developments are cities within cities, following the integrated model popular throughout the Gulf, complete with hotels, villas, apartments, retail and commercial spaces, entertainment facilities, marinas, and golf courses. Among the dozens of projects currently under way are the $20 billion Blue City, $2 billion Yenkit, $1.6 billion Omagine, and $2.4 billion The Wave.

PHOTO: TEBJAN HALM

An appetite for property

‘Oman’s real estate sector is very stable’

Al Taher’s Sheikh Al Khalili: key role in Oman

ousing Finance Co. (Iskan), a Kuwait-based financial investment outfit that provides real estate and industrial loans, and that is also involved in trading and real estate development, moved into Oman in 2007 with the establishment of Iskan Oman Investment Company. Iskan, which boasted a 48 percent increase in profits for the first half of 2008, has been expanding regionally throughout the past two years. Here, Karim Rahal, director of the company’s subsidiary, Iskan General Trading and Contracting, speaks on the opportunities in Oman’s burgeoning real estate sector.

The Al-Taher Group has been a leading player in Oman’s real estate and construction sectors, as well as in engineering and the oil industry, since it was established by Sheikh Saud Al Khalili in the early 1970s. Sheikh Al Khalili has played a key role in the country’s development, having been the country’s first education minister and subsequently an ambassador. “I have been privileged to be able to be part of the sultanate’s renaissance,” says Sheikh Al Khalili, adding: “In my capacity as the first Minister of Education in the country, and through the direction of His Majesty, we were able to open the first schools. I am proud to be a part of the evolution of the country.” Since Sheikh Al Khalili founded the company in 1973, it has emerged as one of the country’s preeminent property developers and managers. Today it owns and operates a number of residential and commercial properties throughout the sultanate, including residential high rises, shopping centers, and offic complexes. Still privately owned, Al-Taher is a family-run business with an annual turnover of more than $350 million. Headquartered in Muscat, the group’s solid financial and technical base has allowed it to approach new market opportunities on a global scale. Al-Taher is made up of a diversified range of commercial, consumer, and trading enterprises that employ more than 1,500 people in the Gulf. Sheikh Al Khalili says the group is making headway into new markets in Asia and Africa.

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Moosa, the General Motors agent. In general, I have to note that working with the government is always the best bet. We have kept the company medium-sized. The bigger you become, the more responsibility emerges. One of the most important attributes for a good business is company loyalty – a good business model with a strong team will have this. The real estate branch of Iskan in Oman is a very new company. How would you assess its first eight months? It is going very well, and is very promising. It is an excellent beginning, really. The place is moving very rapidly. I go to Dubai often, and I do not like the way it is going there; it is too fast. Oman is moving steadily, and we are much more stable here. It is a good climate for real estate development.

Gulf Business magazine last year noted the high quality of GCC sovereign credit ratings. The region’s investment laws make the GCC’s infrastructure and real estate sector very attractive to global investors. Do you feel this to be an accurate description of the investment climate in Oman? Sheikh Abdullah Jaber Al-Ahmed Al-Sabah, chairman of Oman has put in place solid investment Kuwaiti parent company Iskan, has said that rules and regulations, which have matched the company’s soaring profits over the last all the international frameworks for busiyear are due to its endorsement of a conservness and investment. Oman offers a sound ative approach. Is this also a policy for the cominvestment, and the rights of foreign inpany in Oman? What advantages do you offer vestors are well protected. Also, the counover other regional developers? try has signed a large number of internaYou have to be very careful, if you go tional treaties. The region’s security is very too high, prices start moving too fast. important for investment, and Oman is a You have to look after the income of the very stable country. people. Prices should accommodate the Karim A. Rahal needs of the people, and should not be a Iskan General Trading and Contracting ComDirector of Iskan means to push potential customers away. pany was founded in 1983, and has been an Contracting We are always very price-conscious and active participant in this growth period, most Company maintain standards of the highest qualirecently branching out into real estate and ty in our projects tourism investment. Please tell us a little about the origins What role do you see Iskan playing within the broader outof the company and its evolution. When I came to this country, I was working with a line of His Majesty’s Vision 2020 ? Iskan is helping to build the sultanate. As far as I am company called Mothercat. Then we established Iskan Contracting. I joined my brother here in Oman in 1979. concerned, I would recommend Oman to everybody. I I was stationed in Masirah, and we built some 600 low- have had lots of opportunities to leave, but I never did. cost houses for the local people after the hurricane that I kept my family here. I raised my kids here, and it was occurred at that time. We then built coldstores for the only when I was forced to leave for my children to purfishing industry. All the fishermen would bring their sue their higher education, that I moved. However, I kept a base here, because it is a very sound fish there for processing. We would then freeze it and country. I see the potential here. I have witnessed His send it out. We then carried out a lot of building projects for the Majesty’s vision for the country and its future. Indeed, Ministry of Defense inside the air base there. Today, in the period since he took over until now, the changes the vast majority of our work is for the Ministry of De- that we have witnessed are quite astounding for such fense. We are presently building for them at the Masir- a small country. Iskan will continue to play an important role in the sultanate, and I am sure that Oman will ah Air Base. Iskan also undertakes private contracting for Abdullah continue to enjoy a long period of prosperity.

