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Excerpts from the speech of

His Majesty Sultan Qaboos bin Said at the opening of the 5th term of the council of oman on 31st October, 2011 Dear Citizens, The building of a modern state which we pledged to establish since the first moment of the dawn of the Blessed Renaissance, required us to exert big efforts in the field of establishing the infrastructure which is the pillar and first cornerstone of comprehensive development. The provision of this infrastructure - in all parts of the Sultanate - Praise be to God, has given a big opportunity for construction development in various cities and villages throughout Oman and paved the way for the establishment of many economic, commercial and industrial projects as well as different educational, cultural, health and social institutions. Any observer of daily life in Oman will see this quite clearly. And no wonder. Omanis have been, from ancient times, makers of civilization with their great historical heritage, their openness to other civilizations across the seas and oceans, and their ability to communicate and exchange mutual benefits with others. This is why Omanis are wellqualified to be an example and a model for others to follow in this age of rapid development and progress, and why they are also capable of coping with

the challenges of the modern age, and adopting every new enlightened idea, benefitting from sciences and new technology and at the same time always preserving the values and high principles that they believe in, and the traditions and authentic customs with which they were brought up. We all know that progress is part of the reality of the universe we live in. However, many ways and means are required in order to achieve it. The first of these is a strong will and determination, and a readiness to face challenges and persist in one’s endeavours to overcome difficulties and obstacles. Therefore every nation that desires to live – in the full meaning of the word – needs to roll up its sleeves and work tirelessly and diligently with dedication and the love to give generously to utilize its capacities and skills and invest in its resources and potential, so that it can build a great and illustrious present and prepare for a decent and prosperous future. Through God’s grace, the Omani people have been granted many of these qualities, and over the past four decades they were able to realize achievements which still stand as clear evidence that cannot be denied by

anybody who has the power of vision and insight. We offer our thanks to the Almighty for His great bounties and we pray and supplicate humbly to Him to grant this generation of Oman’s sons and daughters as well as the upcoming generations the ability to maintain these achievements and preserve and protect them against every malicious enemy, scheming traitor or envious waylay, as these achievements are in their trust for which they will be asked before God, history and their homeland. We have always affirmed our continued attention to the development of human resources and we said that these resources take top priority in our plans and programmes as the human being is the cornerstone of every development structure and a pivotal component around which all types of development revolve as their ultimate goal is the happiness of the individual, providing him with a means of a decent living and guaranteeing his security and safety. As youth are the present and future of the nation we gave them the attention and care they deserve throughout the years of the blessed Renaissance as the government endeavoured to provide them with education, training,

qualifications and employment opportunities. The forthcoming stage will witness, with God’s permission, bigger attention and greater care to provide more opportunities for the youth in order to consolidate their gain in knowledge, strengthen their talents in creation and production and increase their participation in the comprehensive development march. As education is the basic pillar of progress and development, and in order to produce a responsibly aware generation with expertise and skills, and aspiring to a higher level of knowledge, it is necessary to conduct a comprehensive assessment of the educational march in order to achieve these aspirations and benefit from the available job opportunities in the public and private sectors. The construction, economic, commercial and industrial projects established during the past stage in various parts of the Sultanate have absorbed many national workers and the private sector has proved its cooperation in shouldering the responsibility as it assumed a tangible role in cooperating with the government and boosting sustainable development efforts.


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Published by United Press & Publishing LLC PO Box 3305, Ruwi, Postal Code -112 Muscat, Sultanate of Oman Tel: (968) 24700896، Fax: (968) 24707939 Email: publish@umsoman.com Editorial Mayank Singh, Khalfan Al Rahbi, Ghalib Abdullah Al Fori, Muhammed Nafie Senior Art Director

DEVELOPMENT WITH A HUMAN TOUCH

Sandesh S. Rangnekar Design Team M Balagopalan, Shameer Moideen، Yousuf Ismail

On the day of his accession on July 23, 1970, His Majesty Sultan Qaboos bin Said in an address to his people said, “I

Production Manager Ramesh Govindraj

promise to dedicate myself to the speedy establishment of a modern government in no time. My first aim will be the abolition

Photographers Rajesh Burman, Basim Al Maharbi

of all unnecessary restrictions that overburdened you…I will take the necessary legal steps to ensure the recognition of

Marketing

foreign powers and I am looking forward to the immediate support and the long-range cordial cooperation with all nations,

Avi Titus Das, Arif Abdul Bari, Chandni Maniar, Fareeda Al Balushi, Girija Shankar Mohanty, Jacob George, Pooja Verma, Shivkumar Gaitonde, Vinod Thangoor

especially with our neighbours, with whom we will conduct consultations for the future of our area.”

Business Support Radha Kumar, Sara Al Saadi

Over the last 42 years the visionary leadership of His Majesty has enabled Oman to achieve remarkable development in

Cover Design Chanjeet Singh, Shankar T, Mohd. Nazar

almost every field. The Sultanate has built a robust infrastructure of roads, ports, highways and airports; literacy levels have

Corporate

grown manifold; life expectancy has increased exponentially; core industries like oil and gas have been nurtured along with

Chief Executive Sandeep Sehgal

a thrust on diversification; the country is recognised and respected in the comity of nations; rapid strides are being taken in

Executive Vice President Alpana Roy

the digital realm; human resource development has been given a renewed prominence and focus. Remarkably all this has

Special Thanks to Omantel; Nawras; Petroleum Development Oman، Oman LNG; Sultan Qaboos University; Mazoon Electricity and

been achieved along with the preservation of the Oman’s rich cultural heritage.

Raya Sultan Al-Hashmi for pictures Distribution: United Media Services LLC All rights reserved. No part of this publication may be reproduced without the written permission of the publisher. The publisher does not accept responsibility for advertising contents

On the 42nd anniversary of the Blessed Renaissance, we would like to convey our heartfelt gratitude to His Majesty for his visionary guidance and nation building efforts. Progress 2012-13 takes an in-depth look at the various sectors that have contributed to the Sultanate’s development and modernisation.

Copyright © 2012 United Press & Publishing LLC

Progress Printed at Oman Printers

The digital version of Progress is available on:

www.progressoman.com

We are also pleased to inform our readers that Progress is the first annual country book that is available in a digital version on www.progressoman.com. The digital version offers readers online access to a more comprehensive range of articles than the print edition. This is sure to serve as a one stop reference point for people seeking information on Oman’s remarkable journey over the last 42 years.


content 2 economy

12 oil&gas

30 banking


content 36 nbfc

42 insurance

46 capital market

52 education


content 58 health

60 manufacturing

74 infrastructure

86 power


content 90 ports and shipping

94 aviation

98 telecom

102 information & communications technology


content 106 real estate

112 tourism

118 retail

124 agriculture


www.renaissance-oman.com

Sustainable value creation for Oman


Renaissance: In-Country Value Renaissance adds In-Country Value in the following ways Employment: Training and developing skilled and productive Omani workforce and business leaders

Warm felicitations to

Investment:

His Majesty Sultan Qaboos bin Said and the people of Oman on the occasion of the 42nd Renaissance Day

Building and operating permanent accommodation for contractors in Oman’s oilfields and other investments

Procurement: Using local goods and services; or assisting local providers to achieve international compliance and competitive costs Communities: Implementing a meaningful Corporate Social Responsibility (CSR) programme in the communities we serve Ownership:

Omani Public Company listed on MSM, with Omani individual shareholders, Pension Funds and Institutional shareholders

Economy:

Retaining earnings generated in Oman and repatriating earnings generated abroad

Multinational: An internationally competitive Omani company, winning abroad, proudly flying the Omani flag at international standard

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SAFE

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EFFICIENT

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GREEN

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content 28

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56

HE Hamood Sangour Al Zadjali, Executive President, Central Bank of Oman

HE Abdullah Al Salmi Executive President, Capital Market Authority

HE Dr Ahmed bin Mohammed bin Obaid Al Saidi Minister of Health

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96

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HE Yahya Al JabriŘŒ Chairman of Special Economic Zone Authority at Duqm

HE Dr Abdulmunim bin Mansour bin Said Al Hasani Minister of Information

HE Ahmed bin Nasser bin Hamed Al Mehrizi Minister of Tourism

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HE Dr Ahmed bin Mohammed bin Salim Al Futaisi Minister of Transport and Communications

117 HE Aisha Al Siyabiyah Chairperson Public Authority for Craft Industries


Congratulations to His Majesty Sultan Qaboos Bin Said and the people of Oman on the glorious occasion of the 42nd Renaissance Day Mazoon Electricity Company would like to extend its heartfelt congratulations to His Majesty Sultan Qaboos bin Said on the 42nd anniversary of the Blessed Renaissance. As an Omani Company, we are proud to be at the forefront of advancing this nation forward by delivering electricity safely, reliably and economically to over 40% of the population. We are committed to maintaining our promise to develop social programs that bring economic and social beneÀts to our community, harness young talent and provide employment opportunities for the new generation of leaders.

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Call Center: 8007771 For information and our online services: www.mzec.co.om


economy

DIVERSIFIED ECONOMY, INCLUSIVE GROWTH During the eighth five-year planŘŒ billions of rials have been allocated for developing various infrastructure projects and improving the skill levels of Omani youth

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n important strategy of the Eighth Five-year Plan (20112015) is to create employment opportunities, along with a balanced development across the Sultanate. The plan is expected to create 200,000 to 275,000 new employment opportunities during the five-year period or an annual average of around 40,000 to 55,000 new jobs. The Eighth Plan is formulated to facilitate the growth of small and medium industries at a fast pace, with an intention to create ample job opportunities for Omani youth across the country. Development of four free zones, massive

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investment in Al Duqm, expansion of industrial estates, proposal for a RO100 million fund for small and medium industries (SMEs) and credit guarantee for SME loans, are all part of this larger scheme. REVISED EXPENDITURE In fact, the Eighth Plan development expenditure (between 2011 and 2015) was revised by 13 per cent to RO13.69 billion from an original RO12.06 billion, mainly for funding additional projects included in the plan and to meet cost escalation due to salary revisions and several social security measures introduced last year. Salary revisions and other social benefits for Omani workers and families announced early last year resulted in increasing the Eighth Five-


Al Turki conveys its heartfelt gratitude to

His Majesty Sultan Qaboos bin Said for his visionary leadership and guidance

QUALITY YOU CAN BUILD ON Over the past 25 years, ATE has evolved into an excellent civil & building contractor. ATE is known for its exceptional service, that breathes beauty and culture into structures ATE’s excellence forays into • Building & Civil Construction • Marble & Stone • Building Material • Steel Fabrication • Landscaping & Irrigation • Oil & Gas Services • GRC/GRP/GRG • Joinery & Carpentry • Aluminium Fabrication

AL TURKI ENTERPRISES L.L.C P.O. Box 2803, Ruwi, PC 112, Sultanate of Oman • Tel: 24590140 • Fax: 24597931 • E-mail: alturki@omantel.net.om • www.alturki.com


economy an unbalanced development between the capital city Muscat and various other governorates of the Sultanate, is key to employment generation initiatives. Massive development plans are underway in Al Duqm, Musandam and Sohar regions. The government has been investing heavily in transport infrastructure like new roads, sea ports, airports, power plants, free zones and industrial estates to attract investments to various regions. Expansion of Salalah airport and ongoing plans to build four regional airports (Sohar, Adam, Ras al Hadd and Al Duqm), ongoing expansion of Sohar, Salalah and Buraimi industrial estates and development of two new industrial estates are expected to create employment opportunities in these regions and thereby increase the living standards of people.

year Plan expenditure by 26 per cent to RO54 billion, from an earlier estimate of RO43 billion. Apart from increasing the salaries of employees, the government had introduced an unemployment allowance of RO150, raised monthly pension of employees and social security pension for families, and raised expenditure for providing employment through training programmes following labour unrest that gripped the nation early last year. Higher salaries and other benefits for Omani workers following the disturbances in the country caused an additional RO1 billion expenditure to the government in 2011 alone, taking the total public expenditure to over RO9.1 billion last year.

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DIVERSIFIED GROWTH The Eighth Five-year Plan comprises more than 6,500 projects, which include sectors like housing, healthcare, education, vocational training, electricity, water, roads, ports, airports, agriculture, fisheries and tourism. Apart from pumping billions of rials for developing various infrastructure projects like roads, airports, sea ports, dams and sewage and water supply networks, special focus has been attached to develop the skill levels of Omani youths. For instance, RO100 million has been allocated for offering 1,000 grants for carrying out higher studies abroad and another RO54.1 million is allocated for vocational training programmes during the plan period. Regional development, aimed at alleviating

As much as RO1,233 million is allocated for building major road projects during the plan period, which include dualisation of Nizwa-Thumrait road at an estimated cost of RO250 million, Al Batinah Express road at a cost of RO250 million, Al Batinah Costal Road at a cost of RO200 million, dualisation of Bid Bid-Sur road at a cost of RO240 million and dualisation of Ibri-Jibrin road at a cost of RO73 million. FREE ZONES Another important strategy is to establish new free zones – Sohar, Duqm and Al Mazyouna – and expansion of Salalah free zone. Freezone Sohar, which is investing $70 million for developing 500 hectares in the first phase, has already signed with 14 companies to set up their manufacturing base or logistic centres within the free zone. The tenants are a mixed basket, ranging from metal and mineral companies, light and

Oman has around 121,000 SMEs constituting more than 90 per cent of the economic activity


Duqm Economic Zone is expected to attract direct investment to the tune of $10-$15 billion in the next ten years

economy

middle manufacturing firms. The freezone is developing a metal upstream cluster at the port, with three companies already signing agreements with free zone authorities for building ferro chrome projects. The free zone development strategy is mostly based on cluster-based industrial development model, which is more important because majority of investors are looking at availability of raw materials and infrastructure facilities. Apart from food processing cluster, there is a focus on developing mineral clusters due to the availability of energy and strategic location for shipping finished products to

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target markets. The free zone master plan, which envisages development of a large 4.500 hectare-area, plans to have a public transport corridor, with connectivity to highways, ports and the proposed railway network. DUQM ADVANTAGE Massive development plans, including an economic zone, in Al Duqm in Oman’s northern Al Wusta region is another major initiative to create employment opportunities on a large scale for locals. The economic zone is expected to contribute 5 per cent to 8 per cent of non-oil gross domestic product (GDP) by 2020 and it will

generate 15,000-20,000 direct and indirect jobs during the next 10 years. Duqm Economic Zone is expected to attract direct investment to the tune of $10$15 billion in the next ten years due to its strategic location and conducive investment environment. Plans are at various stages to set up an integrated economic zone that includes multi-purpose commercial port, ship repair dry dock facility, an international airport, a refinery-cum-petrochemical complex, vast areas for the industries and fishery sector, logistic services centre. This is in addition to a


Heartiest felicitations to His Majesty Sultan Qaboos Bin Said and the people of Oman on the occasion of the 42nd Renaissance Day of the Sultanate of Oman

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economy entrepreneurs. The expansion, which will be implemented in a phased manner with an estimated capital expenditure of RO20 million, will take the total size of the industrial estate to 7 million square metres. As many as 200 industrial units can come up there. SPURRING SME GROWTH Another major initiative to develop small and medium industries is the proposed formation of an SME Development Fund with a capital of RO100 million.

modern city with a nearby tourism area that serves as a model for contemporary urban planning. The economic zone has been provided with the vital utilities, such as, the different infrastructure like roads, electricity, water and telecommunication, which have been set up as per the best international standards. The proposed railway project will also contribute to link the economic zone with the rest of the regions in the Sultanate as well as to the neighbouring countries. All these will facilitate fast economic development, and lift standard of living of people in Al Wusta region. NEW INDUSTRIAL ESTATES Also, with the growing demand for industrial plots, the Public Establishment for Industrial Estates (PEIE) is trying to develop new industrial estates, besides expanding existing ones. More and more entrepreneurs are building industries, resulting in better demand for industrial plots as the investment climate in Oman is very good.

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PEIE’s main objective is to speed up regional development and thereby create job opportunities for Omani youths. New industrial estates are planned in Samayil and Ibri, while expansion plans are afoot in Rusayl, Sohar, and Buraimi. The Samayil industrial estate will house 300 industrial units in a vast area of 7.8 million square metres. More than 80 units have already signed agreements for starting business units within the industrial estate. Expansion programmes are also under different stages of planning and implementation at Rusayl, Sohar and Buraimi for meeting demand for industrial plots from entrepreneurs. Rusayl Industrial Estate, which houses 160 industrial units now, is embarking on a massive expansion for developing a vast area of 3.5 million square metres to meet the growing demand for Industrial plots from

The fund, which is under formation, aims at creating 7,500 SMEs, 50,000 job opportunities and will contribute RO100 million to the gross domestic product annually at the tenth year of its existence. It will adopt a four-point plan, which will encompass visiting the colleges, nurturing (making SMEs bankable) and funding. Oman has around 121,000 SMEs constituting more than 90 per cent of the economy activity and around 20 per cent of the GDP. Mainly, the projects of these enterprises are in the sector of wholesale, retail and foodstuffs, constituting 41 per cent of the total projects. A new bank loan guarantee scheme for small and medium entrepreneurs introduced early this year is also aimed at developing small units. The ministries of commerce and finance and Oman Development Bank (ODB) formed a corpus fund, which guarantees repayment of 50 per cent of the bank loan taken by an SME, in case of a default. Since getting a loan guarantee was a major hurdle for young entrepreneurs planning small scale industries in the country so far, this scheme is expected to help them overcome this hurdle. Many lending institutions in the country still consider small industries as high-risk category and keep away from offering loan for these units.

Rusayl Industrial Estate will develop a vast area of 3.5 million square metres to meet the growing demand for industrial plots


Conratulations and Warm Wishes to

His Majesty Sultan Qaboos bin Said and the people of Oman on the occasion of the

42nd Renaissance Day


P.O. Box 2573, CPO Seeb Postal Code111, Sultanate of Oman, Tel: (+968) 24503061/62/63/66, Fax: (+968) 24594237 / 24505460, E-mail: shamelfc@omantel.net.om / shamelestimation@yahoo.com


oil & gas

PLUMBING THE DEPTHS Buoyant international oil prices continue to shore up government revenues, entrenching the hydrocarbon sector’s dominant role as Oman’s economic mainstay

Y

ears of heightened emphasis on diversification has done little to ease the hydrocarbon sector’s predominant sway over the Omani economy, as newly released statistics attest. The country’s Gross Domestic Product (GDP) expanded a robust 18.3 per cent in the first quarter of 2012 to RO7.228 billion at current prices, when compared with RO6.109 billion during the corresponding quarter of 2011. Much of this growth was fuelled by a 25.5 per cent increase in oil-based activities, bolstered by high international oil prices that soared to $109.1 per barrel by end-March 2012, as compared to $88.3 per barrel a year earlier. Thus, regardless of policy designed to wean the Omani economy away from an overly dependence on oil, present global energy dynamics will continue to embed the hydrocarbon sector’s pivotal role in fuelling national growth, albeit over the foreseeable future. In purely output terms, however, the oil sector grew marginally during the first quarter of this year. Total production climbed a minuscule 1.3 per cent to 80.9 million barrels during the first three months of 2012, from 79.8 million barrels during the same period last year. Output, which averaged 885,000 barrels per day (bpd) last year, is projected to rise to 915,000 bpd in 2012 – an incremental rise designed to ensure that output will be sustained over the long term. Not all of Oman’s crude output is destined for export. Rising national demand for motor gasoline, diesel, jet fuel and other refined petroleum products means that a significant share of production is being diverted for domestic refining and consumption. Of 322.995 million barrels of crude and condensates produced last year, only around 266.428 million barrels were shipped to international markets. The rest was pumped to refineries at Mina al Fahal and Sohar. China was the biggest market for Omani crude in 2011, lifting a hefty 46 per cent of total exports. India came second with 12 per cent, with Japan ranked a close third with 10 per cent. New oilfields brought into operation by Petroleum Development Oman (PDO), the country’s preeminent producer, among other oil companies, helped boost output to around 900,000 bpd by the end of last year. Consequently, the average output climbed to 885,000 bpd, from 864,600 bpd in 2010.