At home, the company has Real Estate division is the 30,000 been a major player in fueling the square meter Bausher Center, a real estate boom in Oman and new hypermarket in the capital. has a respected track record of Al-Taher’s Europtima is a projects with an investment value world leader in construction and worth more than $20 billion. The real estate management. group has produced turnkey Sheikh Al Khalil believes that design and build services for a challenges can be turned into wide range of schemes that opportunities, citing the example include healthcare facilities, busi- of the region-wide general boyness parks, retail spaces and cott of Coca-Cola, Ford, and malls, offices, hotels, leisure and other U.S. companies in the early culture centers, transport infra1970s. structure, private and residential “I met with a key personality construction, schools, and govinvolved in Coca-Cola at the time ernment buildings. and together – with the approval At present, says Sheikh Al of the Omani Authorities – we Khalili, Al-Taher has four largemanaged to arrange a breakscale projects under through in the standway, one of which is off. Ford and the construction of a Coca-Cola then wave breaker by its expanded into Oman SNE-Sarooj Construcand the Gulf region. tion joint venture to Together, we helped protect The Wave, a break the impasse of new beachfront intethe period. You must grated tourism and seize all opportunities residential megaand use them to Sheikh Saud bin development being implement your Ali Al Khalili built in the capital. vision,” he says. Chairman and Al-Taher’s trading Sheikh Al Khalili Founder of Al-Taher says the group is concompany, SAM Trading, is also responsistantly expanding. ble for implementing a $3 “We are in the final stages of million civil works upgrade for registering a strategic joint venthe City of Muscat at Sahwa Gar- ture holding company.” Founded den, and which is now 80 percent by key players in Oman’s real complete. estate sector, he is confident of It has also signed contracts its future. with the city of Sohar to build Sheikh Al Khalili, who was low-cost housing in Liwa. Furawarded the Lifetime Achievethermore, it has just completed ment Award at the Oman Ecophase two of a new LuLu Hyper- nomic Forum last year, says that market Center for the UAE’s Oman’s real estate market is wellEMKE Group, which runs a sucmanaged, healthy, and will to cessful chain of department continue to grow. stores throughout the Gulf “Our aim is to meet Oman’s region. growth targets in the real estate The latest development in market to the year 2012 and Oman by the group’s Al-Taher beyond,” he says.

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Oman

Renaissance, a company that just keeps on rising A combination of blue-chip clients, modern assets and long-term contracts is the secret of the company’s success

Caspian Pride: Renaissance’s Marine & Engineering Group operates a fleet of 91 offshore support vessels.

enaissance Services, an Omani multinational with offices in 18 countries and carrying out operations in 39, posted an increase in net profit for the first nine months of last year that was 57 percent higher than over the same period the previous year, despite global economic turbulence. This means that the company looks set to have finished 2008 with yet another coup as 2007 proved to be its sixth successive year of recording highest ever revenue and profit. In 2007, the company won nine contracts valued at more than $767 million and the aggregate value of all its 2007 contracts topped $1 billion. The company’s shareholders? Since 2001, they have earned a compounded return of 100 percent. Renaissance’s largest presence is in the Middle East and the Caspian, with increasing operations further afield in Southeast Asia, Africa and Europe. Its home market of Oman generates about 25 percent of total revenues, and in Oman and abroad, more than 75 percent of the company’s revenues are derived from services to the oil and gas sector from the company’s two major core business groups: Marine & Engineering Group (MEG) and Contract Services Group (CSG). MEG owns and operates an offshore support vessel fleet that grew to 91 vessels in 2008. It has an engineering division that delivers quality oil and gas fabrication and maintenance, and specialist afloat ship repair services. CSG’s services including large-scale catering and related life support services, as well as activities in facilities management and delivering turnkey contract services that include build, own and operate facilities establishment projects. A combination of blue-chip clients, modern asset integrity and long-term contracts is at the heart of the stability and security of the Renaissance business model. The company’s top customers, who represent more than 70 percent of its turnover, include private giants like Agip KCO, Bechtel, BHP Billington, KBR, Maersk Drilling, Oman LNG, PDO, Port of Salalah, SBM, Serco, Saipem and Shell. Recent global uncertainty is unlikely to slow Renaissance’s meteoric rise as the company’s business

model is resilient to both high and low oil prices. Its principal business in offshore support vessel marine logistics, facilities management and life support services are focused primarily on operations and production rather than exploration – activities that have historically proven themselves resilient to rising and falling oil prices. Renaissance’s engineering business is also well positioned as activities have been primarily moved from fabrication to maintenance. With more than 10,000 employees around the world, this is a company with big dreams and the capacity to realize them. Renaissance was structured to grow, according to chairman Samir Fancy, who says that the company believed it had the systems and processes to make it happen, as well as the Renaissance’s management and vision to top customers move the company to another include Agip KCO, level. So they went out there Bechtel, BHP and did it, earning Renaissance Billington, KBR, a reputation as a one-contract wonder. The company then Maersk, PDO, SBM, Oman LNG, took this one step further, lookSerco and Shell ing for ways to build sustainability into its model. The company has set itself ambitious targets. The markets it operates in are growing, sometimes at speeds that are difficult for the company to calculate. Renaissance believes that as an economy grows, even the most ambitious plans must grow with that economy, especially when it’s happening at a rapid rate. Part of its plans consists of creating a center of excellence out of each entity within the company. For Renaissance, the future consists of boiling down the various parts of the company into self-sufficient and successful bodies on their own. Mr. Fancy describes this as structural goal the company is moving towards in the near future. He says that in an ideal world, he would like to have all the specialists in each area talking about where they would like to go. In fact, this already takes place at board meetings, where he says it is possible to get a feel for the real potential and reach of the team.

R Barka Resort: an environmentally sensitive, integrated waterfront community near Muscat, planned by Alargan Towell.

Alargan Towell makes innovation an obligation Joint venture establishes a reputation for original designs and ability to foresee future architectural trends

already one of Oman’s leading companies and a pioneer in the sector. One of its first developments, Madinat Al-Sultan Qaboos, built in the early 1970s, is to this day a sought-after address in the capital. et up in 2003 as a joint venture, Alargan Towell has Kuwait’s award-winning Alargan International Real become an active player in housing, tourism and Estate Company, established in 1994, has acquired an state-of-the art commercial real estate solutions. “The extensive knowledge of all property types from gardenjoint venture has been very strong throughout this pe- style walk-ups to luxury high-rise buildings and comriod, building itself on what it knows best, and still to- mercial properties. Listed on the Kuwait stock exchange, day our bread and butter is the middle-income segment. the company is active throughout the region in Saudi Similarly, we are involved in the urban expansion of Oman. Arabia, Bahrain, UAE, Lebanon and most recently Egypt. We are now on our way to becomConsequently, ATI has come to ing the largest real estate developer be known for its innovative designs in the country,” says Ali Hassan and ability to foresee future archiMoosa, general manager of Alargan tectural trends, as well as predict and Towell Investment Company (ATI). meet the needs of clients with a The new company has hit the ground modern lifestyle. running since its launch. Its timing “We do not only cater to the dehas been opportune, arriving on the sign beauty of any given project we scene on the eve of the country’s reundertake, but also to its environal estate boom. The success of one mental value. ATI is very focused on of its first projects Mawaleh, offersustainable growth and the creation ing 72 villas in three different deof environmentally friendly and green signs, won the company the 2005 areas. This is part of our commitment Euromoney Award for Best Housing to the Omani environment, and part Developer in Oman. of Alargan Group’s credo. Alargan InIts next project, Al Hail 1, located Ali Hassan Moosa ternational is a member of the U.S. in a suburb of the capital, Muscat, General Manager of Alargan Towell Green Building Council, and one of consists of 100 villas with five difthe GCC’s first movers in the sustainferent traditional and modern designs, green areas and able real estate creation,” says Mr. Moosa. a mosque. The company offers financing arrangements ATI’s initial strategy targeted middle-income housing for buyers as well as retail outlets. The project sold out solutions. The company has widened its mission to take so quickly that the company bought another parcel of advantage of the immense opportunities currently on land and is currently developing Al Hail 2. hand in Oman’s real estate sector. Current and upcomDemand in the sultanate is now high for ATI devel- ing developments include the exclusive Oberoi Resort at opments. The company is receiving tremendous inter- Al Kairan, a boutique hotel and spa resort ten miles east est in the market place, and has gone on to win other of Muscat. Also, Barka Resort and Barka Township – awards, including the ICG Award by IREF ME 2006 as both located in Muscat – are, respectively, a mixed-use the Best Developer in Oman, and the CNBC Award 2007 residential tourism development and a master-planned for the Best Architectural Design for its Qurm Gardens community with hotels, marina, marina promenade comdevelopment, a residential and commercial complex with mercial area and high-end residential units. a total built-up area of nearly 25,000 square meters. Mr. Moosa concludes: “Development in Oman is Setting a national benchmark, the development’s slightly different than what is happening in Dubai or townhouses are built on separate lots with private Qatar, for example. The demographics are different – gardens, and are designed to shape the skyline of the there is a very strong, young population in Oman. neighborhood in a way that is reminiscent of tradi- Growth in real estate is booming and in Oman this tional Omani villages. growth will be driven by locals. We see the future in The ATI collaboration had all the ingredients in place master-planned communities. Barka Township and Barto be a success. Combining the strengths of two devel- ka Resort are creating robust and independent comopers, each renowned in its own right for innovative de- munities to support this boom. These projects are supsign and quality, was a sure bet. W.J. Towell & Co. was porting the ‘new’ Oman.”