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The total output, which averaged 885,000 barrels per day (bpd) last year, is projected to rise to 915,000 bpd in 2012


oil & gas PROMISING EOR Much of the output increase this year will come from higher yields pledged by a number of oil producers, according to Oil and Gas Minister Dr Mohammed bin Hamed al Rumhy. Harweel, the site of a major Enhanced Oil Recovery (EOR) project developed by PDO, will contribute an additional 30,000 bpd, alongside higher volumes from some wells drilled within PDO’s Qarn Alam fields. While PDO contributes the lion’s share of Oman’s oil production, six

14 PROGRESS‘12

other companies, including Oxy Mukhaizna and OC Energy Company, are pitching in as well.

amounts to no more than 16 per cent of known reserves, leaving sizeable volumes for future generations.

Earlier this year, Dr Al Rumhy took the extraordinary step of debunking longcirculated rumours suggesting that Oman’s oilfields will soon run dry. Addressing a panel constituted by the State Council to look into the long-term health of this critical economic sector, he revealed that total output since the inception of the industry

He also sought to dispel what he described as “misconceptions” in the minds of many citizens pertaining to oil and gas output and the Exploration and Production Sharing Agreements inked with oil companies. A key factor weighing on output is the cost of production per barrel, which has gone up in comparison with trends of previous

40 per cent of Oman’s current gas production is earmarked for the liquefied natural gas trains at Qalhat


Our sincere felicitations to

His Majesty Sultan Qaboos bin Said and the people of Oman on the occasion of Renaissance Day

2PDQ2LO&RPSDQ\ 22& KDVDOLJQHGLWVREMHFWLYHVWRUHĂ€HFWWKH vision of His Majesty Sultan Qaboos bin Said to invest in Omani human resources, since they are considered the national treasure that contributes to the development of Oman. To give further support to the importance of developing a skilled workforce, OOC launched the Human Capital Unit known as Takatuf which aims to grow talent and create business leaders and professionals through modern learning methods. Furthermore, the company has also demonstrated through its Corporate Social Responsibility initiatives and projects its long term commitment to serving the community by creating more opportunities for Omanis.

Local and International OOC Investments

OOCEP

Investing for the future of Oman

w w w. o m a n - o i l . c o m


oil & gas

years, he said. “Besides, oil is not a lake that we can tap when we wish. On the contrary, there are a number of technical and technological challenges that deter many international companies from investing in the hydrocarbon sector. In fact, there are companies that quit exploring for oil in the Sultanate because they found lower cost options in other parts of the world,� the Minister emphasised. Moreover, in an effort to conserve oil for future generations, the ministry endeavours to strike a balance between production

levels and booking new reserves. Ultimately, the objective is to raise output gradually over the long term, thereby avoiding the pitfalls faced by many countries that suffered a decline in oil production. In fact, some oil producing countries that topped the ranks of oil exporters during the last century are today left with no oil and are no longer members of Opec, he noted. STRATEGIC COMMODITY While crude oil remains a prized commodity in terms of its ability to bankroll a substantial part of the national economy, natural gas


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oil & gas 42nd

is a much sought after resource given its indispensableness to the power and water sector, as well as its use as a fuel and feedstock for the country’s burgeoning industrial and petrochemical sector. Roughly 40 per cent of Oman’s current gas production is earmarked for the liquefied natural gas (LNG) trains at Qalhat which prepares the resource for shipment to energy-hungry markets in the Far East and Europe, among other places. The growing network of power plants and desalination schemes also accounts for another fifth of output, while a similar share goes to a cluster of industries in Sohar, Sur and Salalah for use as petrochemical feedstock. The balance 20 per cent is consumed by PDO in its oil operations. Output, currently averaging 95 million cubic metres per day, is projected

to reach 100 million cubic metres per day by the end of this year. As with oil, PDO also accounts for the vast proportion of current gas output. With demand escalating on all fronts in line with rising economic and investment growth, pressure is on the ministry to deliver more gas. Of late, attention is focused on energy major BP which is currently working on unlocking the massive potential of its KhazzanMakarem gas field in its Block 61 concession in central Oman. Trapped in tight rock at depths ranging from 4,500 to 5,000 metres, this resource is relatively expensive and technologically complex to tap, but BP insists it has the ability, technical wherewithal and gumption to get it flowing. Latest estimates put the gas reserves potential of the Block at a staggering 100 trillion cubic feet (TCF).


This figure represents a three-fold jump over the company’s previous estimate of 30 TCF, making the concession – which holds the prodigious Khazzan-Makarem gasfields – potentially one of the richest gas blocks in the Sultanate. Furthermore, if proven to be commercially exploitable, Block 61 could yield massive volumes of natural gas that will fuel Oman’s industrial and economic development well into the future. BP is investing hundreds of millions of dollars during the current exploration and appraisal stage to appraise the Khazzan-Makarem field. Appraisal gas currently being produced by BP as part of its Early Well Testing (EWT) programme is pumped into the government gas grid. A joint decision by the government and BP on whether on or not to develop the Khazzan field’s gas potential is expected before the end of this year. The company is in continual communication with the government in this regard, and hopes to reach agreement by the end of 2012. BP is currently working on a Field Development

Plan for the Khazzan field which, if given the green light, will deliver around 1 billion cubic feet of gas per day from 2016. Capital investments are envisaged in the range of $15 – 20 billion over a 15-year timeframe, primarily towards the drilling of hundreds of production wells and development of surface facilities. Also holding out much promise is the Abu Tubul gas field in Block 60 operated by Oman Oil Company Exploration and Production (OOCEP), the upstream subsidiary of the wholly government owned Oman Oil Company. OOCEP plans to invest around $1.1 billion in the development of the gas-rich Abu Tubul discovery. The amount represents the first phase investment in an ambitious project to unlock Block 60’s potentially prodigious reserves of tight gas and condensates. OOCEP has set its sights on a Q1 2013 timeframe to bring the field into commercial production. Output is targeted at a peak

production rate of 90 million standard cubic feet per day (mmscf/d). Block 60 is proposed to be developed in two distinct phases. Phase 1, targeting the southern part of the block with its prize Abu Butabul field, will first be taken in hand for development. Around $1 billion will be invested in harnessing the unconventional gas reserves of the field over a two-year period. In the second phase, OOCEP plans to drill at least two exploration wells in the northern half of the 1,485 sq kilometre concession. The Abu Tubul field, first discovered in 1998, has ample volumes of gas in place, but the challenge lies in evacuating the gas, trapped in tight pores in the rock, to the surface. Horizontal drilling and technology hold the key to enhancing recovery from the reservoir. SHALE GAS DEVELOPMENT In the face of soaring energy demand, Oman is now looking at non-conventional energy resources, most notably shale

Oman Oil Company Exploration and Production plans to invest around $1.1 billion in the development of the gas-rich Abu Tubul discovery


oil & gas gas, to supplement supplies. Recently, the Oil and Gas Under-Secretary, Nasser bin Khamis al Jashmi, said the government was keen to attract international oil companies to evaluate and develop its untapped, yet potentially prodigious, shale gas resources. Potential shale gas reserves, he said, are not limited to PDO’s massive Block 6 concessions, but likely more widespread. Earlier this year, the ministry announced that it had commissioned a study to assess the country’s potential of shale gas – an unconventional energy resource that’s rapidly supplanting conventional natural gas as a mainstay resource in a number of countries around the world, chiefly the United States and Canada.

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According to oil industry experts, Oman and the wider region sit on huge shale formations that can potentially serve as a source of natural gas and even petroleum. Shales are fine-grained sedimentary rocks in whose tiny bores may be trapped natural gas. Because shales ordinarily have insufficient permeability to allow significant fluid flow to a well bore, most shales are not commercial sources of natural gas unless developed through a technique known as hydraulic fracturing (fraccing). New fraccing technologies have helped create artificial fractures around well bores, thereby fuelling a boom in shale gas production globally. In the Sultanate, a number of oilfield companies are currently exploring for shale as part of their routine exploration activities

within their respective concessions. Experts believe that, with energy prices now soaring, shale deposits can be economically developed, potentially providing the Sultanate with a near limitless energy resource. BUILDING THE FUTURE The overriding objective of Oman’s Vision 2020 was to transform the country’s oil wealth into a broader-based industrial wealth by developing industrial competence that will induce growth in the economy and sustain it after oil and gas. Although much has been done in this direction by investing in people and reducing the dependency on imported goods and services, a lot more needs to be done for developing talented technical professionals and stimulating the

BP is currently working on unlocking the massive potential of its KhazzanMakarem gas field in its Block 61 concession


oil & gas productivity of local industries. An ambitious stride towards achieving this goal was the conference on maximising incountry value (ICV) across the oil industry in the Sultanate, organised in 2012 by the Oman Society of Petroleum Services (OPAL) under the auspices of Nasser bin Khamis al Jashmi, Under-Secretary of the Ministry of Oil and Gas. ICV refers to the total spend retained in country that can benefit business development, contribute to human capability development and stimulate productivity in the Omani economy. In addition, ICV also

22 PROGRESS‘12

entails setting standards and expectations, lobbying for change, identifying enablers, raising awareness and accountability. An integrated ICV programme which OPAL and the Ministry of Oil & Gas sponsor seeks to achieve increased employment of skilled Omanis by creating more meaningful jobs, and set up a self-sufficient repair/servicing and manufacturing industry to serve the oil and gas sector and other industries in Oman and the region. The conference was the first milestone in the development of ICV in the Oman’s

oil and gas sector, bringing companies and leaders and subject matter experts together to exchange views, discuss and debate the concept to further enhance the development of ICV. Themed ‘deepening in- country value strategy in Oman’, the conference germinated from the belief that formation of an ICV strategy in the oil and gas sector is of significant importance to the national economy of the country. The conference was aimed at laying the foundation which will eventually support job creation, human capability building and establishing industries to support the oil

Oman sits on huge shale formations that can potentially serve as a source of natural gas and even petroleum


oil & gas and gas sector with products and services provided by Omanis. The presentations and discussions at the conference revolved around the perspectives of the government, operators, contractors and suppliers on incountry value opportunities. The conference brought together key oil and gas industry stakeholders to examine the progress of ICV development in Oman and share best practices in the delivery of ICV through skills development, job creation, local manufacturing etc. It also provided an opportunity for Oil and Gas operators

24 PROGRESS‘12

to share contracting and procurement opportunities for Omani companies. Speaking on the occasion, HE al Jashmi said that the government accorded top priority to In- Country Value Strategy by setting up an Oil and Gas ICV Committee, chaired by himself and with various ministries and the CEO’s of Oil and Gas companies as members. “This is the start of an ongoing collective engagement between government, contractors and operators,” he said. “We need more commitment from Omani contractors to this government

strategy. We need them to invest in capability and capacity development in Oman. We want them to take advantage of the oil sector to create a center of excellence and a knowledge based hub to manage other areas. Most importantly, we want them to help create a sustainable environment for local businesses to thrive.” “The in-country value strategy can create immense value for the nation, in terms of developing manufacturing and services, employment generation and educating and training Omani professionals,” said

ICV refers to the total spend retained in country that can benefit business development and contribute to human capability


oil & gas Mohamed Al Harthy, CEO of OPAL and Secretary of In-Country Value Committee. “This is the start of a journey and it will take the commitment of all of us here to maximise the ICV delivery in our country. I know this is a true differentiator for Oman as a nation, for Oman within the GCC and for Oman as a “player” in the international oil and gas arena. This is a journey in which we all win and most importantly we will be taking the necessary steps to building industrial competences and capabilities within Oman, which are internationally competitive. This will also lead to the transformation of oil wealth in

26 PROGRESS‘12

to a broader based industrial wealth, which will create sustainable employment within Oman for many decades to come, even after our Oil and Gas has declined significantly.” The introduction of international standards both in goods and services is fundamental and this is equally important in training. When we train our people to international standards, they then become part of the global skill pool in their chosen profession and can be internationally mobile, added al Harthy. Ernest Nwapa, CEO of the Nigerian Content Development and Monitoring

Board, and Willy Olsen, senior advisor to INTSOK, a foundation established by the government and the Norwegian Oil and Gas industry, were the guest speakers at the conference. Mohamd Al Toki, CEO, Grofin MENA Region, gave a presentation on what Grofin has to offer for helping support ICV business development in Oman. There were also panel discussions with BP, Oxy and PDO CEO’s and other members of the Oil and Gas ICV Committee. The conference was followed by two ‘Wave 1 ICV Opportunities’ workshops at PDO’s HLD training centre.

The introduction of international standards both in goods and services is fundamental and is equally important in training


Hearty Congratulations to His Majesty Sultan Qaboos bin Said and the people of Oman on the Occasion of the 42nd Renaissance Day

“Group has its footprint in Manufacturing, Energy Solutions (Products & Services), OHL & Substation Construction, Oil & Gas (Workover RIG, Well Services); Skills development and Competency training; Design Engineering; Engineering and Fabrication in the Sultanate”

RUKUN AL YAQEEN INTERNATIONAL LLC PO Box 203, PC 134, Jawaharat Al Shatie, Muscat, Sultanate of Oman Phone:+968 24600420 • Fax: +968 24601794 Email : sales@rayoman.com • www.rayoman.com


VIEWPOINT - BANKING

A RESILIENT SYSTEM

The start of Islamic banking will diversify banking services and augment financial inclusion in the sector

HE Hamood Sangour Al Zadjali, Executive President, Central Bank of Oman

Partners in Progress

Energising Oman

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Oman has made commendable progress during last four decades under the wise leadership of His Majesty Sultan Qaboos bin Said, the benevolent Sultan of Oman. Oman has a fairly developed network of physical infrastructure which attracts large foreign investment. The Sultanate’s financial system operates in a deregulated and competitive environment within an open economy framework. Oman’s banking system is sound, well regulated, profitable and resilient due to appropriate regulatory and supervisory policy pursued by the CBO. Omani banks could be able to weather the recent global financial crisis with least disruption in the intermediation process mainly due to no direct exposure to toxic financial assets or to distressed financial institutions. Omani rial is pegged to the US dollar which provides stable exchange rate to the investors. Government provides congenial investment climate by offering several incentives for investment in Oman. Government has embarked upon the Eighth Five-Year Development Plan (201115) from 2011 with emphasis on social reforms. Social spending on public health, education etc. has been stepped up during the plan period so as to promote growth with a human touch. The single most important problem the country currently faces is the unemployment problem which is being addressed through several initiatives. First, nearly 50,000 new jobs were created in Oman

in 2011. Second, unemployment benefit of RO150 per month per unemployed person is being given as a social security till a gainful employment is provided to the concerned person commensurate with his or her educational qualification. Third, Omanisation programme has been streamlined and wherever possible, reservation for the employment of local people has been augmented. Fourth, government has specific plan to provide additional employment to the local people, both in the public and private sectors, during the rest of the current plan period. The endeavour of the government and other public authorities has been to extend fruits of development to the common people. Despite adverse global developments, the Omani economy continued to sustain the growth momentum during 2011. Sultanate’s Gross Domestic Product at current prices grew by 22.7 per cent during last two years. The major drivers of growth in Oman have been recovery in the prices of crude oil in the international markets, sustained domestic demand, mainly supported by large public expenditure and accommodative monetary policy pursued by the CBO. The price situation in Oman remained, by and large, under control with average inflation rate for the Sultanate at 4 per cent in 2011. The Omani crude oil fetched an average price of $103 per barrel in 2011, which was 34.5 per cent higher than $76.6 per barrel realised in the

previous year. The Omani banking sector continued to depict optimism and resilience during 2011, consistent with recovery of the real economy. The most significant achievement has been improvement in the financial health of banks in terms of asset quality, provision coverage, capital adequacy, and profitability. The gross nonperforming loans as percentage of total credit at the end of 2011 stood lower at 2.5 per cent compared to 2.9 per cent a year ago. Total provisions of banks continued to surpass the stock of non-performing loans by the year end. Basel II regulatory capital at the end of 2011 stood at 15.9 per cent, which was significantly higher than the minimum regulatory requirement of 12 per cent prescribed by the CBO. All banks in Oman were Basel II compliant as regards capital adequacy. Despite some pressure on interest rate spread, commercial banks earned higher profit of RO264 million in 2011 compared to RO247.7 million in 2010. Consistent with accommodative monetary policy, the liquidity condition remained comfortable in the banking system throughout the year as evident from large roll over of CBO CDs at weekly auctions. Reflecting comfortable liquidity conditions, both deposit and lending rates softened in Oman during 2011. The CBO also reduced the interest rate ceiling on all new personal loans from eight per cent to seven per cent with effect from April 1, 2012.


Congratulations ations to

His Majesty Sultan Qaboos Bin in Said and the people of Oman on the glorious ance Day occasion of the 42nd Renaissance

GROWING AND PROTECTING YOUR WEALTH Our circle of inÁuence is growing wider: • INSURANCE • LEASING • FINANCE • ASSET MANAGEMENT

P.O. Box 1949, Jibroo, PC 114, Sultanate of Oman, Tel: (968) 24762000, Fax: (968)) 24791357


banking

ON THE CUSP OF CHANGE The financial sector in the country is expected to undergo a sea change, with the merger of two banks and rolling out of Islamic banking products by two specialised institutions

T

he merger of Oman International Bank and HSBC Oman created the second largest player in the country – HSBC Bank Oman. With an active support from HSBC, which holds majority 51 per cent stake in the merged entity, HSBC Bank Oman will be an aggressive player aiming at a bigger market share. The bank has an asset size of $2 billion, a branch network ranging between 94 and 97, paid up capital of approximately RO220 million and an authorised capital of RO750 million. The HSBC group not only trains the staff of its local subsidiary, but also provides certain support services to HSBC Bank Oman under a services agreement with an initial term of ten years. The bank is refurbishing branches and improving the look and feel as well as the overall banking experience for customers. HSBC has already injected an additional capital of up to $97.4 million in cash from its internal resources. Although HSBC Bank Oman has ambitious growth plans in the domestic market, the merged entity is planning to either sell or close down OIB’s five overseas branches. OIB has five overseas branches – three in Pakistan and two in India. The Central Bank of Oman’s decision to allow Islamic banks and window operations is another major factor that will have an impact on traditional banks. The banking regulator is in advanced stage to announce the Islamic banking regulation. According to the Islamic Banking Draft Framework, banks planning to enter Islamic banking business need to have a five-member Sharia board, exclusive branches for window operation, clear cut segregation of conventional and Islamic banking with separate teams of people and accounts and a 12 per cent capital adequacy ratio.

30 PROGRESS‘12


Three of the five Sharia board members should be experienced Islamic scholars and two should be from a relevant field


banking An international audit firm Ernst & Young advised the Central Bank of Oman for framing a set of new regulation. The banking regulator is still working on the regulation, and may incorporate changes on the basis of feedbacks from banks, before announcing it. CBO said three of the five Sharia board members should be experienced Islamic scholars and two should be from relevant field - either a professional in Islamic law or Islamic accounting. CBO’s draft regulation also stipulates on separate branches for Islamic banking window operation of conventional banks. As Islamic banking is a distinctly different line of business, there needs to be a separate team of people for accounts, information technology, marketing, compliance for Islamic banking line of business.