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ESO works toward sustainable development Can you tell us about ESO’s projects? There are three noteworthy campaigns: the satellite tracking of Loggerhead Turtles for one, which was an extremely successful project. Secondly would be our whale and dolphin research for the last 13 years. The group was established long before ESO and then came under our umbrella. Another project is the plastic bag campaign that we’ve started. We’ve printed canvas bags that we are selling at reLamees Daar tail outlets. Executive Director The Damaniyat Islands is an important isEnvironment sue. Tourism on the islands is growing. The What is your opinion on the new projects that Society of Oman coral reefs have been growing; it’s actually are under way in the sultanate? one of the few areas in the world where the We want to encourage development as long as reefs have grown rather than shrunk. This has come about it’s done responsibly. We work with the Ministry of after conducting a baseline survey of the islands. After Tourism and the Ministry of Environment in devel- the cyclone in 2007 there was a lot of damage. We must oping a master plan to create zones where people foster the reef’s rejuvenation. We’ve received funding to should not be developing. complete a post-cyclone assessment of the reefs. man has been careful to manage the growth of its real estate sector in a sustainable manner. Strict restrictions on new construction, such as building height and the obligatory use of traditional architectural styles, have long been a part of the government’s policies. Environmental impact has also been an important consideration. Here, Lamees Daar, Executive Director of the Environment Society of Oman (ESO), speaks on the challenges that real estate growth is bringing to the sultanate.

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Thursday, January 22, 2009

Oman

Heavy industry metals sector

Sohar, working to create added value Four years on, a landmark smelter is facilitating the creation of new companies that are using its aluminum across a range of products ohar Aluminium Company structure and availability of competitively describes its mission as helping to priced gas, Oman was a natural choice for the diversify Oman’s economy and site of this project. contribute to the country’s susThe company hopes to take advantage tained GDP growth. It was formed of its home market and expand beyond the in 2004 to undertake a landmark $2.4 billion Middle East region. “Aluminum is an interGreenfield aluminum smelter project in the national market, and we look to sell intersultanate, which will benefit from the develnationally,” says Mr. Kinsman. opment of the new Sohar Industrial Port. Sohar Aluminium is playing a pivotal role Sohar Aluminium’s first phase of develin the major project initiatives that Oman opment includes construction of a single Tony Kinsman has chosen to pursue in its economic diverAP35 potline with an annual production CEO of Sohar sification strategy, Mr. Kinsman continues. capacity of 350,000 tons, together with Aluminium Company The company’s next project is a $325 million associated carbon and casting facilities and aluminum rolling mill that will use hot metal a 1000-MW, gas-fired power station. The facility began from the existing Sohar smelter. Construction is set to production last year, and is the first plant of its kind in the begin in 2009. The mill is a joint project between Sohar region in more than 25 years. and Takamul Investment Company. “It was good to start producing and extracting our “Our operations team is in place now. The handover first metal from our cells,” says Tony Kinsman, CEO of from project to operations is virtually complete and has Sohar Aluminium. “The objective is to maximize the pro- been very smooth,” says Mr. Kinsman. “We have a very duction of metal and improve the returns to the business.” long pot line – three quarters of a mile; the largest pot line Sohar Aluminium is one of only three aluminum pro- in the world to date.” ducers in the Arab Gulf region. More producers are lookWhen asked how Sohar will maintain safe, smooth ing to enter the market, shrugging off record-high global and sustainable operations in the future, Mr. Kinsman says energy prices as they capitalize on cheap, gas-gener- that the focus is on labor-intensive activity and techated electricity and a construction boom. With a stable nology expertise – in other words, Omani workers. political and economic environment, modern infra“There is very high expectation within Oman about this smelter contributing to the further development of Oman,” he explains. “We have a significant commitment to the people of the region. We took on 800 local people in the construction phase and gave them six months’ training in various aspects of construction. We established a college with workshops.” At the end of six months, trainees were taken on to the construction site, and those who proved themselves to be ready were transferred into the team. Sohar’s system has exceeded the Ministry of Labor’s expectations, and production has been consistently above 65 percent. Production rates like this fit into the government’s 75-year plan and Vision 2020, which put a strong emphasis on Oman’s long-term industrial growth. At the same time, Sohar’s products are feeding a growing number of the manufacturing companies that are coming into the country. Sohar produces aluminum components that are used in other industries, and Mr. Kinsman says that the company has encouraged international partnerships and joint ventures. “We have been working for some time to foster the development of downstream industries – industries that Key to economic diversity, Sohar Aluminium is one of will take our metal and add to the next stage of value only three aluminum producers in the Arab Gulf region. added,” he says.

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Al Jazeera: more steel tubing in the pipeline High-quality product has allowed the company to command a higher price in the marketplace l Jazeera Steel is helping build new businesses in Oman. “We are practically the sole supplier of tubes in Oman,” says CEO Dr. Bhaskar Dutta. Created by a group of Omani entrepreneurs in Tunnel vision: Al Jazeera has built on its domestic 1997, over the last decade Al Jazeera has become reputation to establish international markets. one of the leading steel tubing manufacturers in the Middle East. From its modern plant in Sohar, The company has been faced with mounting Al Jazeera offers black and hot-dip galvanized steel pressure from all sides of the iron ore industry, yet pipes and square and rectangle hollow-section has remained resilient, recording a 12 percent pipes used in a wide range of sectors. growth in revenue in 2007 and over 200 percent “Al Jazeera’s vision is to expand capacity,” says in net profits. “Because of the quality of product Mr. Dutta. “Another tube mill is being installed to we produce, we have a good market. We command try to get into more value-added products. One- a higher price and are the price setters in the marthird of our capacity is galvanized products. We have ket,” continues Mr. Dutta, “but sourcing of raw maplans to venture into other polyethylterial has always been a problem.” ene and epoxy coating of these pipes, In anticipation of this shortage and so that we give further resistance for benefiting from its international reputainstalling in more corrosive environtion, Al Jazeera has done some advance ments,” he says. planning to book materials from China, Al Jazeera has API certification, and India, Russia, and Ukraine. will be bidding to supply piping for use “Thanks to financial support from the in Oman’s expanding gas and oil inlocal banks, who have raised our bordustry. The company’s pipes do not all rowing limits, we have been able to plan stay in Oman, however. in advance and book at reasonable prices,” As one of the largest steel tube mansays Mr. Dutta. Bhaskar Dutta ufacturers in the GCC region, the comAdditionally, Al Jazeera has developed CEO of Al Jazeera pany exports 85 percent of its products key partnerships and alliances that have Steel Products to 25 different countries, including the supported its operations in the United U.S., Canada, Australia, Germany and States. “We stayed with only three groups other European Union members. “We are now look- right from the inception, and they have been suping into the North African market. MENA will def- porting us all through the years,” says Mr. Dutta. initely play a big role in our business plans,” says “These groups have four or five partners who work Mr. Dutta. “In the GCC area, we are selling about as a team, and supply totally to the U.S. east and 70 percent of our production locally, and 30 per- west coast markets.” cent is exported.” To accommodate its internaLooking to the future, Al Jazeera Steel has covtional clients, Al Jazeera supplies types of pipes with ers its credit risk by getting its customers evaluatthreaded and coupled ends as per British, DIN, ed by the Export Credit Guarantee Agency (EGCA). ASTM (Grade A & B) and other international spec- “We are proud to say that we are one of the largest ifications. customers of ECGA. They have supported and stood Al Jazeera’s multi-national workforce is manned by us when steel prices have almost doubled,” says by well-trained and experienced technical and man- Mr. Dutta. With this kind of outside support and agerial professionals, and the company has a vi- a stellar local and international reputation, Al sion to become one of the leading tubing suppli- Jazeera Steel tubes is set to keep business flowing ers in the world. in Oman and beyond for years to come.

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Building strong foundations for the future

A Commitment to Safety A Promise of Quality A Passion for Excellence

Since 1972, GALFAR has worked alongside the government to build the country. It has grown into the leading engineering and construction company in The Sultanate of Oman. www.galfar.com

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SPECIAL ADVERTISING SUPPLEMENT TO THE NEW YORK TIMES

Oman

Dalma provides access to Oman’s hidden reserves aving lost the U.S. presidential elections, John McCain and Sarah Palin, and with oil exploration in the Arctic Refuge likely to be banned, the Republican duo’s drill-crazed backers will be needing a place to vent their frustration. Oman, Saudi Arabia’s southeastern neighbor, offers a perfect landscape for pent-up proponents to run wild. The country has over 4.5 billion barrels of proven oil reserves, 795.2 billion cubic meters of natural gas, and, more importantly, a drill-friendly administration. “Petroleum is very important for the economy of Oman,” says Philip Woods, CEO of Dalma Energy, an Omani drilling company. “The government has been trying to develop the oil and gas sectors for years.” In 2006, the Minister of Finance vowed to increase gas production by dedicating $4 billion to exploration. Oil production, however, has steadily decreased