The draft regulation also insists on a 12 per cent capital adequacy, with a minimum paid up capital of RO10 million for starting window operation. Another major suggestion for window operation is that funds can be pumped into Islamic line of business by a conventional parent bank, but Islamic banking operation cannot transfer money for using it in conventional banking. Another major concern expressed by bankers is the lack of availability of Sharia scholars to become board members of Islamic banking as all banks are getting into Islamic banking. Difficulty in getting people with relevant experience is going to be a challenge.

Two Islamic banks - Bank Nizwa and Al Izz Bank International – are at different stages to start operation. Bank Nizwa, which raised RO60 million from an initial public offering is expected to commence operation either in July or August with three branches – one each in Muscat, Nizwa and Sohar. The bank has been working with its consultants and advisors on implementing the drawn up plans. Although the founding committee members have made progress on several fronts, CBO has to come out with necessary regulation for starting operation. Bank Nizwa’s initial public offering has received an overwhelming response with the bank mobilising over RO681 million from investing public and institutions, indicating an oversubscription of 10.3 times. The collection figures from four banks show that as many as 37,084 investors applied for 600 million shares floated by Oman’s first Islamic bank. Al Izz Bank International, the second Islamic bank under formation, is also planning to raise money from the investing public. The bank is planning to float a RO40 million issue, which is managed by BankMuscat. UNMET POTENTIAL As bankers believe that there is substantial unmet demand for Sharia-compliant products in Oman, almost all banks BankMuscat, National Bank of Oman, BankDhofar, Oman Arab Bank and Bank Sohar –have already geared up to offer Islamic financial products once regulatory approvals are in place. BankMuscat has already assigned RO150 million of capital for its proposed Meethaq Islamic banking window. The bank is all set to launch Islamic banking platform and has made headway by announcing a three-member Sharia board. NBO is also not far behind. It is also

32 PROGRESS‘12

Bank Nizwa is expected to commence operation soon with three branches


banking well prepared to launch its Sharia compliant window and will have a presence across all regions in the Sultanate. The bank has also appointed a Sharia board comprising wellexperienced and knowledgeable Sharia scholars to supervise its Islamic banking business. Bank Sohar is also planning to open five exclusive branches for Islamic banking window operations. As Islamic banking is a focused area for several banks, these institutions are also raising capital base. For instance, BankMuscat is set to raise RO100 million through a rights issue, while ahli bank and Bank Sohar have also drawn their plans for raising capital base. BankMuscat plans to offer its shares to its existing shareholders at a 20 per cent discount to the market price. Ahli bank is raising RO25 million, while Bank Sohar plans to float a rights issue of RO10 million. These rights issues are aimed at enhancing capital base of Islamic banking and to meet the anticipated asset growth this year. As government has awarded several major infrastructure projects, banks also expect a better demand for credit, probably to the tune of 12 per cent this year. Meanwhile, the banking regulator has taken major initiatives to ease repayment burden of borrowers, as well as the default risk of banks. These initiatives are lowering of interest ceiling on new personal loan to 7 per cent from 8 per cent, an equated monthly instalment (EMI) deductable limit of not more than 50 per cent of the borrower’s salary and a maximum ten year repayment period for personal loans. Since EMI to salary ratio are coming down, the default rates also falling, which will help banks to have a better risk management. Also, banks cannot allow topping up facility for personal loans, except after two years of repayment of the

original loan or repayment of 50 per cent of the existing loan. The maximum repayment term for housing loan is also restricted to 25 years. The banks should also take into account the borrower’s age to ensure that loan repayment completes before the customer reaches retirement age. The new stipulation will have a short-to-medium term impact on bank margins. However, with chances of default rates coming down, banks will gain in the long run. Personal loans, which constitute almost 40 per cent of RO12.5 billion-bank loan portfolio, are the key revenue drivers for Omani institutions due to high interest margins. CBO stipulates an upper ceiling of 40 per cent of a bank’s total credit portfolio as personal loan and another 10 per cent as mortgage finance. The aggregate personal loan portfolio of all banks grew by 16.8 per cent to touch RO5 billion by end-2011 from RO4.28 billion a year ago. FINANCING SMEs Oman Development Bank plays an important role in supporting and financing the Small and Medium Enterprises (SMEs) in the Sultanate. In 2012, ODB approved development loans for projects worth RO 2.915 million for the industrial, tourism and service sectors. The bank aims at supporting the individual initiatives that enhance added value for economic projects and ensure selfsufficiency in services and commodities. The number of loans funded by ODB since its incorporation till November 2011 amounted to 36,977 worth RO 354 million. The bank funds projects which come within the economic and developmental sectors exclusive of the commercial sectors with a maximum of RO 1 million and with subsidised interest rates. While the government bears 6 per cent of the interest rate, the investor bears 3 per cent only.


E V ER Y R OL E X I S M A D E FOR G R E ATNE S S . THE COSMOG R A PH DAY TON A , I N T R O D U C E D I N 19 6 3 , W A S D E S I G N E D T O M E E T T H E D E M A N D S O F

"A youth are the present and future of the nation we gave them the "As a attention and care they deserve throughout the years of the blessed STATUS. WITH ITS PATENTED CHRONOGRAPH MECHANISM AND BEZEL WITH R Renaissance asT LYthe endeavoured to provide them with TA C H O M E T R I C S C A L E , I T A L L O W S D R I V E R S TO P E R F EC M E government A SURE training, qualiďŹ cations and employment opportunities." E L A P S E D C I R C U I T T I M E A N D C A L C U L ATeducation, E AV E R A G E S P EED. PR OFE S S ION A L R ACEC A R D R I V ER S A ND QUI CK LY E A R NED IT S I CONI C

the cosmogr aph Speech day tona Of His Majesty At The Opening of the 5th Term of The Council of Oman - 31st October 2011

Felicitations to His Majesty Sultan Qaboos bin Said and the people of Oman on the proud occasion of the 42nd Renaissance Day


nbfc

UPBEAT PROSPECTS All the six non-banking finance companies in the country made significant gains in the last fiscal year on the back of new jobs, salary rises and infrastructure spending

F

inance and leasing firms or non-banking finance companies (NBFCs) have been crucial players in Oman’s financial services industry for the last 25 years, contributing significantly to the Sultanate’s economic development and diversified growth. Today NBFC is a fast growing industry worth RO600 million and with large capitalised companies who are so strong and resilient enough to compete with banks at all levels. They have carved a niche for themselves as the key supporters of small and medium scale enterprises and retail financing in the country. Though the year 2011could not turn out to be a turnaround year for national economy as expected, all the six NBFCs in the country performed fairly well and posted good growth on the back of new jobs, salary rises and infrastructure spending. The industry enjoyed a good run across various segments, as almost all the companies have performed well in their niche markets wherein they may not be adversely affected by any kind of slowdown at the macro level. In addition, the overall business prospects are bright and positive for them in 2012, with government’s expansionary fiscal policy and an expected 5 per cent growth in real terms in 2012. PAID-UP CAPITAL The year 2012 saw the NBFCS gear up to raise their paid-up capital to RO20 million by June 30, in line with CBO guidelines. Al Omaniya launched a RO10 million bond issue. It will be 100 per cent compulsory convertible bond of which 20 per cent will be converted into equity each year. It is a five year bond. This will enhance the capital base and net worth of the company and its

36 PROGRESS‘12

ability to grow. This measure is timely and structured well to meet the CBO guidelines. National Finance has raised its incremental equity through a rights issue of shares amounting to RO7.5million to existing shareholders which was completed in February 2012. This has incidentally increased its paid- up capital to RO25.54million which meets not only the first target of RO20million by June 2012 but also actually the next target of RO25million by December 2016. The board of directors of Muscat Finance has recommended a stock dividend of 20 per cent for 2011, to fulfil the guidelines. This has increased the company’s capital from RO16.80million to RO20.16million by March 31. And the board of directors of the company will explore all the possibilities and select the best way of raising it further to RO25million progressively over the next five years. Oman Oryx recommended a rights issue worth RO5million to the existing shareholders which helped the company to increase the paid-up capital to RO21.775million by June. To meet the requirements, Taageer Finance has offered rights issue of RO4million at par in May 2011 and the issue was fully subscribed, according to the company’s annual report published at Muscat Securities Market. The company also proposed to issue stock dividend of 40 per cent by capitalising the share premium reserve of RO3.091million and the balance of RO1.909million from the retained earnings. FORAY INTO ISLAMIC PRODUCTS Although the CBO is yet to issue the guidelines for NBFCs regarding shariacomplied services, most of them are all set to win a bigger slice of the burgeoning Islamic finance pie in the Sultanate. The companies


Congratulations to

His Majesty Sultan Qaboos Bin Said

and the people of Oman on the glorious occasion of the 42nd Renaissance Day

Celebrating the 25th year of enabling dreams Success is a journey, not a destination. Striving ahead, together with Oman, Muscat Finance traces an incredible 25 years of growth and progress. Credited with many Àrsts and as the pioneers of Hire Purchase, Leasing and Factoring, we have successfully carved an indelible niche in the Ànancial backdrop of the Sultanate of Oman. Today, as we enter the 25th glorious year of growting with you, we thank you for reposing your trust, for nurturing your dreams and making us a formidable force in Oman.

PO Box 108, Ruwi, PC 112, Sultanate of Oman • Tel: 24625300 • Fax: 24625310 Email: mÀnance@mfcoman.com • www.mfcoman.com Call us for all your Ànancing needs: Auto Finance 99372210

Corporate Leaing 92801544

Debt Factoring 94021310

Working Capital Financing 92811499

Corporate Deposits 92118840


The year 2012 saw NBFCs gear up to raise their paid-up capital to RO20 million

nbfc

believe that Islamic banks are not likely to affect their profitability but would bring a new dimension to the financial structure. It creates wider choices for individuals and corporates. Since leasing itself is an Islamic product, the emergence of Islamic banking services holds a lot in store for the leasing companies. As the Islamic banking has their own way of financing and generally in retail and SME the leasing companies are better positioned. In addition, Islamic banks may be a source of funding for NBFCs as they would be able to obtain funding from them also.

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In 2011, Al Omaniya maintained its number one position among other players in size, market capitalisation, net worth, earnings per share, profit per employee, cash dividend, revenue, the quality of assets etc. Its nonperforming loans are lowest among all the banking and nonbanking finance companies in Oman. For Muscat Finance, which celebrates the 25th anniversary in 2012, the year 2011 was satisfactory in terms of growth in assets and profits. The company posted 4 per cent growth in assets and 6 per cent in net profit which went up to RO3.57million. MFC has also managed to

reduce its NPA substantially to RO9.7million from RO13million. The year 2011 was very important for National Finance as the year when it passed RO100million milestone in finance leases for the first time. In addition, the year-onyear profit has grown by 52.1 per cent to RO3.546million. The growth was driven by a combination of increasing demand for car loans with the expansion of the economy and consequent creation of jobs and also increased customer acquisition in the rapidly growing SME sector. The total earning


Heartiest felicitations to His Majesty Sultan Qaboos bin Said and the people of Oman on the occasion of the 42nd Renaissance Day

OMAN’S LARGEST NON-BANKING FINANCIAL INSTITUTION Comprehensive Financial Solutions Provider • Corporate Loans • Bill Discounting • Express Business Loans • Working Capital Loans • Bridge Loans • Project Finance • Debt Factoring • Lifestyle Personal Loans • Corporate Deposits • Plant Equipment and Machinery Loans • Construction Loans (Factories & Warehouses) • Lifeline Auto Loans

GLOBAL SCALE RATING BY MOODY’S BA3 STABLE OUTLOOK


Islamic banks may be a source of funding for NBFCs as they would be able to obtain funding from them

nbfc

assets as at the end of 2011 amounted to RO107.52million of which the bulk pertained to finance leases. Oman Oryx has registered its best ever profit growth in 2011. It has got many record numbers during the year, though it has not been that aggressive and continues to remain conservative as usual. In 2011, Oman Oryx’s operating asset was RO63million with an increase of 15 per cent. Its return on equity went up from RO12.11million to RO12.60million whereas the infected portfolio went up from RO2.73million to RO2.848. United Finance which commenced operations in January 1998 with a paid-up capital of RO5million has expanded its presence across the country with seven branches at Barka, Firq, Ibra, Ibri, Mawaleh, Sohar and Salalah in addition to its head office in Muscat. As of December 31, 2011, the company’s net worth stood at RO34.9million. The UFC has over the years increased its asset base by growing its net finance debtor’s book to

40 PROGRESS‘12

RO79.33million. The company recorded a net profit of RO2.85million for the year 2011 as against RO1.09million in 2010. Taageer Finance has registered 8 per cent growth in the lease portfolio during 2011 over the previous year, according to the annual report. The profit after tax (PAT) for 2011 stood at RO3.216million with an increase of 30 per cent compared to the figures in 2010. The report attributes this profitability to decrease in borrowing costs and increase in gross income. Taageer company continues the policy of creating and strengthening the general provisioning and has provided RO1.117million towards loan impairments during the year. The cumulative provision as at Dec 2011 stands at RO4.649million.

approximately 16 per cent and is growing at a steady pace. The key to the success of the company is its dedicated team, system driven policies and procedures, dynamic online IT functions and access to the best industry and international practices. Being the latest entrant to the leasing industry in Oman, the company’s systems, policies, procedures are based on the latest market conditions and the best industry and banking practices. The diversified shareholder base also gives it an opportunity to bring in their expertise to the overall improvement in operational efficiency. Taageer is a consistent profit making company and it has given uninterrupted dividend payouts since its inception.

Taageer’s philosophy of corporate governance is aimed at promoting trusteeship, transparency, empowerment, control and ethical corporate citizenship. The company has a market share of

In short, all the six NBFCs made significant gains in the last fiscal year with solid and stable performance and started the new year on a very bright and optimistic note.


Congratulations to

His Majesty Sultan Qaboos Bin Said and people of Oman on the glorious occasion of the 42nd Renaissance Day The extraordinary achievement of Oman under the wise leadership of His Majesty has been a paradigm of foresight. Development has been driven by the vision for progress, while being guided by the rich cultural legacy of the nation. On this occasion, Taageer Finance Company reaffirms its wholehearted commitment to His Majesty’s vision for the country, while being anchored to the central principles of Oman’s Renaissance.

Our Branches: MBD - Sohar - Nizwa - Seeb - Salalah Customer Service: 24839999 Head office: 24839800 E-mail: customerservice@taageer.com


insurance

A PARADIGM SHIFT Takaful firms are expected to offer Sharia-compliant insurance products in Oman before the end of 2012 or early 2013

42 PROGRESS‘12

T

he Sultanate’s $725 millioninsurance sector is expected to undergo a sea change with the imminent entry of Shariacompliant takaful insurance firms. The insurance regulator Capital Market Authority (CMA) is preparing a set of regulation, with the assistance of global consultants Clifford Chance, for takaful firms and sukuk debt instruments. If everything goes well, new takaful firms will offer shariacompliant insurance products to Omani customers before the end of this year or early next year. According to recent reports, the Capital Market Authority will favour standalone companies for Sharia-compliant takaful insurance business as conventional insurance is entirely different from takaful. This is against window operations proposed for banks intending to offer Islamic financial products.

people who borrow funds from Islamic banks need to go for Sharia-compliant insurance.

Further, the minimum capital for promoting a takaful insurance company is envisaged at RO10 million, which is against the RO5 million minimum capital for conventional insurance firms. A conventional insurance company planning to enter takaful business has to seek a separate licence, form a separate company and it needs to have a Sharia board consisting of three members. However, the regulating authority is still waiting for Clifford Chance to submit their report. The consultant is reviewing the existing rules and regulations and they will advise whether the country needs a separate set of regulations for accommodating Islamic products or only amendments to the existing rules. An internal committee, formed by CMA, is looking at various aspects for allowing companies to float sukuks and Sharia-compliant insurance In fact, the CMA has already issued ‘in products. principle’ approvals to three companies – one local and two GCC firms - for promoting MUTUAL HELP Sharia compliant insurance firms. The In takaful, there are two types of funds – the local insurance firm Al Madina Insurance shareholders’ fund and the policy holders’ Company has received the first ‘in principle’ fund. The way takaful business is managed approval from CMA for introducing takaful is completely different from conventional insurance products. The group is planning insurance, which has only shareholders’ to offer life, medical and non-life takaful fund. Therefore, the risk is undertaken by the products in the country. Two other GCC shareholders. Takaful insurance concept is promoters have also approached CMA for based on the notion of mutual help that is forming insurance companies in Oman to provided voluntarily. In practical terms, it is a offer Sharia-compliant insurance products in risk sharing arrangement among a group of the country. members, who are known as contributors or policyholders collectively, who then agree to HUGE POTENTIAL compensate each member against potential It is anticipated that demand for takaful loss or damage. The nature of this loss or insurance products in the country will be damage as it were has to be clearly defined driven by Islamic banking customers. The in the agreement. experience of other GCC countries shows that there is a positive correlation between And any policyholder who suffers such a Islamic banking and takaful, because the loss is to be compensated in the form of


financial assistance from the common fund established for this purpose. General takaful includes products such as home takaful, auto takaful, and property and casualty cover to name a few. Likewise, family takaful includes products such as long term savings and protection in case of disability or death. The takaful insurance industry has seen remarkable growth over the past five years. Global takaful contributions grew by 31 per cent in 2009 to reach $7 billion, and by the end of 2011 the market was thought to have a value of $12 billion, according to Ernst & Young. Approximately 70 per cent of all global contributions come from the Gulf Cooperation Council (GCC), as low insurance penetration, demographic factors and the rise in Islamic consciousness have made the region a prime target for domestic providers and large multinationals alike. The second largest contribution comes from South East Asia, which accounts for 21 per cent of the global market. AMPLE SCOPE FOR GROWTH Meanwhile, the Sultanate’s insurance companies have achieved a 12.2 per cent growth in gross premium income at RO281.73 million for 2011, from RO251.07 million for the previous year. Huge investments in infrastructure projects coupled with better demand for motor and medical insurance aided the growth in premium income. In fact, Oman holds out immense potential for growth in the insurance sector. Of Oman’s 2.7 million people, 30 per cent are less than 19 years old while 83 per cent are younger than 35 years. Due to large young population, changes in life style, increased per capita income and awareness of insurance benefits, there is ample scope for growth of life and personal insurance business. Though Oman has a long way to

go in terms of total business volume before it can catch up with its GCC counterparts and other developed countries, the country’s low insurance penetration of around 1 per cent, less even than developing countries like India, is being viewed as a positive factor for the development of medical insurance. Apart from low insurance penetration levels, growing awareness among the public on insurance in the aftermath of natural calamities like Cyclone Gonu is also expected to fuel the growth in insurance sector in the long run. Since motor vehicle insurance is compulsory, a major portion of revenue for companies come from this segment. As most of the competition is in this segment, insurance experts believe that this is a segment that has low margins. Industry players opine that Oman’s insurance market is grossly underpriced, mainly due to growing competition and the tendency of companies to place majority of risk with reinsurers in other markets. The local companies need to understand the concept of risk-based pricing and underwrite accordingly to have a robust balance sheet. Several companies, including foreign firms, have incurred heavy losses due to claims from Omani companies during Cyclone Gonu and Phet. However, unlike several other countries in the region, the international financial crisis in 2009 did not have much effect on the local insurance industry. As far as the gross premium income is concerned, Dhofar Insurance Company led the market in 2011 with a gross premium of RO52.23 million, which was followed by National Life Insurance at RO35.21 million, Al Ahlia Insurance at RO29.52 million and Oman United Insurance at RO29.31 million.

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VIEWPOINT - CAPITAL MARKET

STABLE INVESTMENT ENVIRONMENT The Capital Market Authority worked on strengthening corporate governance, disseminating awareness on prudent investment practices and upgrading the efficiency of employees

HE Abdullah Al Salmi Executive President, Capital Market Authority

Partners in Progress

Energising Oman

44 PROGRESS‘12

In the legislative area CMA continued the execution of certain draft laws and regulations and review of laws and decisions in coordination with the concerned authorities to enhance the legislative environment in the capital and insurance sector. The key legislative and regulatory achievements in 2011 were the amendment of certain provisions of the Executive Regulation of the Capital Market Law and the issuance of Secured Financing Directives, and of Clearance and Settlement Regulation in addition to amending trading commission on the MSM. In the transparency, disclosure and integrity field, to protect the investors and attain justice and enhance confidence in the investment environment in the securities market and to protect policyholders, CMA monitored public joint stock companies and insurance companies’ compliance with the disclosure guidelines pertaining to disclosure of the annual and quarterly results and followup of distressed companies. CMA also issued disciplinary decisions against the companies infringing the laws and regulations regulating the capital and insurance markets. Based on its role in the investment awareness and education of the public, CMA continues its awareness activities and efforts to

disseminate savings, investment and insurance culture among all the segments of the community. It educates the investors about their rights as well as the directors and executive managements. It also promotes the idea of saving and investment among the minors and constructive interface with the various academic institutions and educates the public about the importance of capital and insurance markets and how to deal with them. The most salient activity carried out by CMA in 2011 was the Capital Market Awareness Campaign in collaboration with MSM and MCDC by conducting workshops for students and taking part in cultural events. In the field of Arab and international cooperation, CMA enhanced its presence in the Arab and international circles through bolstering Arab and international relations to cope with the developments and acquaint with the experiences and latest developments in the international financial and insurance markets and other fields of concern to CMA. It received a number of official Arab and foreign delegations and took part in a number of events and activities inside and outside the Sultanate. In the area of social responsibility, out of its belief about the role of institutions in the service of the community, CMA sponsored the Annual Education Technology Forum

organised by the Directorate General of Education, Governorate of Muscat, in addition to financing training of drivers on traffic culture to reduce traffic accidents, participation in the Seminar on Fair Financial Services to the Consumers organised by the Omani Society for Consumer Protection and participation in the Traffic Safety Seminar. In the training and qualification area, CMA was keen to upgrade the professional efficiency of the human resources of CMA and the employees of securities and insurance sector as well as the interested parties from outside the sectors. CMA held a number of courses and dispatched its employees to specialised training courses and conferences inside and outside the Sultanate. More than 90 activities were conducted with the participation of 426 participants from the employees of CMA in addition to 2,000 participants from the various segments of the community. In the insurance sector, CMA continues the development process and activation of its role in the service of the national economy of the country. It issued a number of rules and circulars further to reviewing and amending a number of rules and directives to ensure that legislations and regulations cope with the best international practices market.


capital market

ON THE ASCENDANT High dividend yields and low valuations are attracting risk-averse investors to the Muscat Securities Market giving a fillip to trading volumes

O

man’s capital market is going to witness a series of initial public offerings in 2012 and early 2013, mainly from two Islamic banks and a well-established commercial bank. While one Islamic bank has already raised RO60 million from investing public, another Islamic bank and three conventional banks – Al Izz Bank International, Oman Arab Bank, BankMuscat and Ahlibank – are in an advanced stage to finalise their primary or right issues. LIQUIDITY AND DEPTH The share offers, which are expected to be in the range of RO275 million to RO300 million, will definitely add liquidity to the market. The Sultanate’s first Islamic bank, Bank Nizwa’s 40 per cent paid up capital (or RO60 million) was offered to the investing public and the remaining RO90 million were subscribed by 92 founding members. The bank, with an authorised capital of RO300 million, has a paid up capital of RO150 million. As much as 60 per cent of the share offer was reserved for those investors who apply for 100,000 shares or less. And the remaining 40 per cent were reserved for institutional investors or high net worth individuals who apply for more than 100,000 shares. The shares listed on June 10, 2012 on the MSM. Bank Nizwa said that the bank would commence operations by end-July, with three branches – one each in Muscat, Nizwa and Sohar. Al Izz Bank International, the second Islamic bank under formation, is also finalising its offer documents to raise money from the investing public. The bank is planning to float a RO40 million issue, which is managed by BankMuscat. In yet another move, the two partners of Oman Arab Bank have decided to divest 25 per cent stake in the bank in favour of investing public through a primary offer. Of the two partners, Oman International Development and Investment Company (Ominvest) will dilute 21 per cent or 243.6 million shares and Bahrain-based Arab Bank four per cent or 46.4 million shares. The nominal value of the share is 100 baisas each. Presently, Ominvest has 51 per cent stake in the Omani bank, while the remaining 49 per cent holding is with Arab Bank.

46 PROGRESS‘12


Oman Arab Bank has decided to divest 25 per cent stake through a primary offer


capital market The decision to change the status of the bank to a listed company was taken by the bank’s shareholders’ meeting by endMarch. In fact, OAB is the first Omani firm to dilute less than the minimum stipulated 40 per cent stake for listing shares on the local bourse. The bank’s move is considered as a special case, since the Companies Law insists that a company can not go public unless the promoters dilute 40 per cent through an initial public offering.

RIGHTS ISSUES IN THE OFFING BankMuscat, Oman’s biggest bank, Ahlibank and Bank Sohar are also planning to float rights issues in 2012. BankMuscat is planning to raise RO100 million through a rights issue some time in the second half. The proposed rights issue, which is aimed at raising the capital adequacy ratio for meeting the anticipated asset growth in 2013, was approved by the board in 2011. The shares will be offered to the existing shareholders at a 20 per cent discount to the market price.

However, a proposal to bring down the minimum stipulated capital dilution (for companies floating initial public offering) to 25 per cent from 40 per cent has reached an advanced stage. The move is aimed at encouraging family-owned business to list their companies.

Ahlibank is another bank which is coming out with a rights issue to the tune of RO25 million to support growth and expansion. Ahlibank’s capital base, which is RO80 million now, will increase to RO105 million after the rights issue. The bank will issue 250 million shares at 100 baisas per share to existing

48 PROGRESS‘12

shareholders. The board of Bank Sohar has also decided to float a right issue to the tune of RO10 million to be used as capital for establishing an Islamic banking window. It is anticipated that the Middle East and North Africa (MENA) region will witness buoyancy in primary issues, along with the recovery in the secondary market. Capital markets in the MENA region raised merely $843.9 million in 2011 as compared to $2.8 billion in 2010, a decline of 69.3 per cent. Saudi Arabia led the country standings in 2011, raising $460.5 million through IPOs last year, followed by the UAE with $271.3 million and Oman with $63.9 million. Morocco, Tunisia, Jordan and Syria were the only other MENA countries with IPO activity in 2011.

BankMuscat, Ahlibank and Bank Sohar are planning to float rights issues in 2012


Congratulations to

His Majesty Sultan Qaboos Bin Said and the people of Oman on the glorious occasion of the

42nd Renaissance Day

The building of modern state which we pledged to establish since WKHÀUVWPRPHQWRIWKHGDZQRIWKHEOHVVHGUHQDLVVDQFHUHTXLUHGXV WRH[HUWELJHIIRUWVLQWKHÀHOGRIHVWDEOLVKLQJWKHLQIUDVWUXFWXUHZKLFK LVWKHSLOODUDQGÀUVWFRUQHUVWRQHRIFRPSUHKHQVLYHGHYHORSPHQW.

-His Majesty Sultan Qaboos Bin Said

P.O. Box: 3028, P.C.:112, Ruwi, Sultanate of Oman, Tel.: (+968) 24813143, Fax: (+968) 24813241


capital market ATTRACTIVE PROSPECTS Further, valuations of the Muscat bourse also stay attractive when compared to regional markets. The Omani bourse, at its price earning (PE) ratio of 10.86 and price book value (PBV) of 1.55, trades at a discount to GCC average of 12.1 and 1.6, respectively, at the end of last year. However, the MSM general index plummeted 15.7 per cent to end trading in 2011 at 5,695.12 from 6,755.20 for the previous year. The sentiment on the bourse was largely influenced by regional and global developments, leading to lower participation by investor community. The Muscat bourse remained the fourth best performer in the GCC region, followed by Saudi, Qatar and Abu Dhabi.

Companies chose other fund-raising routes over IPOs in 2011, which was another year of low capital market activity. Low investor interest continued in the MENA region as companies chose Islamic funding such as Sukuk, which saw a record year, as the preferred route for fundraising. Meanwhile, the Muscat Securities Market (MSM) started its recovery since the beginning of the year with local investors staging a come back. Better financial results, better dividend payments and a boom in neighbouring GCC markets are aiding the recovery. Local investors, including pension funds, have extended their buying in the market. Foreign institutions have also enhanced their support on better investment opportunities. MSM general index, the barometer of the market sentiment, moved up by 174 points

50 PROGRESS‘12

or three per cent to 5,868.90 points by end-April, 2012, compared to 5,695.12 at the beginning of the year. Better dividend yield of the corporate sector is supporting the investor sentiment. The overall cash dividend outflow of listed companies on the Omani bourse for 2011 stood at about RO296.637 million. The total cash dividend outflow of MSM30 Index constituents alone was RO240.64 million. In fact, the Omani bourse offers the highest dividend yield among the GCC markets. The dividend yield of MSM was 4.74 per cent for 2011, way above the GCC average of 3.47 per cent last year. In fact, high dividend yield coupled with low valuations are attracting risk-averse investors to the local bourse, as reflected by the recent growth in trading volumes.

The market was in favour of declining shares, with 63 having witnessed a fall, 27 advanced, and 35 remained unchanged in 2011. Overall, 55 companies have outperformed the MSM Index returns, mainly led by small caps firms. The market capitalisation of MSM index declined by five per cent to RO10.34 billion in 2011 from RO10.9 billion in 2010. Also, MSM’s total turnover declined by 26 per cent to RO0.97 billion in 2011 from RO1.31 billion, the lowest in the past seven years. The average daily turnover for MSM plunged by 24 per cent to RO3.94 million in 2011 from RO5.2 million in 2010. Likewise, the trading volumes plunged by 22 per cent to 2.32 billion shares in 2011 from 2.99 billion shares, while the average daily volume was down by 23 per cent to 9.38 million shares in 2011 from 12.2 million. Though the year 2011 ended on a low, the spate of IPOs and rights issues in the pipeline is expected to give a big boost to the MSM in the months ahead.

The market capitalisation of the MSM index declined by five per cent to RO10.34 billion in 2011 from RO10.9 billion in 2010


education

A MARKET-ORIENTED EDUCATIONAL SYSTEM Enhancing the employability of young Omanis is a major imperative for the nation as higher education institutions race to address a mismatch in curricula and the needs of the labour market

T

he benefits of what has been a watershed year gone by for the higher education sector are now being reaped by Oman’s student population. Streamlined admission criteria, enhanced capacity intakes, new course offerings, and a windfall in local and overseas scholarships, have transformed the higher education landscape in the Sultanate. No longer is the refrain heard in student circles lamenting the paucity of seats in colleges and universities, the dearth of scholarships, and shortcomings in teaching standards and course curricula. Indeed, reforms initiated last year at the express directives of His Majesty the Sultan have ushered in a new era that seeks to replace the so-called ‘assembly line’ style of education, with a system that lays much store by hard work, creativity and excellence. Run-of-the-mill study programmes are being rapidly given short-shrift in favour of modern courses that extol the importance of science and technology, research and innovation, and entrepreneurship. An online admission system administered by the Ministry of Higher Education now makes it possible for students to register and compete fairly and transparently for government funded scholarships or seats at state-run higher learning colleges or institutes. Some 59,800 students are expected to compete for the estimated 32,400 seats and scholarships up for grabs during the upcoming academic year. To help mitigate demand for seats, private higher learning institutions are also expanding their intake to accommodate thousands of additional students this year. They hope to better last year’s pledge to boost their combined intake by 7,000 new seats. Also pitching in with efforts of their own to boost intake levels is the Higher Colleges of Technology. Recently, its board of trustees approved a proposal to add more seats at its prestigious network of institutions. The board decided to increase its overall intake to 14,500 students during the 2014-2015 academic year. The colleges, which are administered by the Ministry of Manpower, also agreed to launch two new study programmes – ‘Environmental Sciences’ and ‘Executive Coordination’.

52 PROGRESS‘12


As many as 59,800 students will compete for the estimated 32,400 seats and scholarships during this academic year


education education sector is the Higher Education Council chaired by the Minister of the Diwan of the Royal Court. The Council’s principal mandate is to make the sector more responsive to the higher learning needs of Omani students and to prepare them suitably for the labour market. An immediate task at hand is to raise the intake levels of various technical, vocational and other higher education institutions in the Sultanate to help absorb the great numbers of students passing out from the General Education System every year.

Thousands of internal and external scholarships - all paid for by the government – will also be keenly coveted by students this year. Recipients of external scholarships will be able to study in any of the following countries: UK, USA, Australia, New Zealand, the Netherlands, Germany and Gulf and Arab countries, besides Austria, Malaysia and Turkey. In addition, as many as 1,000 scholarships are on offer for PhD and master’s degrees.They will be disbursed over a period of five years at the rate of 200 scholarships annually with 150 for Masters and 50 for PhD students. PREMIER INSTITUTION Leading the way in providing internationalclass higher learning opportunities in the Sultanate is Sultan Qaboos University (SQU) – the pride of Oman’s educational

54 PROGRESS‘12

sector. SQU is making continuous efforts to enhance graduate and postgraduate studies both in terms of quality and quantity, so as to cope with the rapid changes in different development aspects in the Sultanate, and to prepare highly qualified people. At present, SQU offers master’s and doctoral programmes in diverse disciplines for students coming from different walks of life in order to promote human resources within the overall development plan in the Sultanate. It has witnessed great progress in this field and will work strenuously to cater for the local market’s requirements. The university offers 57 masters and 28 PhD programmes, and there are plans to open new programmes. Overseeing the reform of the higher

A technical team constituted by the Council is currently looking at various shortcomings that have plagued the higher education sector for the past several years. Besides reviewing the educational system itself and its different tiers, the panel is also deliberating on the content and objectives of various curricula, course offerings, teaching methodologies, present methods of training and qualifying teachers, the complimentary role of public and private institutions in higher learning, and the overall management of the sector. Further, in a move to enhance the quality of the general educational system and examination standards, His Majesty issued directives earlier this year for the establishment of a National Centre for Educational Assessment and Examinations. The centre’s mandate, which came into force with effect from the 2011-2012 academic year, is to assist the Ministry of Education to devise the requisite tools, indicators and benchmarks to assess the overall performance of students from Grade 1 to 12. The centre has also been allocated the necessary funding to support the professional development of teachers and support staff through refresher and training prograammes.

As many as 1,000 scholarships are on offer for PhD and Master’s degrees


Congratulations to

His Majesty Sultan Qaboos bin Said and the people of Oman on the glorious occasion of the 42nd Renaissance Day

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VIEWPOINT - HEALTH

UNMATCHED INFRASTRUCTURE Oman can pride itself for taking the top position in the rate of progress in human development from amongst a host of countries

HE Dr Ahmed bin Mohammed bin Obaid Al Saidi Minister of Health

Partners in Progress

Energising Oman

56 PROGRESS‘12

On the glorious occasion of Oman’s Renaissance Day, I would like first to extend my most humble greetings to His Majesty Sultan Qaboos bin Said and my best wishes to all the people of Oman. Over the last 42 years, Oman has been rediscovering itself. Emerging from extremely low levels on almost all human development indicators, enormous human accomplishments have been attained in such a short passage of time across all ages of the nation. This is despite the relatively high cost of development in a country where the population is scattered over expansive geographical area of vast terrain and physical challenges. Oman can pride itself for taking the top position in the rate of progress in human development from amongst 135 countries worldwide. According to the Human Development Report, titled “The Real Wealth of Nations: Pathways to Human Development” published in 2010 by the United Nations which examined gains over 40 years in health, education and income, as measured by the Human Development Index, for the 135 countries, Oman has made significant and appreciable development. The report looked into the progress the Sultanate achieved compared to its situation in 1970. Human development was measured by progress in achieving three particular capabilities: allowing citizens to live a long,

healthy life, be educated and knowledgeable and to enjoy a decent standard of living. In fact this progress was not attributable to oil and gas earnings alone but to impressive long-term improvements in health and education. In acknowledging Oman’s achievements, the UN report described the Sultanate as a success story and thus a model for other nations to emulate. Concurrently, Oman is on track to meeting the Millennium Development Goals (MDGs) by 2015. On MDG 4: Reduction of Child Mortality, Oman is on track to fulfilling its commitment as under-five mortality rate has dropped from 35 per 1000 live births in 1990 to 12.3 in 2010. Also, infant mortality rate has dropped from 29 to 10.2 deaths for every 1,000 live births. A rising lifespan is also a telling indicator of how far Oman has come over the past 42 years. The average life expectancy at birth in the Sultanate stands now at 73.3 years. The current health system in Oman is modern and well-funded, and has proven itself as useful tool at reducing significantly or eliminating health problems that were common in the past. Entrusted by the Government of Oman, the Ministry of Health took the responsibility of stewardship and coordination of the health sector, apart from being the principal health care provider.

Initially, the Ministry of Health concentrated on establishing a state-of-the-art healthcare infrastructure. Recently, the primary healthcare institutions have been upgraded and expanded in all the governorates, and extended health centres have been established in some Wilayats to compliment primary healthcare. At least, four indices for population coverage with basic health services are among the highest in the world. These include over 99 per cent coverage rate for major vaccines, 99.2 per cent antenatal care coverage ( at least one visit during pregnancy), 98.6 per cent of all deliveries taking place in hospitals, and 98 per cent of the population now having access to primary healthcare services. The Sultanate has been free from polio since 1933 and diphtheria since 1991. Besides the Primary Health care, the Ministry of Health realised the importance of strengthening the other spectrum of health care, namely curative secondary and tertiary care in response to the needs of the population that has moved towards the care of noncommunicable diseases, which usually require higher levels of medical care and intervention. Within the framework of developing our human resources, the Ministry of Health laid emphasis on the importance of training at its different departments, to upgrade the skills and capacities of its national employees.


health

SOUND VITAL SIGNS Recognition of the high standards of Oman’s healthcare delivery systems has come from no less a body than the United Nations

T

he recent conferment of a prestigious international award on the Ministry of Health offers a measure of the superior standards governing the delivery of public healthcare services in the Sultanate. With UN Secretary-General Ban Ki Moon in attendance, the United Nations Public Service Award (UNPSA) was presented to high officials from the Sultanate at a ceremony held in Geneva and attended by world figures. Oman was cited for its groundbreaking ‘Reducing Childhood Mortality Rate’ initiative that enhances the quality of mother and child health care. It was a proud moment for Oman and a resounding endorsement of the Health Ministry’s efforts to provide international-class healthcare services in the Sultanate. Indeed, the Sultanate has come a long way over the past 40 years of its modern development, exemplified by the dramatic strides it has made in the healthcare sector. Oman has been successful in reducing both the maternal mortality rate in childbirth from 22 (per 100,000 live births) in 1995 to 13.4 in 2009, and the Infant Mortality Rate of 20 (per 1,000 live births) in 1995 to 9.6 in 2009. This has been attributed to comprehensive healthcare services for mother and child. These extraordinary achievements are a reflection of the overall economic and social development of the country, and more so, the result of the ministry’s successes in combating a host of deadly infectious diseases. The crude death rate is currently at a low of 3.0 per 1000 population, while life expectancy at birth is at a high of 70 years for men and 75.7 years for women, up from an average of 49 years in 1970. A robust Expanded Programme of Immunisation (EPI) initiated in 1981 was the initial spearhead with which the Ministry confronted a host of deadly communicable diseases. This effort was augmented by the establishment of a Disease Surveillance and Control System in 1987, followed by the Malaria Eradication Programme in 1991. On its heels came a raft of other health pogrammes targeted at scourges such as tuberculosis, and diarrheal and acute respiratory infections in children. These initiatives have paid off handsomely over the year and, as a result, malaria cases declined from a high over 30,000 cases in the early 1990s to 898 cases in 2009. Not a single case of poliomyelitis or diphtheria has been recorded since 1993 and 1992 respectively. Only one solitary case of neonatal tetanus was recorded since 1991, while sexually transmitted infections (STIs) were dramatically reduced as well. The Incidence of AIDS/HIV does not exceed 5.8 per 100,000 of the population, while deaths from opportunistic diseases are at a mere 2 per cent. Having successfully rolled back a number of lethal communicable afflictions, the Health Ministry’s focus has since shifted to non-communicable and lifestyle diseases that currently account for roughly 75 per cent of all deaths reported at hospitals. Alarmingly, 40 per cent of hospital in-patients and 55 per cent of outpatients suffer from chronic diseases. Priority concerns are diabetes, kidney disease, genetic conditions, and of course, the most disconcerting of all – trauma cases linked to traffic accidents.