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over the past decade, according to Mr. reasons: a tricky variety of oil and lack of Woods. investment. Many of the Omani fields re“When I came here in 1995, oil proquire special equipment because their oil duction was at 900,000 barrels plus just is of a thicker composition. for PDO (the government-owned oil com“A lot of the oil in Oman is what we call pany), and it was probably over a million brown fields,” explains Mr. Woods. “It is with the rest of the small companies that heavy crude that needs to be liquefied, were involved here,” says Mr. Woods. “Towhich is done by injecting steam and varday, that’s probably down to 700,000 to ious other things to get it to flow, and re800,000 barrels, and it is on the decline.” quires a big investment.” Although they are not chanting it yet, In spite of hard-to-extract reserves, large Phillip Woods one can almost see “Drill baby, drill,” on oil companies are moving in and utilizing Chief Executive the lips of Omani oil officials. specialized drillers like Dalma. “There are a Officer of Dalma “In this current market of high oil prices, lot of major players coming here: British it makes sense for everybody to start drilling,” says Gas, BP, and a lot more consortium-based companies Mr. Woods. “We need to get production up in this are coming in and taking small concessions,” says the country.” CEO. BP recently awarded a contract to Dalma EnerProduction remains low, Mr. Woods says, for two gy, which has branches in Qatar, India and Algeria,

and operates through a joint venture in Saudi Arabia. Worldwide, Dalma has over 2,000 employees. In Oman, Dalma Energy owns and operates 22 specialty rigs. Mr. Woods says his company earned the confidence of companies like BP because of their superior drilling equipment and knowledgeable Omani staff. “I think the workforce in Oman is one of the best in the Gulf,” he says. “The Omani work ethic is different, perhaps because of the size of the country and its small population of just under four million.” Along with its staff, Dalma offers a superior drilling experience, says Mr. Woods, because of its modern drilling techniques and equipment. His company has had difficulty winning over local investors though. “New technology is not always well received,” says Mr. Woods. “It’s quite difficult to convince people that you can actually save time and money, and also improve safety, using us.”

Galfar, the long, hard road to success

Shaksy: evolving to meet the needs of the market

“We built up from a small civil engineering company, and today in Oman we employ around 23,000 to 24,000 people,” explains Mohammed Ali, vice chairman of Galfar Engineering Company. Galfar is representative of the growth of the region itself, and Oman in particular. In the past three decades, the sultanate has experienced tremendous growth in all sectors, and Galfar has become one of the largest multi-disciplined engineering, contracting and construction companies in the Middle East, with a turnover of more than $700 million. Galfar’s level of expertise in project management, engineering, procurement and construction in various sectors comes from time spent working in the pre-boom years, when Oman was less-than-ideal territory. “We work across the country in the remote places, where they don’t have the infrastructure,” Mr. Ali explains. “We work where the water, electricity, roads and schools are being built; where it is not easy to get to, we are contracting, and we are equipped for that.” The range of Galfar’s projects include oil and gas pipelines, oil and gas production, collection and processing facilities, service contracts in the petroleum industry, commercial and residential complexes, educational institutions, industrial structures, ports and harbors, hospitals, stadiums, water-retaining structures, monuments, water-line and sewer-line networks, bridges, roads, dams, electro-mechanical works, HVAC systems, power transmission lines, substations and maintenance of hospitals. Galfar maintains a fleet of 6,200 plants, equipment and vehicles. It has operations and presence in all corners of Oman, providing a one-stop solution to all types of construction requirements.

Since setting up in 1976 the Shaksy company in Dubai that provides supGroup has established an enviable repport for regional activities and develutation for providing reliable services opments. while offering professional joint venOne of Shaksy Group’s recent proture and representation services to forjects is the extension of the Salalah eign companies wishing to develop Port. “We built the port and did the business opportunities in the region. marine works for liquefied natural This has meant evolving to meet the gas,” explains Mr. Ali. “We recently got needs of an ever-changing Oman. “The a $30 million contract to supply pipes initial vision was to establish a platto PDO oil rigs.” Mr. Ali says that each form through our company whereby of the Shaksy companies plays a role in Said bin Salim high-tech companies from abroad Oman’s infrastructure development. Al Shaksy could come and provide services to Executive Chairman Through the various companies and Shaksy Group local clients,” explains founder and divisions within the group, a broad executive chairman Said bin Salim Al section of government and private secShaksy. “As we went on with this task, we found tor organizations are served, either through the that there were services that we could provide on provision of different types of equipment on a our own. We developed our own services and direct sales basis, the provision of specialized sertrading activities. At the present stage, we are vices, or through participation in major infrasponsoring companies, providing them with local structure development projects. Shaksy Group will support, and we have also established joint vencontinue to build its portfolio to better serve the tures with companies to create local branches needs of Oman in its bright future. where we have a stake and participate in the management as well.” Mr. Al Shaksy says he has always been selective in determining which companies the group associates with, resulting in a profile that offers a sound platform for business development in the sultanate. Presently, the group consists of five sub-companies: Hani Oilfield Supplies and Services LLC, which serves Oman’s oil and gas industry; Sharikat Hani, the group’s corporate office, which provides project coordination and administrative support; Hani Marine Services LLC, which provides products and services such as buoys and maintenance of fishery harbors; Sharikat Hani Projects and Marketing LLC; and finally, Western Man-made docks: Shaksy Group built the Engineering Co. LLC, a project engineering comextension to Salalah Port. pany. The group also has an independent trading