58 PROGRESS‘12


And with non-communicable diseases placing an increasingly unsustainable burden on public healthcare resources, the government has been adopting a number of far-reaching measures in response, notably, by drafting a national strategy that will seek to address the underlying causes and factors. This strategy will be a key component of a new National Health Policy that will serve as a blueprint for the development of a highquality healthcare sector in the Sultanate through to 2050. As a first step in the formulation of this long-term vision, the Ministry recently hosted an international conference that looked at the national health systems of a number of countries. Eminent personalities

from the world of health planning and management took part in the three-day event. The delegates included key figures from John Hopkins University, Royal College of Physicians and Surgeons of Canada, Imperial College (London), School of Public Health – Columbia University, University of Wales, Cardiff University, and Cairo University, as well as various UN agencies and specialised bodies. Part of the objective behind the hosting of this high-profile forum was to learn from the successes of modern countries in the way how they ran their health systems, particularly with regard to their handling of emerging infections and the explosion of lifestyle-related diseases. Yet another

goal for healthcare policymakers was to understand the challenges of meeting the escalating demand for resources in the face of the ever-growing healthcare needs of the country. But reflecting the government’s unwavering commitment to healthcare is an 88 per cent increase in allocations to this sector during the current 8th Five Year Plan (2011-2015). Envisaged for implementation during the 8th Plan are a slew of major healthcare projects valued in excess of RO 275 million. Key among these is a proposal for the construction of a prestigious referral hospital in Muscat Governorate at a cost of RO 140 million. A further RO 103.5 million has been earmarked for the establishment of hospitals in Salalah, Suwaiq, Mahout, Sinaw, Dhalkout, and Al Mazyounah. Health centres and polyclinics are also planned in a number of wilayats and towns around the Sultanate. The new Muscat General Hospital will help ease pressure on the capital city’s muchburdened public healthcare infrastructure. To be established at Airport Heights, not far from Muscat International Airport, its catchment will be the geographical area of the capital region, home to roughly a fifth of the country’s population. The city already hosts three of the country’s biggest tertiary care hospitals – Al Nahda, Khoula, and Royal – as well as the medical services arm of Sultan Qaboos University, the nation’s premier higher learning institution. But capacity at these hospitals has lagged demand, with the result that care-seekers often have to cope with lengthy lines and wait several weeks for appointments with specialists for non-emergency related surgeries and treatments. The new Muscat General Hospital will thus be positioned largely as a secondary healthcare services institution which will alleviate pressure on the tertiary hospitals.

40 per cent of hospital in-patients and 55 per cent of outpatients suffer from chronic diseases


manufacturing

INDUSTRIAL DYNAMOS With a contribution of 10.1 per cent to the Gross Domestic Product, the industrial sector is rapidly consolidating itself as a powerful engine of economic growth and employment generation in the Sultanate

A

fter sputtering along for nearly a quarter of a century, Oman’s manufacturing and industrial sector is now growing at a healthy clip. New industrial parks are mushrooming across the country, attracting small and medium-scale investments, while free zones are eyeing the bigger players along with their ancillary investments. Impetus for this sea change has come in the form of a dramatic overhaul of policies, coupled with the introduction of a one-stopshop that has made investment procedures a cinch for investors. Not surprisingly, existing industrial parks are undergoing a continuous expansion to cater for strong demand growth, while new zones are being carved out in regions of the country that lack any manufacturing capacity. This effort is being led by the Public Establishment for Industrial Estates (PEIE), which currently oversees a growing network of industrial parks, as well as the recently established Al Mazyounah Free Trade Zone on the Oman-Yemen border. These industrial zones are presently home to around 1,200 factories, involving a combined investment of around RO3.7 billion. They employ an estimated 32,000 people, of which 41 per cent are Omani men and 13 per cent Omani women. Earlier this year, the PEIE celebrated the 25th anniversary of the establishment of the first industrial park – at Rusayl – in Muscat Governorate. That landmark project eventually paved the way for the setting up of parks in Raysut, Sohar, Nizwa, Sur and Buraimi, covering a leasable area of more than 71 million square metres. Three more industrial estates are currently under study and development at Samayil, Ibri and Musandam, offering around 16 million square metres of additional leasable land for industrial investment. During the current fiscal year, PEIE is investing in the order of RO55 million in developing and modernising the infrastructure of its network of industrial zones. The goal, says Hilal bin Hamad Al Hasani, CEO, is to raise overall standards to the expectations of investors. The lion’s share is earmarked for the development of the infrastructure of a new industrial park at Samayil, just outside the capital region. With an allocation of RO30 million, Samayil is expected to benefit from spillover demand from the Rusayl Industrial Estate, which is currently bursting at its seams and unable to accommodate any new requests for leasable land. Facilities at Raysut and Nizwa industrial estates are also proposed to be suitably upgraded. Oman’s exclusive technology park, Knowledge Oasis Muscat (KOM), will also benefit from

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Industrial zones are presently home to around 1,200 factories, involving a combined investment of around RO 3.7 billion


manufacturing an RO5 million infusion of funds from PEIE. Infrastructure services at this technology hub will be significantly enhanced, while a new ‘ring road’ will be built all around the sprawling facility at Rusayl. Significantly, the new outlays will lay the groundwork for an ambitious strategy by PEIE to nearly double the size of investments in its network of industrial parks by the end of the current 8th Five Year Development Plan (2011 – 2015). Over this timeframe, PEIE is confident of pulling in RO2.93 billion worth of new Arab and foreign industrial investments, taking the total to RO6.13 billion. PEIE’s growth strategy envisages a roughly 300 per cent increase in the number of new manufacturing and industrial units,

boosting the overall number to 2,950 by the end of the 8th Plan. These new units are expected to create around 65,000 new jobs, a third of which will be initially earmarked for Omani nationals. With these new openings, the total size of the workforce within PEIEadministered parks is projected to balloon to 87,000 workers. Importantly, these inflows are expected to contribute to a quantum leap in the sector’s share of the GDP, which climbed from 7.7 per cent in 2001 to 9.9 per cent by the end of 2010. Early last year, it crossed the 10 per cent mark and was pegged at 10.1 per cent, with a contribution of RO 2.484 billion in manufactured goods.

CATALYSING INVESTMENT A dominant share of the GDP contribution comes not from industrial parks, which primarily accommodate small and medium scale manufacturing units, but from the heavy industrial zone at Sohar Port, and the free zone developments at both Sohar and Salalah. The latter category, which are set up in the close proximity of major ports, are designed to cater to big-ticket basic industries that in turn spawn downstream ventures and ancillaries. Sohar Port, with its large heavy industrial zone, serves as the Sultanate’s main industrial dynamo. More than two-thirds of the estimated $14 billion in investments ploughed into the port development so far have gone into the construction of mega petrochemical and metals projects. The latest of these giant schemes to come into operation was the $1.4 billion Vale Industrial Complex comprising of two pelletising units, each with a nominal production capacity of 4.5 million metric tonnes of direct-reduction pellets per year, and a distribution centre with a throughput capacity of 40 million metric tonnes per year. The company’s first production line commenced operations in April 2011, successfully supplying pellets to key steel producers in the region. Also supporting the growth of a steel industry based at Sohar is Jindal Shadeed Iron & Steel, which brought its $500 million direct reduction iron (DRI) facility into operation in 2010. Jindal Shadeed, a subsidiary of Jindal Steel – one of India’s largest steel producers – also has plans to invest $1 billion to ramp up output from the present 1.5 mtpa of DRI to 5 mtpa of steel by 2015-16. The company has also commenced construction work on a new Steel Melt Shop

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PEIE is investing RO55 million in modernising the infrastructure of its network of industrial zones


manufacturing of a major marketing push. Leveraging its proximity to the strategically located port, which abuts key East-West shipping routes, the authority hopes to attract more than 2,500 new units to the free zone, creating an estimated 54,000 jobs in the process. Salalah overlooks important East-West trade routes that channel an estimated $1.2 trillion worth of goods from East to West, and $740 billion worth of merchandise from West to East. These volumes represent significant potential for investors looking to leverage Salalah Free Zone’s advantageous geographical location for processing, distribution, warehousing, assembly and related investments. Also auguring well for Salalah Free Zone’s investment appeal is the Free Trade Pact (FTA) inked by Oman and the United States. As a signatory, Omani businesses enjoy privileged access to a potential $2 trillion market. at an estimated cost of $500 million. In the second phase of a robust expansion drive, Jindal Shadeed aims to set up a 7-mtpa pelletising plant, as well as a major rolling mill at its Sohar site.

stages of development at the free zone, with more industrial, warehousing and logistics based projects on the anvil.

The industrial port has also attracted billions of dollars of investment in a major refinery, aromatics complex, polypropylene plant, methanol project, and fertiliser venture. These projects either operate downstream to the Sohar refinery of Oman Oil Refineries and Petrochemical Industries Company (ORPIC) or use natural gas as feedstock.

EMERGING HUBS Making quiet headway in its evolution into a major free zone development is Salalah Free Zone in the south of the country. Set up adjacent to Oman’s principal transshipment and logistics hub, the free zone is already home to two major petrochemicals projects – Salalah Methanol and OCTAL Petrochemicals – among a host of other assorted industrial ventures.

At the adjoining Freezone Sohar, investments are fuelling the establishment of a dedicated Metals and Minerals Cluster. At least four ferrochrome based smelters are in various

Under ambitious plans drawn up by the free zone authority, investments in Salalah Free Zone (SFZ) are projected to soar to $15 billion by the year 2025 on the back

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But the unquestioned industrial powerhouse is set to be the Duqm Special Economic Zone (SEZ) on Al Wusta coast. Anchored by a world-scale commercial port and dry dock complex, the SEZ will target investments in petrochemicals, building materials, minerals and inorganic chemicals, fishery and acquaculture, food manufacturing, clean technologies, life sciences and allied businesses. Already, a joint venture of Oman Oil Company of the Sultanate and IPIC of Abu Dhabi has announced plans to establish a massive 230,000-barrel per day export refinery at Duqm, with a petrochemicals complex to be added later. The $6-billion project is expected to pave the way for new investments estimated to reach $10 billion

PEIE envisages a roughly 300 per cent increase in a number of new manufacturing and industrial units


Congratulations to His Majesty Sultan Qaboos Bin Said and the people of Oman on the glorious occasion of the 42nd Renaissance Day

Partnering in the Development of A Strong Nation. Jindal Shadeed Iron & Steel L.L.C is the world’s number one plant with HOTLINK Technology and Oman’s Àrst Integrated Iron & Steel Industry. It has the capacity of 1.5 MTPA (Hot Briquetted Iron).

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Voltamp Energy has a franchisee agreement with Schneider, France

manufacturing

during the first 10 years of the SEZ’s life. These investments are projected to account for a roughly 5 – 8 per cent share of the country’s non-oil GDP by 2020. Sohar Industrial Estate is ideally located midway between Muscat and Dubai. This garden city – offers tenants easy access to domestic as well as international markets. The estate is home to 60 businesses, 35 units under construction and a further 55 are expected to come on stream in the near future. On the estate’s doorstep is Sohar Port, a large three-phase project which began late-1999. The Daewoo Corporation completed the construction of a breakwater and Hyundai Engineering and Construction, executed the dredging and reclamation at the port. Turkey’s STFA Construction is building an 66 PROGRESS‘12

850-metre long quay. In time, the Port will boast cargo and container berths and two liquid cargo berths, to be used for oil, as well as a 260-metre quay for the upcoming fertiliser plant. Moreover, there are plans to erect a fourth for the aluminum smelter project. The harbour will have a depth of 17 metres, deep enough to accommodate fifth generation container vessels which are currently coming into service. Indeed, the Port has generated considerable international interest in Sohar Industrial Estate. Production on the estate includes: marble; paper recycling; foodstuffs; detergents; leather; furniture; toothpaste; beverages; ice cream; resins; glass, steel bars; and engine oil. LEADING LIGHTS Voltamp Energy is one of the leading

manufacturing companies in Sohar Industrial Estate. It manufactures low voltage switchgear panels and has a franchisee agreement with Schneider, France. The company began its operation in 1987 and went public in June 2008. A fully owned subsidiary of Voltamp Energy, Voltamp Transformers Oman (VTO) is engaged in the manufacture of a wide range of distribution, power and special transformers up to 15 MVA 33 kV class. It also designs and manufactures multitap transformers required for the oil and gas sector. It was established in 1991 in collaboration with Babcock Transformers, UK. Both VOES and VTO Companies are certified as ISO 9001:2008 and the manufacturing facilities are located in the Rusayl Industrial Estate, Oman.


Al Jazeera has diversified its product range by installing a new production unit Merchant Bar Mill

manufacturing

In addition to manufacturing activities, VTO also offers Engineering services relating to the erection, testing, commissioning of Transformers and associated equipment through its Engineering and Services Division (ESD). Voltamp, Oman is a well known manufacturer for its Quality Products & Services in the Region.

This new factory will cater to the local demand initially and then also to the wider GCC and MENA regions. The Power Transformers market is growing strongly and this project provides the Company with an opportunity to benefit from this growth while, at the same time, providing a diversification to its current product portfolio.

In continuation of its growth strategy, the company has recently commissioned their new World Class facility for manufacture of Large EHV Power Transformers at Sohar Industrial Estate. The product range of this unit extends up to 315 MVA 220 kV Class. This extension of the product portfolio will allow the company to further enhance its brand name in the local and regional power sector.

The location in Sohar Industrial Estate provides easy access to the industrial hub being developed around Sohar Port, Sohar Refinery and the Aluminium smelter. The Sohar Port will facilitate efficient import of raw materials and export of transformers. VPL’s proximity to the UAE and Saudi Arabia, will also enable to the company to easily access the large and growing Saudi Arabian transformer market.

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Al Jazeera Steel Products company is another company which has become one of the leading steel tube and structural products manufacturers in the Middle East. From its modern plant at Sohar Industrial Estate, Al Jazeera offers mild steel ERW tubular products in both black and galvanised class with plain end and threaded and coupled ends conforming to API, ASTM, BS, DIN, EN and other international standards. Al Jazeera has diversified its product range by installing and commissioning a new production unit Merchant Bar Mill capable of producing hot rolled products like angles, channels, squares, flats and rounds conforming to BS, EN, JIS, ASTM, DIN and other international standards. Al Jazeera boasts of installing some of


manufacturing the latest and most modern machineries in the plant to produce 300,000 MT/ annum of tubular products. Al Jazeera’s tube manufacturing facilities include four production lines supplied by M/s Abbey Etna Inc, Ohio USA, M/s TRM Thailand and M/s Prasert Machineries Thailand. There are three galvanising lines with main line supplied by M/s BERG, Germany. At Al Jazeera, production processes have been integrated with modern quality control like on-line Eddy Current Testing facility, Optical Emission Spectrometer, Universal Testing Machine, Hardness Tester and Inverted Metallurgical Microscope with CCD camera attachment etc. Composed of a multinational workforce and managed by competent technical and managerial professionals, Al Jazeera has been seized with a vision of becoming one of the leading

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tubing and structural product suppliers of the world. The company currently export its product to 25 countries including USA, Canada, Australia, Germany other European Union countries. Majan Glass Company was promoted in the year 1994 and established in the year 1997 with a sole objective of catering to the huge demand for glass containers within Oman, in the GCC region and globally. Located at Sohar Industrial Estate it is one of the most high-tech manufacturing companies in the Sultanate. Majan Glass has an installed capacity of producing 250 MT per day of glass and has two furnaces, five production lines and equipments designed to produce glass containers in 88ml – 1000ml range, in different sizes and in flint and coloured glass.

The plant is put up with a ‘State-of-the Art Technology’ with latest up to date modern equipments available in the Industry supplied by well known manufacturers like Emhart Glass SA – Switzerland, BDF Industries SpA – Italy, Ernst Pennekamp – Germany, Antonini SRL - Italy, Raute Precision Industrial Weighing – Finland, Emmti SpA – Italy, AGR International – USA and SGCC Glass Inspection Systems – France to name a few. The company caters to most of the glass container, jars requirements of the Sultanate and also exports its containers to countries in Middle East, Far East other than all over GCC region. The Company is an approved empty glass containers supplier to Pepsi Cola International and Coca Cola International worldwide. It has received a Certification for ISO 9001:2008 Quality Management Systems and ISO 22000:2005 Food Safety Management Systems.

Majan Glass has an installed capacity of producing 250 MT of glass per day


VIEWPOINT - TRANSPORT & COMMUNICATIONS

AN INTEGRATED EFFORT The Ministry of Transport and Communication is playing a vital role in economic development by upgrading the transport and communication infrastructure of the country

HE Dr Ahmed bin Mohammed bin Salim Al Futaisi Minister of Transport and Communications

Partners in Progress

Energising Oman

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Over the past years, the transport and communication sector has been one of the focus areas of His Majesty Sultan Qaboos bin Said, given its importance in developing and maintaining the transport infrastructure among governorates, establishing ports and airports, and overseeing communication and mail services. The extensive care given to this sector is reflected in the continuous achievements that Oman has witnessed. Currently, the Ministry of Transport and Communication (MoTC) is implementing several road projects to connect Omani governorates, and connect Oman with its neighbouring countries. This will help in providing better services for nationals and expatriates, and in facilitating their movements. Until the end of December 2011, the total length of the paved-road network implemented by MoTC reached 12.402 kilometres. MoTC has tendered several projects including, Batinah highway; a new road reaching approximately 265 kilometres, Bid bid doubling project, Sur road (phase 1 part 1) extending to 40 kilometers, and doubling of Nizwa road at al-Dhakhliya governorate. In the context of GCC transport integration, Oman participated in the economic feasibility study of establishing a modern railway network connecting all GCC countries. Financial and technical proposals for the prequalified companies have been received for the consultancy services tender for designing and overseeing the GCC railway project. Currently, technical and financial proposals

are being analysed for awarding the tender. The railway project in Oman will extend over 1.061 kilometers, connecting Omani borders (Al Buraimi) and UAE borders (Al Ain) to Sohar, Muscat, Duqm. It will also connect Oman with UAE at the border at Khatmat Milaha, which will in turn connect the port city of Sohar to Fujairah. The Sultanate pays a lot of attention to the transport sector by conducting studies, forming committees to discuss transportation issues, participating in conferences, joining regional and international bilateral agreements. Further, the land transport committee was formed and this was joined by several governmental entities. As for the ports sector, several studies and plans are underway to develop maritime, commercial and industrial ports and maritime docks, given that the ports sector is one of the economic growth pillars. Moreover, ports are considered the communication link between Oman and different countries. The government has prepared development programmes to improve Omani ports, including Port Sultan Qaboos, where it has developed an accommodation for tourists and travellers, finalised the first phase of transforming the port into a tourism-commercial port; and Salalah port which is one of the biggest ports for container handling. Currently, the government is implementing the liquid jetty, and paving the floating cargo berth project, which is important as it serves liquid industries at Salalah free zone and

the import-export trade through the general cargo berth at Salalah port. Moreover, such projects assists economically in enacting transformational industries, developing the services sector, creating job opportunities, attracting investments, and encouraging other economic sectors. Further, studies are underway to establish three berths, in coordination with other related entities. In addition, Sohar industrial port is one of the strategic projects. Construction of the bridge as well as the road leading from the port to the aluminum smelter and highways leading to the port is completed, in addition to the development of the Shinas port. Duqm port is one of the vital investment projects contributing to the diversity of income sources, and improving the national economy’s performance. The construction work of the dry dock for ship maintenance and repair is completed, and it is deemed the first of its kind in Oman where the project includes two dry docks of 140 metre each, thus facilitating commercial movements at the area. The pilot operation of the dry dock already started. Shana harbour is one of the development projects at Al Wusta governorate, and it was established to ferry tourists and citizens from and to Masirah Island. The MoTC has started establishing a maritime harbour at Khuriya Muriya Islands; in addition, MoTC is coordinating with related entities to tender the study of establishing a new port at Hasek and harbor at al-Shwimiah in Dhofar governorate; and developing Dibba and Lima ports.


infrastructure

OPTIMISM GALORE

After going through a tough period in the year 2011, Oman’s construction sector continues to gather pace backed by a fairly strong economic growth and smooth execution of large-scale projects

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ne of the drivers behind the expansion of the construction industry has been government spending, which registered noteworthy increase in recent years and now with the newly announced budget for 2012, there holds even more promise. The Sultanate’s economic diversification has also played a significant role behind the development of construction projects in the Sultanate.