Mohammed Ali Vice Chairman of Galfar Engineering All Galfar’s operations are certified for ISO 9001. “Safety, quality and reliability are the cornerstones of Galfar’s operations,” says Mr. Ali. With a wide range of experience in construction and its unparalleled records in quality, safety and reliability, today Galfar is the most trusted name in the construction industry in the region. The company has many successful joint ventures with the global giants in construction, and Mr. Ali invites investors to discover why Galfar is one of Oman’s most soughtafter construction partners.

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Oman

Magic and mystique, right under your nose

In brief

Capturing the exotic essence of centuries in a bottle, the House of Amouage proves the nation’s oil is not its only liquid asset

Friday at the bullfight

nce upon a time, in a land of unforgiving deserts and violent sand storms, a fragrant milky sap was discovered seeping out of a Boswellia tree; tears from a suffering tree that no matter what withstood gale force winds and harsh conditions. So enticing was the aroma of the resulting resin, however, that this substance, hence named olibanum, grew in fame and eventually became not only a household item in the region, but also a trading commodity that was passed along the Incense Road, Silk Road and Spice Route eastwards and westwards. Olibanum, or frankincense as most Westerners call it, has appeared in the Bible, in texts of ancient Greek historians, and in tales of the Queen of Sheba. Highly regarded for its medicinal value and rich aromatic qualities as an ingredient for perfume, Omani frankincense is considered the best in the world. Today, the House of Amouage is conjuring up memories, tales and legends of Oman’s romantic past through unique perfumes that blend rare native ingredients, such as silver frankincense and oil from the rock rose – a flower that grows solely up in the hills of Jebel Akhtar and blooms during one month only – with other quality ingredients. Amouage scents not only celebrate Oman’s rich cultural heritage but also act as a type of ambassador to the world, portraying the country as a maker of luxury products. Established 25 years ago at the request of Sultan Qaboos bin Said and under the Sabco Group’s umbrella, Amouage initially concentrated on markets in Saudi Arabia and the UAE. Then, just five years later, the perfumes were being sold in Harrods in London, triggering international expansion. However, it wasn’t until David Crickmore, the current CEO, took the helm that business truly took off. Mr. Crickmore turned the company around, gave it a new roadmap and vision and expanded the collection to include bath products and a home collection. The rebranding process even included a new logo; one that retained the Arabia motif yet did not send a message that would put people off in light of recent world events. “Today we believe the packaging and logo device are wonderful, exotic and interesting,” claims the CEO. So far, Amouage has been very well received in markets in Europe and the U.S. In fact, Russia has taken the lead over Gulf countries as the number one market for the perfumes.

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David Crickmore CEO of Amouage That Amouage perfumes have a luxury quality is undeniable. Carrying on the tradition of the 1920s and 30s, when France was still creating more fragrances from real flowers and natural oils than scents based on synthetic components, Amouage spares no expense and uses only the choicest raw natural ingredients as much as possible rather than chem-

ical constructions. As Mr. Crickmore puts it, “We create our fragrances to have a voice, to sing. We’re taking real perfume back to the consumer.” The art, or alchemy, of perfume crafting is still a thing of magic and mystique at Amouage. The original House of Amouage perfume was created by the renowned French parfumeur, Guy Robert, and was commissioned to be “the most valuable perfume in the world”. With top notes of rose, jasmine and lily of the valley, heart notes of patchouli, orris, sandalwood and myrrh, and with bottom notes of ambergris, musk and civet, Amouage Gold is still the top selling line. A close second, Dia (meaning “brightness” in Arabic) was launched in 2002. Amouage’s other lines are Reflection, Ciel, Lyric and the brand new Jubilation, celebrating the 25th anniversary. As different as their aromas are, Amouage prides itself on using as a base the rare rock rose and silver frankincense in every single one of its scents. And it’s not only the valuable Omani ingredients that set the perfumes and eaux de toilette apart; each bottle captures the essence of the Omani culture – part art and part history. While some of the bottles have smooth contours and undulations that reveal the meaning of the word “Amouage” – “waves of emotion” – all bear the beautiful Amouage label, flowing and exotic Arabic script that