According to the 2012 budget, the housing sector allocation has been increased from RO266 million in 2011 to RO323million in 2012 – a significant increase of 21.5 per cent in 2012 budget. This includes the government allocation of RO 120 million for the constructing of 2,500 housing units for people with limited income. Likewise, in the civil engineering fields, the expenditure increased significantly by 16.67 per cent on yearly basis to RO 1.4bn mainly to cover development projects in various sectors. While government spending on infrastructure is showing tremendous growth, cut-throat competition from foreign players puts pressure on revenues and margins. With a slowdown in construction activities in various parts of the Middle East, regional players have entered the more lucrative Oman market for getting a slice of the business. The influx of foreign giants was also aided by government’s strategy to encourage competition in an apparent move to optimise cost and bring in new practices. A direct result of this, as many operators in the business have affirmed, is cutting corners to get the job done. Not only in terms of building materials but also in some cases health and safety. As firms are tightening control over these issues, many are really pushing the envelope. Yet another setback has been the rise in the price of imported steel. Reports have indicated an increase of as much as 15 per cent and is expected to continue rising over the next six months, adding to the repertoire of challenges faced by construction firms. The growth in construction sector is mostly fuelled by government infrastructure development, which constitutes a major chunk of total business. The ongoing multi-billion rial-expansion of two major airports–Muscat and Salalah, development of four green field regional airports, a major sea port along with a planned city in Duqm and expansion of Salalah and Sohar ports, road projects in different parts of the country, a massive sewage network

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One of the key new projects in 2012 is the construction of Al Battinah expressway at a cost of RO1 billion


The envisaged investment in Duqm in the coming years will be as high as $20 billion

infrastructure

programme, development of industrial estates and free zones in several places are all aiding the growth of the industry. Each of airport projects involves at least three major packages – for levelling of land and basic civil work, runway and other traffic control facilities and terminal building. Barring few, almost all airport development contracts have already been awarded, which is helping even small contracting firms to get business through sub-contracts. Projects have been classified under many categories such as roads, airports and ports in different areas in the country in addition to build new schools and hospitals and developing the logistics ground of the industrial areas. One of the key new projects in 2012 is the construction of Al Battinah expressway at a cost of RO1 billion. Among the major projects, Duqm

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is going to witness massive investments in the coming years, for developing a wellplanned township with separate areas for industries, tourism and residential buildings. The envisaged investment will be as high as $20 billion. The initial projects are making progress, as the dry dock has already started operation and the port has reached an advanced stage of completion. Also, the government has recently appointed a highprofile official to speed to the development through Duqm Special Economic Zone. In this vein, some of the larger contractors have bagged some projects, for instance, Galfar Engineering and Contracting received an order from Muscat Municipality for “Design and Construction of Al Faroosiya Street Interchange” for a total sum of RO

12,290,412. The company also received an order from Directorate General of Projects & Maintenance at ROP for construction of “Border Post Complex at Al–Rub Al Khali “ in Al Dakhiliyah region for a total sum of RO 29,700,000. Carillion Alawi was recently selected to build the air traffic control tower for Muscat International Airport, as part of the plans to expand the airport. The contract has been estimated to be Rial Omani 57 million. (The other bidders for the project were Consolidated Contractors Company (CCC) with Turkey’s TAV). In terms of electricity and water, reports have indicated that as much as RO 390 million has been set aside for the development


Modular building systems

Congratulations to His Majesty Sultan Qaboos bin Said and the people of Oman on the occasion of the Renaissance Day anniversary

Pumps and Pump sets assembling

Al Ansari Group of Companies

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Since 1975 P.O. Box 1832, Ruwi 112, Sultanate of Oman Tel: (968) 24810033, Fax: (968) 24812522. Email: contactus@alansarioman.com, Website: www.alansarioman.com

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The vast majority of office stock in Muscat is Grade B or C with a limited availability of Grade A space

infrastructure

of this sector. The expansion will include construction of new power plants in Salalah, Duqm and that work is under way to complete the construction of four power plants in different governorates. It has been said that the first power plant in Salalah will be equipped to produce 450MW and the desalination plant will produce 15 million gallons of water. Commerical operations are expected to begin by the second quarter of 2012. The design and construction of water treatment plant in Wadi Daiqah to supply potable water to the wilayats in the Governorate of Muscat is also underway. A Swiss-German partnership (Terra Nex and

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Middle East Best Select) will be investing US$2 billion in solar plants and panel manufacturing in Oman. The solar arrays will be capable of generating 400 MW of electricity in Oman and is in line with Oman’s target to produce a tenth of its energy need from ‘green’ sources by 2020. HOUSING AND RETAIL In a recent report published by Cluttons, leading real estate experts, it was said that the demand in the residential housing market would remain strong. Over the past year, tenants have begun laying a lot of emphasis on quality and ‘value for

money’ and the report said that tenants will continue to look for well designed and built properties with features such as good quality fixtures and fittings, outdoor space, excellent maintenance and leisure facilities. It is apparent that tenants are increasingly willing to compromise on the size and even location of a property rather than on its quality. With regard to commercial property, the vast majority of office stock in Muscat is Grade B or C with a limited availability of Grade A space. This will change over the coming year as a number of large scale, Grade A office


Felicitations to His Majesty Sultan Qaboos Bin Said and the People of Oman on the Occasion of the 42nd Renaissance Day

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Developments under construction will deliver 100,000 m² of good-quality, retail mall space over the next 18 months

infrastructure

developments are due for completion in the near future. Four recently or soon to be completed developments alone will add approximately 158,000 m² of Grade A office space to the market, according to Cluttons. The report went on to say that the demand for office space in the capital area will remain relatively steady over the next 12 months. The majority of demand will remain, however, on smaller spaces of up to 500 m²: flexibility in office space design to cater for smaller space occupiers will be vital. High quality, professional property management will be vital in attracting and retaining tenants.

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Muscat has approximately 300,000 m² of retail space in purpose-built retail centres. This figure does not include a large number of ground floor retail units and showrooms in mixed-use buildings as predominant in areas such as Ruwi, Ghubrah North and Al Khuwair. Over the next 18 months, developments under construction will deliver an additional 100,000 m² of good-quality, retail mall space. Cluttons predicted a continued demand for smaller retail space, in particular from the food and beverage sector - where potential retail tenants are searching for space within successful shopping destinations - attracted by proven footfall and/or in prominent

locations with ample car parking provision. Cluttons predicts continued growth of the industrial and logistics sector, with the on-going development of shipping ports, free-trade and industrial zones in Salalah and Sohar. With greater certainty on the development of the new industrial city at Duqm, increased clarity from the government as to plans for the development of the industrial and logistics sectors, and continued investment in transport and power infrastructure will help to drive forward the development of the industrial and logistics sector.


Oman Cement produced 543,544MT of cement during the first quarter of 2012

infrastructure

CEMENT: ON THE PATH OF RECOVERY There is a significant increase in the country’s cement consumption recently on the back of government’s continuing focus on construction and infrastructure sector. The major two cement manufactures are scaling up their production capacity to meet the ever-rising demand both from the local and export markets such as Yemen and East African nations. The total cement demand in Oman is expected to increase by 7 per cent YoY and to touch 6 million tonnes in 2012. The total

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ongoing projects in the country is estimated to be RO33.5 billion, which demonstrates the prevailing stronger cement demand in the local market. A recent research report of Gulf Baader Capital Market (GBCM) predicts a stronger volume growth of around 15 per cent YoY for the local cement players during 2012. As demand for cement is expected to rise and the local Omani players are all set to tap the forthcoming opportunity. The cement manufacturers have ramped up their capacity to meet the domestic needs and are gearing up for the next cycle of growth.

Oman Cement produced 543,544MT of cement during the first quarter of 2012 which is 10.7 per cent higher compared to the same period last year. It has reported a 24 per cent rise in net profit for the quarter ended March 31, 2012. Net profit increased to RO5.14 million from RO4.15mn in the same quarter of last year, according to the company’s filing with Muscat Securities Market (MSM). Sales volume grew 13.8 per cent to 558,495 million tonnes (MT) in the first quarter, while the sales revenue grew 8.6 per cent to RO13.96 million. Oman Cement’s positive quarterly numbers follow up on a


Warmest Greetings to His Majesty Sultan Qaboos Bin Said and the people of the Sultanate of Oman on the joyous occasion of the 42nd Renaissance Day

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The total revenue of Raysut Cement group surged by 21.8 per cent to RO24.640 million in the first quarter

infrastructure

poor full-year 2011, when the company’s net profit fell 49 per cent to RO12.8 million on year. The company plans to increase its cementgrinding capacity in the near future for which the company has appointed a consultant. It has entered into a contract to refurbish its existing kiln-1, thanks to which the utilisation level in the kiln-3 is expected to progress during 2012. With the improving sales, the domestic market share of the company is expected to improve to 35.7 per cent (on a base case assumption of normal growth in market share), about 37.5 per cent (regain of better market share from UAE competitors)

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and 40 per cent (strong demand growth along with reduced dumping). Due to close proximity to construction developments in this region, Oman Cement incurs lower transportation costs. The close proximity to Yemen, its major exporting market, is also an additional advantage. The total revenue of Raysut Cement group surged by 21.8 per cent to RO24.640 million in the first quarter. The contribution from its subsidiary to the group went up to RO 7.960 million in 2012 from RO5.3 million in 2011. Raysut Cement has approved moves for a

fresh term loan of RO 64 million from three Omani banks- BankDhofar, BankMuscat and Oman Arab Bank to refinance the existing loan of a higher instalment and interest burden totalling about RO19 million a year, for a tenure of five-year. Both Oman Cement and Raysut Cement has signed numerous long term contracts with the contractors working on the major government projects such as Duqm Hub, Seaport, Airports, Sohar Industrial Zone etc. Pioneer Cement, Raysut’s UAE subsidiary, currently focuses on northern Oman, apart from the UAE market.


power

A QUANTUM LEAP Several independent power and water projects are in various stages of planning and implementation to meet the growing demand

O

man government has undertaken a comprehensive programme for two important utility sectors - power and water - to meet the soaring demand in line with population growth and reduce network losses by improving efficiency. The demand for electricity in the main interconnected system (MIS), which serves 500,000 consumers, is expected to grow by nine per cent for the next seven years to touch 6,317 megawatts (mw) by 2017. Similarly, demand for power in Salalah region will soar to 690mw from 348mw. Water demand is also expected to increase by eight per cent per annum for the seven-year period, mostly driven by factors like increasing population, economic development and the build out of water supply networks. MEGA PROJECTS There has been a well thought-out plan on attracting investment and new technology from multinational firms for building power projects in different regions, to meet the ever-growing demand from both industrial and residential consumers. As a result, several independent power/power and water projects are under various stages of planning and implementation, which include the 750mw-capacity Barka 3, 750mw-Sohar 2, 2000mw-Sur project and other IWPPs/IPPs proposed in Duqm, Salalah and Suwaiq. The Barka 3 and Sohar 2 – the two green field gas-fired IPPs that are to be commissioned in two different phases - are expected to add around 1,000mw of capacity soon and a further 500mw in 2013, taking the total capacity to 1,500mw of power. The total investment for the both the projects is estimated at $1700 million. Once operational, both the plants, being built by a consortium of Siemens of Germany and GS E&S of South Korea, will help meet the growing demand for electricity in the Sultanate. Yet another mega project is taking shape in Sur with an overall generation capacity of 2,000mw. A consortium led by Japanese conglomerate Marubeni Corporation is developing the project – which is considered as the biggest in Oman. Investments in the power-only scheme are estimated at $1.7 billion. Marubeni, as a lead developer, holds a 50 per cent equity stake in the consortium comprising also Chubu Electric of Japan, Qatar Electricity and Water Company, and Multitech of Oman. Part of the total generation capacity, which is around 400mw, will be brought into operation ahead of summer in 2013. And the IPP’s full capacity of 1,500-2,000mw is slated for full commissioning ahead of peak summer demand in 2014. The authorities are also contemplating to build another independent power project in Duqm. For developing this project, two options are under consideration – either to have an isolated power project to cater to the demand in Duqm with a low generation capacity of 100-200mw or build a large-size unit with a capacity of 500-1000mw, which can be interconnected to the MIS for evacuating excess power to meet the demand in other parts of the country. Plans are also afoot to build one each large scale independent water and power projects in Salalah and Suwaiq to meet the growing demand for power in these regions. The authorities are expected to float a tender for the proposed 200-400mw capacity-Salalah project soon, which will come up near Mirbat or

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power near the existing power project. The power generation capacity of the IWPP planned in Suwaiq is yet to be decided. However, it will have a desalination capacity of 191 cubic meters of water per day. LICENCE EXEMPTION To meet the temporary peak demand during summer months, the Authority for Electricity Regulation (AER) in May issued licence exemption orders to four companies to collectively generate 299mw of power on a temporary basis to support the main grid. These exemption orders were given to Bahwan Enterprises, Oasis Trading & Equipment Co, OFSAT, and Sakr Energy Solution (Oman Branch). This will be the last time temporary diesel generation will be required as the Barka 3 and Sohar 2 IPPs

are expected to start commercial operation within few months. As far as the efficiency is concerned, the energy losses in Oman have been drastically brought down to 13.7 per cent in 2011 from as high as 24.6 per cent in 2004. Now the plan is to further bring it down to as low as 10 per cent by 2014. Power distribution companies will be penalised if they fail to reduce system losses within a stipulated period. Also, consumers will be encouraged to use electricity more efficiently. All the three power distribution companies – Muscat Electricity Distribution Company, Majan Electricity Company and Mazoon Electricity Companies – have been able to reduce losses, thanks to restructuring. Another proposal is to allow

more distribution companies to reduce system losses and enhance customer service. The AER is also supporting Public Authority for Electricity and Water in developing a remarkable energy policy framework for the whole country aimed at reducing system losses. COST-REFLECTIVE TARIFF Yet another move to improve the viability of power companies is to introduce a costreflective power tariff for industrial and commercial customers. This will not be introduced for residential consumers. The new price mechanism will help consumers to reduce their power bill, by shifting power usage to off-peak hours of the day. The new price mechanism will allow government to allocate subsidies to segments of the society who need the most. Electricity tariffs in Oman have not changed for well over a decade. On the water front, the overall demand for potable and industrial water will increase to 278 million cubic metres in 2017 from around 163 million cubic metres in 2010-an average growth rate of around 8 per cent per annum. For purposes of assessing future resource requirements, water demands are analysed in five separate zones, reflecting the general configuration of the water supply infrastructure and the principal sources of supply - Ghubra zone, Barka zone, Sohar, Sur zone, and Al Duqm zone. Assessment of demand and supply of water in the five zones reveals the need for new plants in three zones, including Duqm and Sohar. The government is planning to invest RO2.9 billion for developing water transmission and network alone for the next 20 years under a long-term master plan. And the investment for building desalination plants will be made by private sector.

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The IWPP planned in Suwaiq will have a desalination capacity of 191 cubic metres of water per day


VIEWPOINT - SEZ IN DUQM

A QUANTUM LEAP FORWARD

The Special Economic Zone (SEZ) in al Duqm seeks to attract $6 billion investments, contribute 5 per cent of the Sultanate’s non-oil GDP and create about 20, 00 new jobs for Omanis

HE Yahya Al Jabri Chairman of Special Economic Zone Authority at Duqm

Partners in Progress

Energising Oman

The objective behind setting up the Special Economic Zone Authority at Duqm (SEZAD) is to manage, organise, monitor and develop the activities in the economic zone which stretches over 1776 kilometre. It is therefore a regulatory body that seeks to create conducive business environment that attracts local and foreign investors. It also seeks to simplify procedures, facilitate the movement of businessmen and increase the business activities which in turn will contribute to generating many job opportunities for Omanis. The zone is expected to generate about 15,000- 20,000 direct and indirect job opportunities inside the zone in addition to many indirect job opportunities outside the zone. It will also attract investment worth about $6 billion at least during the coming 10 years. The special economic zone in A’Duqm is also expected to contribute 5 per cent of the non-oil GDP, diversify non-oil exports, enhance the re-export business and improve the standard of living of the local communities. These activities will increase the population of the al Wusta governorate. Unlike other free zones, the special economic zone in A’ Duqm is unique in that it is not limited to industrial and logistic

activities. It also has the one-window system which allows investors to meet all needs under one roof. We have highquality infrastructure, simple procedures, quick decision making and, above all, the strategic location on the Sea of Oman. Moreover, the Education City will be instrumental in creating the national talent pool to meet the new job opportunities in the zone. We focus on creating investor-friendly environment, simplifying procedures, ensuring high-quality infrastructure and making lands available at affordable rates. We are trying to leverage from the abundant natural, mineral, fish, oil and gas resources in the region. We also seek to maximise the benefit from the strategic location, the commercial port and the dry dock. All these competitive edges will help us attract local and foreign investment and generate more job opportunities. Many job opportunities will be created for Omani at the different managerial, administrative and technical levels. The activities will also contribute to the urban growth which in turn will improve the standard of living of those living in al Wusta governorate and nearby areas. The activities will also create a lot of business

opportunities for the local communities to meet the needs of the zone. In addition, the authority has financial and administrative independence which provides it with more flexibility in carrying out the assignments delegated to it. Moreover, we have the single window system which ensures smooth transactions for all investors. We estimate that the investments will be around $6 billion on the short term. We have completed the lay out for the industrial area. We are about to complete the master plan for the residential and tourist areas. At the same time, work is under way to level the land, build roads and complete the required infrastructure system. The SEZ at Duqm has eight components: the industrial area; the fishing marina; the commercial port; the dry dock; the logistic centre; residential areas; the business centre, tourist and spa areas; and the education city. This will be the first of its kind in the Sultanate in terms of high integration among all these components. The authority, as stipulated by the Royal Decree establishing it, will streamline operations at all these components. (Excerpts from an exclusive interview to Alam al-Iktisaad Wal A’mal)


ports and shipping

GATEWAYS TO THE WORLD

Ongoing investments in port and maritime infrastructure, as well as a modern national shipping fleet, are helping drive economic development over the long term

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R

ecognising the importance of maritime hubs as drivers of economic growth, the Omani government continues to plough substantial sums of money into new port infrastructure, as well as the modernisation of existing gateways. Thus, from primarily one commercial port that served as a conduit for maritime trade for nearly three decades of Oman’s modern existence, the nation’s maritime infrastructure has since burgeoned over the past decade to include two additional seaports and the makings of a hub integrated with a major ship repair yard at Duqm. The Duqm Port and Dry Dock Complex has the hallmarks of a government-led strategy designed to fuel the country’s long-term development and economic prosperity. The government, represented by the Ministry of Transport and Communications, has so far invested around RO700 million in the construction of a massive deepwater harbour that will anchor an ambitious industrial and petrochemical hub on the Wusta coast. Phase 1 of the port’s development is now at an advanced stage of completion. The centrepiece is a 2.3-kilometre-long commercial quay whose substructure is now substantially complete. Also largely in place are nearly 9.6 kilometres of breakwater, and a roughly one kilometre length of quay wall for government vessels. A water depth of -19 metres in the approach channel and -18 metres at the commercial berths will allow for the safe reception and handling of ships of up to 150,000 DWT capacity. As an industrial port with a largely export-oriented vision, the commercial berths will be suitably developed to cater to three main cargo types – general cargo, containers, and dry bulk – each serving a key objective behind the Duqm SEZ’s broad


Congratulations!

to His Majesty Sultan Qaboos Bin Said

On the auspicious occasion of the 42nd Renaissance Day of the Sultanate of Oman, GAC congratulates His Majesty Sultan Qaboos bin Said and the people of Oman on the accomplishments of the last four decades and extends its wishes for the country’s continued success and prosperity.

Gulf Agency Company (Oman) L.L.C


ports and shipping vision. Around 80 hectares (ha) of newly reclaimed land have been earmarked for the construction of modern terminals catering to each of these cargo types. Envisioned is a Multipurpose Terminal with an indicative capacity of 0.8 million tons annually. The Container Terminal will boast a throughput capacity of 3.5 million TEUs, while the Dry Bulk Terminal will be large enough to handle 5 million tonnes per year. A further 900 hectares have been allocated behind the terminals as backup storage. In Phase 2, the total quay length is proposed to be nearly tripled to roughly 10 kilometres, while several liquid jetties will be constructed as well. Port of Duqm is currently focusing on launching ‘early

phase operations’ during which an initial number of cargo vessels will be brought alongside for discharge. Oman Drydock Company (ODC) has recently celebrated the successful one year of the soft operation of its worldclass ship repair yard in Duqm which heralded a new era in Oman’s maritime industry. Within a short span of time, ODC could build its unique brand in a highly competitive dry dock market by utilizing local and international marketing and media channels. Since it started operation in April 2011, the company had repaired more than 80 vessels of various types and sizes. And in 2012, it is looking to receive

more than 100 ships and tankers. For this it is cashing in on its human expertise and material resources and the unique operation and management of Daewoo Shipbuilding & Marine Engineering Co (DSME). LOGISTICS HUB New investments in the Port of Salalah also promise to further reinforce the gateway’s position as a logistics hub. Key among these investments is a RO 55 million contract to expand the port’s general cargo handling capacity. The project will meet the growing demands for increased economic activity in Dhofar Governorate and international investment projects in Salalah. The project will increase cargo handling capacities to 20 million tonnes per annum (mtpa) of dry bulk commodities and over 6 million tonnes of liquid products, in comparison to the port’s present cargo handling capacity of 6.5 mtpa during 2011. MARITIME HUB At Sohar, already the site of one of Oman’s biggest success stories as an industrial port, investments in a deepwater terminal and bulk minerals jetty have substantially enhanced the gateway’s appeal to commercial shipping. The 1,380-metre-long deepwater terminal is currently being operated by the Brazilian mining conglomerate Vale to receive raw materials and export the finished products from its $1.4 billion iron ore pelletising plant at Sohar. TOURISM PORT Port Sultan Qaboos, the Sultanate’s first commercial gateway in Muscat, will cease to be a cargo port under a government initiative to transform the harbour into a heritage and tourism port. All cargo operations are proposed to be shifted to Sohar as a result.

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Port of Duqm is currently focusing on launching ‘early phase operations’


We Salute The

True Visionary Warm felicitations from

, Oman’s leading brand, to

His Majesty Sultan Qaboos bin Said and the people of Oman on the occasion of the 42nd Renaissance Day.

The National Detergent Co. S.A.O.G. www.ndcoman.com


aviation

TAXIING TO NEW HEIGHTS Construction continues apace on Oman’s air transport infrastructure comprising a network of greenfield domestic airports anchored by two major gateways that will drive tourism and economic growth over the long term

T

he rapidly changing landscape at the sprawling site earmarked for the development of a world-class gateway at Seeb in Muscat Governorate, offers a sense of the breathtaking pace at which Oman’s modern air transport infrastructure is taking shape.

After initial hiccups, blamed on overlapping mandates and poor coordination, work on the country’s showpiece air logistics hub is now at full throttle and is on track for commercial operation in 2014. Periodic, high-profile site visits by the Minister of Transport and Communications, Dr Ahmed Al Futaisi, are helping make the point that any slippage in schedules and timelines will not be taken kindly. When complete by 2014, the new gateway will handle a throughput of 12 million passengers annually in the first phase. The terminal itself has been conceived as a splendid structure complete with shopping arcades, restaurants, cafes, elegant lounges, and an 80-bed airside hotel for transit passengers. Further expansions planned in three subsequent phases will ultimately boost the airport’s capacity to 48 million passengers per annum by 2050. In Salalah, contractors are making headway in the expansion and modernisation of the existing airport. The centerpiece is a new passenger terminal with a capacity to cater to one million passengers per annum. The project will impart robust impetus to socio-economic development in Dhofar Governorate. Tourist traffic and tourism investment in the region are expected to soar when the upgraded airport is operational by around 2014. GREENFIELD AIRPORTS The Ministry of Transport and Communications is also overseeing the development of domestic airports at Sohar, Duqm, Ras al Hadd and Adam. All four domestic airports are being built concurrently with the aim of bringing them into operation over the 2013-2014 timeframe. At Sohar, work is progressing on a green-field facility, which along with plans for a major expressway and rail network, will underpin the port city’s eventual transformation into a major industrial and economic hub on the Batinah coast. At the heart of the project is a passenger terminal building designed for a capacity of around 500,000 passengers per year, along with a dedicated terminal building to handle around 50,000 tonnes of air-freighted cargo per year. When operational by the end of 2013, the airport will also serve as an alternative Muscat International Airport in the event of any contingency, as well a well-located back-up for any other airport on same range neighbourhood. At Duqm, the government is investing in an international-class airport designed primarily to serve the region’s upcoming industrial hub. The facility will cater to around 500,000 passengers annually, as well as 50,000 tons of air cargo. In Sharqiya North, a new airport with a capacity of 500,000 passengers per year is under development at Ras al Hadd. Adam Airport, on the other hand, has already partially opened primarily for VVIP traffic. In the next phase of the airport’s development, a Commercial Passenger Terminal Building

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(PTB) designed to handle around 250, 000 passengers annually, will be added. Adam Airport was initially being used for daylight VVIP flights. The capability to service night VVIP flights will be commissioned during 2011. The passenger terminal building, which has a capacity to handle 250,000 passengers annually, was completed in 2012 when it will become a commercial airport. AIR-CARGO HUB Significantly, ample space has been allocated for air-cargo logistics at all of the airports presently under development. Both Muscat and Salalah will incorporate dedicated facilities for air cargo services aimed at developing the underpinnings of an air cargo hub in the country integrated with land and maritime-based logistics, and a future rail network. The expanded Muscat gateway will house a modern, state-of-theart air-cargo terminal with a capacity of

260,000 tonnes per year in Phase 1, that can be ramped up to 500,000 tonnes per year in Phase 2. Covering an area of 34,000 sqm, the new air-cargo terminal will come up on a spacious site located between the modernised airport’s two parallel runways. Unlike the existing facility, the new terminal will include 19,000 sq metres of temperature controlled space, and 2,200 sq metres of dedicated space for live animals. Airfreight volumes will be processed semiautomatically, in contrast to the manual process employed in the existing terminal. At Salalah International Airport, the government is investing in a 100,000 tonnes per year air-cargo terminal which, like Muscat, will be equipped to process airfreight semiautomatically. Similar terminals of a capacity of 50,000 tonnes per year are also under development at Sohar and Duqm.

RECORD TRAFFIC Like many aviation hubs around the world, airline and passenger traffic through Muscat and Salalah airports too has been growing by leaps and bounds. In fact, passenger throughput at Muscat and Salalah airports hit record highs last year, despite the global economic downturn and the political upheaval in the Arab world. According to statistics released by Oman Airports Management Company (OAMC), combined traffic at the two airports soared above 7 million passengers, registering a 12.7 per cent rise over the previous year’s tally of 6.2 million. For the first time, passenger traffic at Muscat International Airport crossed the 6 million mark in 2011. Around 6.4 million passengers were handled by the airport the year, up 12 per cent from the previous year’s figure of 5.7 passengers. The growth has been driven by a number of factors including fleet and route expansion by national carrier Oman Air, and the increase in capacity and frequency by the existing airlines. This in turn has been fuelled by the growth and development of the tourism industry within the country, as well as strong commercial, industry and economic activity. Muscat International Airport is currently served by 29 scheduled airlines and is directly connected to 57 destinations in 28 countries – a record for the country’s principal air transport gateway.Of the 6.4 million passengers handled by the airport in 2011, around 2.5 million were from the Indian Sub-continent. Travellers from the Gulf Cooperation Council (GCC) countries comprised a further 2.2 million. Other regions, such as the Middle East, Africa, Europe, Far East, and the Domestic market, also witnessed an increase in passenger numbers.

The government is investing in a 100,000 tonnes per year air-cargo terminal at Salalah Airport


VIEWPOINT-INFORMATION

A FACILITATING ROLE The Ministry of Information has been helping the local and international media by providing them with the wherewithal to report and project the right image of the Sultanate

HE Dr Abdulmunim bin Mansour bin Said Al Hasani Minister of Information

Partners in Progress

Energising Oman

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His Majesty Sultan Qaboos bin Said has appreciated the role of the media by stating, “We appreciate the media and the role it plays in shaping the nation’s life; we are aware that media agencies are the mirror reflecting events occurring across the state. Such a mirror should be clear and sincere”. Thus, following His Majesty’s footsteps, the Omani media over the last year, has witnessed a huge leap in covering special issues. The media derives its authority from the Omani Statute, and it is working towards providing competencies for the State and Shura Councils, in addition to judicial independence and developing the state administrative and financial control. Further, the media assists the judicial authority in performing its duties, which asserts the role, importance and position of different media in Oman’s comprehensive development. Today, the role of the Omani media is not limited to reporting news or events around the world, but it represents social values, views and thoughts. In doing so, the media relies on integrity and content accuracy. The Omani media contributes largely to the positive and effective participation of the Omani citizen on the economic and development levels. On the foreign level, Omani media has deep relationships with different countries, and it is internationally appreciated and recognised.

During 2011, different Omani media continued its distinguished local coverage of the 41st national day celebrations, 7th Shura Council elections, Oman Horse and Camel festival, His Majesty’s speech to the State Council, and the inauguration of the Royal Opera House, Muscat. Different media, as well, were interested in several issues and events that Oman witnessed over the past year. On the foreign level, the Omani media performed its usual role in transmitting the non-biased and actual facts of regional and international events and issues. In the field of the foreign media, the Ministry of Information performed its role in showcasing the true image of Oman by hosting several Arab and Foreign journalists to have a closer look at Omani development across different fields. These journalists conveyed what they saw and heard by their writings, photographs and other audio/video channels. In addition, the Ministry of Information exerted efforts to provide other newspapers, magazines and channels with media content. On the digital media side, given the rapid development of this field, the Omani media aimed at coping with these rapid changes by providing recent media and communication technologies. Given the Ministry of Information’s awareness about the importance of the internet, it has

adopted it in socialising its media mission, highlighting several Omani achievements, transmitting news and different reports, and providing researchers with accurate information. Moreover, the ministry has linked its website with other ministerial websites in order to facilitate information access. In the meantime, relentless efforts have been exerted by continuously providing updated information and data on Oman, through printing and distributing several books to internal and external press institutions. The most important of these books was the Oman annual book, which included comprehensive information on the nation’s achievements in different fields.


Congratulations to His Majesty Sultan Qaboos Bin Said and the people of Oman on the glorious occasion of the 42nd Renaissance Day


telecom

BATTLE LINES DRAWN Telcos Omantel and Nawras go head to head in an increasingly fierce battle for market share shaped not so much by pricing as by technology

N

othing exemplifies their rivalry more than their recent race to be the first to roll out 4G Long Term Evolution technology in the Sultanate. Touted as the mobile broadband technology of the future, 4G offers the promise of market dominance for the victor and a substantial chunk of telecom revenues.

In the end, it was Omantel that pipped Nawras to the post when the majority government-owned operator recently announced the commercial launch of stateof-the-art 4G services in a number of areas in the country. That landmark launch effectively heralded the start of a new era in mobile Internet broadband services in the Sultanate. Long Term Evolution 4G is capable of delivering speeds up to 100 Mbps, providing customers the opportunity to stream, download, upload data and play online games faster than ever before. Leading international telecom equipment and services giants Ericsson and Huawei are implementing TD-LTE or Time Division-Long Term Evolution – which corresponds to 4G mobile telecommunications technology – in the Sultanate on behalf of Omantel. When commercially available nationwide, it is widely expected to promote the rapid and widespread uptake of mobile broadband services, while enhancing penetration rates across the country. Already, Omantel’s 4G infrastructure has been built out to cover more than 50 sites across the Sultanate. At launch, the 4G LTE network will be available to tens of thousands of people in different areas. Among these areas are Sultan Qaboos University Campus, Mawalleh, Al Khoudh, Al Khuwair and Ruwi, in Muscat Governorate as well as Buraimi and Khasab. Not to be outdone, Nawras is also rising to the challenge by embracing cutting edge technologies. Recently, the telco signed a deal with Huawei to provide Nawras with a Radio Access Network (RAN), as well as to undertake a modernisation of the RAN so that it is optimally designed to accommodate anticipated developments including the launch of LTE. At the same time, Nawras has begun the task of turbocharging its network to give customers a more rewarding experience. Recent successful completions of the first stage involved a core network upgrade which immediately boosted capacity to enable Nawras to serve 30 per cent more customers with fast mobile broadband.

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Omantel’s 4G infrastructure has been built out to cover more than 50 sites across the Sultanate


telecom The turbocharging exercise will massively extend 3G+ coverage and see the introduction of 4G LTE providing a superfast broadband internet service, says Nawras. The company has already completed successful 4G trials. In addition to the huge increase in 3G coverage and the 4G LTE launch, new sites will be introduced in many areas and the WiMAX home broadband network extended even further. MILESTONE YEAR On the whole, it’s been a highly rewarding year for Omantel. The operator began the year with the launch of a new unified brand. Omantel’s main brands are also united under a common identity, while Oman Mobile is now represented as an Omantel Mobile word mark. On the financial front

as well, Omantel has performed creditably well. The operator achieved net profits of RO113 million during the year that ended on December 31, 2011. Revenues increased to RO452 million supported by the growth of retail operations and wholesale revenues. Operating expenses increased by 11.1 per cent to reach RO329.7 million compared to RO297.11 million in 2010. A six per cent rise in subscribers also took the total number of customers at Omantel to 3.530 million. The figure includes subscribers of its subsidiary company Worldcall Telecommunications Limited (WTL). Worldcall’s individual subscriber base grew by 7 per cent in the previous year. Omantel’s

telecom

infrastructure

has

burgeoned too over the course of 2011. Last year the operator completed the installation of approximately 1000 3.5G base stations in various parts of the Sultanate. Omantel Mobile – the company’s mobile business arm – continued to see remarkable growth of approximately 7 per cent with the number of customers reaching 2.28 million making Including Resellers, the Omantel Mobile network customers, increased by 13 per cent to a total 2.82 million at the end of December 2011. The company’s mobile network market share has increased to 58 per cent. Omani Qatari Telecommunications Company SAOG (Nawras), on the other hand, posted a 4.2 per cent increase in revenues for the year ended December 31, 2011. Full year earnings rose to RO196.9 million in 2011 from RO188.9 million for the comparative period. EBITDA achieved 4.3 per cent growth to RO26.8 million in Q4 2011 compared to RO25.7 million in the same period last year. Year-to-date EBITDA grew by 1.1 per cent at RO103.4 million. The total net profit achieved for the year 2011 was RO47.5 million compared to RO50.0 million in 2010. Net profit was affected by higher depreciation and amortisation charges relating to the build out of the fixed and mobile networks. The fixed service customer base grew by nearly 251 per cent to 27,175 in 2011 compared to 7,753 at the end of 2010. The mobile post-paid customer base developed by 2.6 per cent to 173,274 compared with 168,897 customers in 2010. The mobile prepaid customer base declined from 1,856,610 in 2010 to 1,759,787 in 2011. This was due primarily to regulatory changes in the rules for counting the customer base.