evokes the opulence of Golden Age Arabia. The lids of the women’s perfume bottles are inspired by domes of classical Arabian architecture. The men’s bottle caps are ivory white and are reminiscent of the khanjar, the decorative, curved dagger that forms part of the national emblem of Oman. The House of Amouage has definitely helped put Oman on the world map of luxury goods. Lesser known than its neighbors Saudi Arabia and UAE, people are becoming more aware of the country as a producer of quality products and if they delve deeper, they also realize it’s become a tourist hotspot. As Mr. Crickmore puts it, “We always say that our fragrances are unspoken ambassadors for our country. Wherever we sell them in the world people immediately become interested in what goes on in Oman and what Oman is all about.” And this is precisely the basic premise behind the creation of Amouage. Plans for the future at the perfume house include moving into other luxury items, including leather goods, jewelry and scarves. This crossover would be a world first for this kind of company. ”It’s never been done that a perfume becomes a complete luxury brand; it’s been done the other way round, when a clothing brand goes into perfume,” says the CEO. But then, the House of Amouage is certainly ready for the challenge, and judging from the divine quality of its perfumes, we would expect nothing less from the other goods. Jubilation 25 for women (pictured far left) and Jubilation XXV for men were launched in 2007 to celebrate the 25th anniversary of Amouage. Each luxurious scent includes the essence of Oman’s finest rose, myrrh and frankincense.

A’Saffa, hatching a business plan Strengthening Oman’s poultry sector n a nation that is actively promoting and giving preference to local products, A’Saffa Poultry Farms is a star example of how this is being done successfully. A’Saffa is the first and largest Omani company in a sector that before relied primarily on imports. After just five years of operation, it has already captured 16 percent of the local market and plans are underway to increase capacity by 50 percent over the next five years. This is by no means a superfluous move; demand is currently higher than supply, meaning there is virtually no wastage. From fresh and frozen chicken to chicken burgers, nuggets, spring rolls and other processed products, A’Saffa’s poultry goods are highly respected in Oman, not only because of their quality, but

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also due to the fact that they are made by a company that respects Islamic values. “Our product is highly regarded on the local market. Respecting Islamic values is important for us and our business model alike. People respect this approach,” says company CEO Dr. Nasser Zaher Nasser Al Mauly. Furthermore, A’Saffa is a fully integrated company, meaning that every step in the process is strictly controlled and quality remains high all along the way. The poultry farms are located in an isolated part of Dhofar and house more than 1.8 million birds at any given time. With its own feed mill, slaughter house and power generation, A’Saffa is the largest integrated project of its kind under one roof in the entire Middle East.

Friday night is bullfight night in Oman. This historical form of entertainment is cherished by many Omanis and takes place at several makeshift tracks along the Batinah coastline. In contrast to the gore of Spanish bullfighting, the Omani version is bloodless and is more about a contest of strength between two powerful animals. Two bulls of similar size are led into the ring to lock horns for battle. The fight is over when one contestant either gives up and runs away, or is forced out of the ring. Each fight only lasts a few minutes, and usually the worst injury suffered is a bruised ego felt by both the losing bull and its owner. Visitors are welcome and fights are not held during the hottest summer months or Ramadan.

Modern must-haves The nation’s capital is becoming an increasingly important retail market on the radar of high-profile international retailers. In October, the opening of the new Qurum City Centre shopping mall was a resounding success, with 85 percent of its shops trading on the first day. Located in the commercial heart of Muscat’s upmarket Qurum area, the contemporary mall is home to more than 75 outlets, including Mango, Monsoon, Next, Promod, Body Shop, H&M, and the center’s main anchor Carrefour store. The development, which is around 18 miles away from the hugely popular Muscat City Centre mall, was project managed by Mace and is one of a number of community shopping malls that the Majid Al Futtaim Group is planning to develop across the region.

Musandam peninsula Often dubbed the Norway of the Gulf, the beautiful limestone fjords and colorful reefs of Oman’s northern enclave of Musandam is an enticing getaway for the region’s urbanites. Sheer mountains towering over narrow inlets and deserted coves provide spectacular jeep trips. Snorkeling and diving are popular attractions, as is taking a leisurely cruise on a converted dhow – a traditional wooden Arab vessel – while spotting for humpback dolphins that frequent the fjord-like bays. The mountainous region is separated from the rest of the sultanate by the UAE, and access was given a boost last year with the launch of a high-speed ferry service connecting Muscat and Khasab. The 225-nautical-mile route to the peninsula is now possible in just over five hours, instead of the tenhour drive or relying on expensive and infrequent flights.

Finest frankincense Oman was once considered one of the wealthiest nations in the world. Its trading location and surfeit of frankincense – then the world's most valuable substance – made it a relative superpower. Previously regarded more precious than gold, the finest frankincense in the world is produced in Oman from the aromatic resin of the Boswellia sacra tree, which excels in the monsoon-lashed mountains of the Dhofar province to the south. Today, government buildings are censed daily, even the elevators. At home, Omanis perform their courtly ceremonies of hospitality—the graceful proffering of coffee, dates and sweets— in an atmosphere perfumed by frankincense.


Renaissance feature in New York Times suppliment