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Nawras has begun the task of turbocharging its network to give customers a more rewarding experience


ict

TOWARDS A KNOWLEDGE BASED SOCIETY Elements of the Sultanate’s e.Oman strategy have won international accolades that attest to the groundbreaking and innovative nature of the country’s quest to support the development of a knowledge-based society

F

or a country that set out far later than most on the digital superhighway, the Sultanate has a lot to show for itself, with some prestigious international awards to boot. It’s a success story that promises to pay rich dividends in the creation of an e-enabled society where an array of government and public sector services can be accessed online. Oman’s quest to create a digital society is the essence of the National e.Oman Strategy. It aims to transform the Sultanate into a secure knowledge-based society by implementing a set of initiatives that support the rollout of e-government services. Spearheading this drive is the Information Technology Authority (ITA), the country’s flagship agency tasked with overseeing the realisation of this vision. Significantly, the latest biannual eGovernment Survey of the United Nations applauds the Sultanate on the rapid progress it has made in the use of information communication technology (ICT). Oman is ranked 16th in the world on the UN eParticipation Index, which indicates how governments create an environment in which citizens can be more active and supportive of their governments. The 2012 edition of the survey also points to significant improvement in Oman’s standing on online citizen and business services indices, which are demonstrative of the success of the Omani government’s and the ITA’s policies. The ranking for eServices this year is at 35 compared to 55 in the 2010 Report. Similarly, Oman has improved its overall ranking on the UN eGovernment Development Index, moving from 82nd position to 64th out of 193 countries, advancing 18 positions from the 2010 Report. The Sultanate was listed out of a total of 25 member states that offer separate m-government sites. The

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eGovernment Report evaluates components related to online services, e-participation, telecommunications and infrastructure, and human capital. Comprising the online services index, four sections correspond to the four stages of e-government development: emerging, enhanced, transactional and connected. In the 2012 report, Oman has been evaluated at 57 per cent in stage four, labeled ‘connected’, which represents the most sophisticated level in online e-government initiatives. This attests to the increase in available citizen-centric services and the government’s willingness to give citizens a voice in policymaking. As measured by factors that focus on commitment to a whole-of-government approach, Oman is listed with several other countries among the top performers. Oman was also listed among countries with government websites providing a statement ‘follow us on Facebook or Twitter’. The United Nations eGovernment Survey 2012 highlights the speed with which governments across the world are adopting technology to enhance public sector efficiencies and streamline governance systems to improve service delivery and support sustainable development. Also highlighted by the UN survey is how governments are using technologies like computers, tablets and mobile phones to improve service delivery to citizens. Mobile applications for car parking in Muscat, and the Ministry of Education’s portal are all examples of this trend – examples which have won national and international acclaim in recent years. Among the ministries and government departments that have won international honours in this regard are Muscat Municipal


Warm greetings to His Majesty Sultan Qaboos Bin Said and the people of Oman on the occasion of the 42nd Renaissance Day

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ict (2003), Royal Oman Police (2009) Ministry of Health (2010), the ITA, Ministry of Education, Ministry of Civil Service and National Association for Cancer Awareness (2011), and more recently the Health Ministry. E-BUSINESS SERVICES Yet another much-lauded initiative is the OneStop-Shop of the Ministry of Commerce and Industry. The creation of this system arose from a conviction by the government of the importance of investment in all economic fields, by providing support to investors and businessmen, regardless of their nationalities, and eliminating all obstacles that limit the work of this sector. This one-stop-shop system includes the provision of e-business services to the business sector through modern technology, which has approximately more than 60 completely automated e-services in various ministerial sectors (i.e. trade, industry, minerals, and s on). Since its creation, the One-Stop-Shop system has witnessed an unprecedented influx of requests and transactions being submitted through the system. The number of applications and transactions is growing at an annual rate of about 15 per cent, with the tally for 2011 pegged at 223,091 submissions. Other ministries and government departments too have rolled out innovative e-government services, some of which won top billings at the GCC eGovernment Awards hosted by Kuwait last November. The Central Bank of Oman’s cheques scanning system won the best transactional e-service award in the business sector, while the educational portal of the Ministry of Education scooped the best e-portal award in the developmental sector. Winning the Best Governmentto-Government Project Award was the

The ITA has launched the National IT Training and Awareness Initiative, to train members of the society

Tender Board for its novel e-bidding system. Furthermore, both the Ministry of Civil Service’s human resources management and central recruitment system and the Ministry of Higher Education’s higher education admission system were honoured with two awards. Also keeping pace with the times has been Oman Post, the state postal authority, which recently introduced the landmark e-post initiative. Billed as the first-of-its-kind in the world, the initiative involves the convergence of both digital as well as printed mail into one unique digital address with each individual, both national and expatriate, receiving a distinctive identity free for life. Besides offering convenience and enabling hasslefree transactions, the new e-post identity will travel along with the person wherever he resides around the country.


real estate

POISED FOR RECOVERY Housing needs in Oman are projected to grow in leaps and bounds in the coming years

O

man’s housing sector is still in a nascent stage when compared to its GCC peers, despite government taking a series of initiatives to build affordable houses for its citizens. The housing sector needs not only more involvement from large developers, but also availability of ample mortgage finance from lending institutions.

With more than half of Oman’s 2.7 million people under the age of 20, housing needs in Oman are projected to grow in leaps and bounds in the coming years. The Ministry of Housing had completed 2,000 low-cost housing units worth RO40 million last year, while another 2,000 low-cost houses will be delivered in 2012, making it possible for those at the bottom of the pyramid to own a house. However, this is not enough for meeting the housing needs of the entire population, which include middle income people. Apart from lack of finance for affordable housing projects, slower approval processes create a challenge for the entire residential market in Oman. Further, limited supply of land for developers who build low cost houses poses another challenge. GOVERNMENT SPENDING In an effort to boost the affordable housing segment, the government allocates RO80 million every year through different housing assistance programmes. During the 15 month period (2011 and March 2012), 3,174 housing units with a total cost of RO60 million were offered through the Housing Assistance Programmes, besides providing interest-free affordable housing loans to 400 families with a total cost of RO7 million. The ministry of housing has been supporting and financing affordable programmes for low-income and social security families through social housing programmes. The Ministry of Housing provides adequate housing for families through the Housing Assistance Programme, the Housing Loan Programme and the Housing Units Project. The Housing Assistance Programme aims at building and restoring houses for families of social security and low-income, while the Housing Loan Programme provides soft, free interest loans

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From January 2011 to March 2012, 3,174 housing units with a total cost of RO60 million were offered through the Housing Assistance Programmes


real estate not exceeding RO20,000 for Omani families. The number of families that benefited from the Social Housing Programmes since its inception and until the end of March 2012, reached 29,600 families, with a total cost exceeding RO475 million. As much as RO360 million has been allocated for the Housing Assistance Programmes during the current five-year plan. The ministry aims at helping more than 18,000 families during the current five-year plan period, while soft loans will be offered to more than 2,500 families in the next three to five years. SHORTFALL OF HOUSING UNITS Despite all these initiatives, there is still a shortage for affordable houses in Oman, as

majority of projects developed by private real estate firms are integrated tourism complexes or luxury apartments aimed at upper middle class customers. A study in 2011 showed that Oman has an estimated shortfall of about 15,000 housing units. However, the extent of housing shortfall in Oman is the lowest among seven countries in the Middle East and North Africa (Mena) region. These countries have a combined shortfall of more than 3.5 million affordable dwellings, as the real estate industry has failed to provide sufficient housing units to meet the required demand, said Jones Lang LaSalle in a study report. Focusing on seven major markets, the report said that while governments across

the region are increasing their attention on the supply of new homes, demand is far outstripping supply as the region experiences population growth around twice the global average. With a young and fast growing population, the report estimates that there remains a combined shortage of more than 3.5 million affordable dwellings across the major markets within MENA region and that demand will continue to outstrip supply for at least the next five years. The extent of this shortfall varies from more than 1.5 million units in MENA’s most populous Egypt, to just 15,000 units in the Sultanate. HIGH-END LEISURE Several property developers, including major layers like Muriya, Muscat Hills, Alargan and the Wave, have massive development plans at different stages of completion in various locations spread across the country. Muriya, a joint venture between Egypt’s Orascom Development Holding and Oman government’s tourism investment arm Omran, is now developing two major integrated tourism complexes - Jebel Sifah and Salalah Beach. Muriya’s Jebel Sifah and Salalah Beach projects are part of integrated tourism complexes, which allow 100 per cent foreign ownership. Similarly, Alargan International Real Estate Company, the Kuwait-based Real Estate developer, has launched Qurm Hills project. The development, comprises 109 plots, including road networks, service facilities and landscaped park spaces including a variety of residential units in addition to retail, commercial and office space. In yet another development, Al Khonji Real Estate & Development is building their newest real estate project Rimal. The Wave Muscat and Muscat Hills, have announced massive expansion programmes, which are expected to enhance availability of luxury homes.

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A study in 2011 showed that Oman has an estimated shortfall of about 15,000 housing units


Warmest greetings to His Majesty Sultan Qaboos bin Said and the people of the Sultanate of Oman on the 42nd Renaissance Day

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VIEWPOINT-TOURISM

ALL ROUND DEVELOPMENT The MoT is working on providing proper legislative, legal, and regulatory environment for the private sector to perform its development role in future

HE Ahmed bin Nasser bin Hamed Al Mehrizi Minister of Tourism

Partners in Progress

Energising Oman

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Over the last six decades, the tourism sector has evolved significantly, providing more opportunities for social and economic development all over the world and in developing countries in particular. The tourism industry achieves significant returns for the national economy. The sector creates job opportunities for national labour, supports regional development and increases foreign and governmental revenues. In addition tourism is a vital factor for enriching knowledge with other cultures and traditions, and for introducing other nations to Oman’s rich heritage and traditions. The tourism sector in Oman has developed significantly, and it has been getting a lot of attention over the past few years. Since 1995, when the future vision for the Omani economy for the year 2020 was set, the government started focusing on the tourism sector. One of the main aspects of the vision is to make the tourism sector one amongst four other leading economic sectors, to achieve economic diversity and reduce the country’s dependence on the oil sector. Oman posszresources that has enabled it to have a highly developed tourism sector. The development achieved over the past few years is reflected in improved indicators that measure the sector’s progress. The quick review of such indicators shows, for

example, an increase in the value-added (GDP) for the tourism sector during the last five years (2005-2010), from RO295 million to RO600 million, i.e. an average of 15 per cent annual growth rate. And this was achieved regardless of the world financial crisis that negatively impacted global tourism growth rates during 2009-2010. Accordingly, tourism’s contribution to the GDP varied between 2.5 -2.7 per cent; the number of hotels and rooms increased from 161 hotels and eight thousand rooms to 226 hotels and eleven thousand rooms respectively, with an average growth rate of seven per cent for hotels and 6.6 per cent for hotel rooms. The number of hotel residents and tourism nights achieved average reasonable growth during the indicated period; reaching 2.8 per cent for residents and 2.3 per cent for nights. Moreover, the number of staff at hotels increased by 12.2 per cent from 5,562 in 2005 to 9,985 by the beginning of 2012; half of which was made up by Omanis. The year 2011 witnessed improvements on several indicators, including an increase in the value added by hotels and restaurants from RO174.4 million in 2010 to RO177 million in 2011, and with growth rate of 1.5 per cent. In 2011, the number of accommodation facilities and rooms increased by 9.3 per cent and 10.5 per cent respectively, while the growth rate of

hotel residents, nights, and hotel revenues decreased during the same year. The 8th five-year plan (2011-2015) objectives were set to drive growth and development in a way that allows all Omani governorates and citizens to leverage the vast array of opportunities provided by the tourism sector, thus, reaching the desired social and economic development that reflects Oman’s progress. The following are the most important objectives included in the 8th Five-Year plan: 1. Achieving regional balance across the tourism sector 2. Encouraging and developing internal tourism 3. Ensuring a proper tourism environment to attract private sector investments 4. Diversifying tourism products 5. Implementing national manpower development strategy at tourism institutions 6. Improving tourism service quality and competitiveness 7. Involving local communities in tourism development 8.Implementing an Omani tourism marketing plan


Our sincere felicitations to

His Majesty Sultan Qaboos bin Said and the citizens of Oman on the occasion of the 42nd Renaissance Day

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tourism

ROLLING OUT THE RED CARPET Oman’s endearing tourism branding catchphrase, ‘beauty has an address’, is the lynchpin of an energetic marketing drive by the Ministry of Tourism targeting international markets as far afield as France, Russia and Australia

T

he designation of Muscat as the Capital of Arab Tourism for 2012 could not have come at a better time for Oman’s hospitality industry. Political upheaval in the Middle East triggered by the Arab Spring had all but choked tourist traffic into Oman and the wider region. As hotel occupancy levels slumped and tour operators scaled down their operations, hoteliers too dithered over their investment plans. In the upshot, the industry languished during much of 2010 and 2011, exacerbated by the slow recovery of the global economy. Then came news of Muscat’s selection by Arab League Tourism Ministers as the Capital of Arab Tourism for the year 2012. Oman responded to the announcement with unbridled enthusiasm, and promptly unveiled a comprehensive plan to capitalise on the accolade. But coinciding with this declaration was the equally prestigious recognition of Oman as a must-see destination of 2012 – a tribute conferred by two celebrated journals. National Geographic ranked the Sultanate among ‘20 Top Tourist Destinations in the World’ – the only Arab country to figure in the elite list. ‘Lonely Planet,’ the popular travel guide publisher affiliated with the British Broadcasting Corporation (BBC), ranked Muscat the second best city in the world to visit in 2012. Second only to London, Muscat was placed ahead of the world’s most iconic cities including Orlando (USA), Cadiz (Spain), Hong Kong and Stockholm (Sweden). Galvanised by the trio of recognitions, the Tourism Ministry embarked on a programme of high-profile road shows, marketing campaigns, and value-added promotion offers designed to put the international spotlight on a unique and authentic Arabian destination endowed with natural beauty, rich heritage, and a warm and tolerant people. While the government introduced discounted tourism visas, major hotels and national carrier Oman Air pitched in with offers of a free night’s stay in the capital. The promotion was targeted at international transit passengers and the GCC short-break market. Also unveiled

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Tourism industry languished during much of 2010 and 2011, exacerbated by the slow recovery of the global economy


tourism were weekend packages targeted at Australian travellers eager to watch a World Cup qualifier game that was held between Oman and Australia in Muscat.

tourism to the Sultanate’s GDP from 2 per cent in 2011 to around 3.5 per cent in 2015, while also eyeing a 10 per cent growth for the sector in 2012.

Indeed, the recognitions were a turning point for the industry, with the Tourism Ministry flaunting these accolades at a number of high-profile international tourism fairs and trade shows held during the past six months. The list includes ITB Berlin 2012, Riyadh Travel Fair 2012, Arabian Travel Market and IMEX Frankfurt. Road shows and marketing campaigns were also staged in promising source markets, such as France, Germany, Russia, Australia and India.

SOARING OPTIMISM The marketing campaign, along with pledges by the government to support tourism development, has since bolstered confidence in the industry’s ability to fight off the effects of the global economic downturn. Investor interest has since returned to the market, as is evident from the sizable number of hotel properties currently under implementation.

These initiatives augur well for the Ministry’s efforts to increase the contribution of

According to statistics compiled by the Ministry of Tourism, the country’s resort and hotel portfolio continues to expand with

over 2,000 additional rooms scheduled for opening during the 2012 – 2013 timeframe. Of this total, 726 rooms will be added to Muscat, while niche properties are under development in Khasab in Musandam governorate, Jebel Akhdar in Dakhiliyah governorate, and Salalah in Dhofar governorate. Duqm – the new industrial and maritime hub on Al Wusta coast – will feature around 400 rooms. Much of this investment is attributable to state-owned Omran, which is mandated by the Omani government to deliver major projects and manage tourism assets and investments. This is in line with the government’s vision of positioning tourism as a major economic driver of the future and as a generator of employment. Omran’s estimated $10 billion portfolio of hotel and tourism related projects include some of the largest developments in Oman. Having delivered the second Asian Beach Games facilities in record time and with an impressive health and safety record, it is now focusing on the delivery of its numerous projects spanning the country. Omran is also a prominent asset manager and operator of tourism assets in Oman. Regional and international investors have chosen Omran as their partner in developing mega mixed used projects and masterplanned communities in addition to real estate developments and niche projects, with more than 20 joint ventures under various stages of development. The largest and most prestigious by far is the $1.8 billion Oman Convention and Exhibition Centre project which is set to catapult the Sultanate into the ranks of countries with world-class meetings, incentives,

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Over 2,000 additional hotel rooms are scheduled to open during 2012 – 2013


tourism However, not all of the developments are government-funded. Property group Muriya, which is a joint venture of Omran and Orascom Holding, opened its Sifawy Boutique Hotel at Jabal Sifah earlier this year. The group’s Juweira Boutique Hotel at Salalah Beach Resort (64 suites and 21 guest rooms) has also been soft-launched. The year 2013 will see more hotels open at the Jabal Sifah and Salalah Beach Resorts. Several new hotel openings are also scheduled at The Wave and the InterContinental Hotel site.

conferences and exhibitions (MICE) facilities. After its completion in 2015, the two- million sqm facility will include a 3,200seat auditorium, four hotels with a total of 1,000 rooms, a 192,000-sqm shopping mall, 200 serviced apartments, 85,000 sqm of grade-A office space, and 25,000 sqm of exhibition space.

with the Duqm Special Economic Zone Authority (DSEZA) to utilise a 17,700-sqm land to develop a hotel facility. Oman’s firstever prefabricated three-star hotel that has been developed by Omran will cater for the influx of economic activity in the area as a result of the construction of the Duqm Port and Dry Dock.

Architecturally advanced in design and capability, this world-class venue will be among the first to be built to meet the rigorous LEED certification by the US Green Building Council. A pair of convention halls will be equipped with superior specialised acoustics plus advanced lighting and rigging to serve as a multi-purpose space for plenary sessions, concerts, performances, and gala events for up to 10,000 people.

Investments by Omran in Duqm will include The Duqm Frontiers Town and Duqm Crowne Plaza Hotel. These hospitality assets along with Duqm City Hotel will add impetus for foreign and local investment while delivering long-term benefits to the local community and the national economy.

DELIVERING GROWTH Recently, Omran also signed an agreement

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Besides Duqm, there are eight properties in the Omran asset management portfolio including Golden Tulip Dibba, Al Jabal Al Akhdar Hotel, Golden Tulip Khasab and Ras Al Jinz Turtle Reserve.

Further, with a view to diversifying Oman’s tourism product, the Tourism Ministry is studying around 30 locations across the country for possible development into tourism attractions. They include the development of Majlis al Jinn and Suhoor Caves into show caves, the construction of an archaeological park and museum at the recently discovered Friday Mosque in Qalhat, and a geo-heritage attraction linked to a unique Stone Park near Duqm. Evidence that Oman’s tourism product is indeed world-class came at the recent World Travel Awards 2012, when the Sultanate scooped a total of 14 nominations in various categories. Among those entities nominated for the prestigious awards, billed as the Oscars of the travel industry, were the Ministry of Tourism, national carrier Oman Air, cruise ports, resorts and hotels. Applauding the industry on the record number of nominations, HE Maitha al Mahrouqi, Undersecretary of the Ministry of Tourism, said, “It is pleasing to see that the nominations encompass many elements of our industry…. The number and range of nominations is a barometer of industry recognition of Oman as a quality tourism destination.”

Investments by Omran in Duqm will include The Duqm Frontiers Town and Duqm Crowne Plaza Hotel


VIEWPOINT-HANDICRAFTS

CUSTODIAN OF CULTURE Public Authority for Craft Industries has been working tirelessly on preserving the rich crafts heritage of the Sultanate

HE Aisha Al Siyabiyah Chairperson Public Authority for Craft Industries

Partners in Progress

Energising Oman

There have been landmark achievements during the Renaissance, under His Majesty Sultan Qaboos bin Said‘s leadership, in all fields. All these success stories can be attributed to Omani Renaissance for which Omani citizens were instrumental in a big way, as they were the makers and drivers of the development in the country. Omani leadership, since the beginning of the Renaissance, has adopted a far-sighted approach to promote the cultural identity, which has resulted nowadays in improving the craft sector, and maintaining craft industries as a cultural legacy. The Sultanate has accorded more importance to crafts industries, due to their cultural, social, and economic significance for preserving the national identity. The crafts represent the interaction with cultures connected to the Sultanate across ages, as Omani craftsmen have contributed effectively to several traditional professions given their willingness to work hard and their ability to be creative. With a view to ensure the sustainability of handicrafts and to maintain their national features, Royal Decree No. 23/2003 establishing Public Authority for Craft Industries (PACI) was issued, in addition to PACI articles of association, and PACI approved organisation structure as per the Royal Decree No. 53/2003. Since it was established, PACI has managed to achieve several craft related milestones based on a clear vision and strategy.

To achieve more effectiveness and development, PACI opened several training and crafts production centres across Oman. These centers are equipped with state-of-the art machines and equipment, to provide high-level training and craft products. The crafts sector is witnessing the implementation of huge projects that are supposed to develop the crafts business, and develop crafts to combine ancient and modern cultures, with an eye on having a good share of the economy. Furthermore, the effort is to train and qualify Omani craftsmen according to a moderncustomised approach to fit the Omani crafts essence. PACI works parallely to keep pace with the recent changes in the crafts sector, to have a developed and renewed crafts environment. That will be done by highly qualified and trained Omani craftsmen, who are expected to reach high standards in different craft development fields. PACI has developed craft industries through qualifying and training the craft sector workforce, where it cared first and foremost for the human element. That was based on the notion that improving the crafts sector will not be achieved unless the craft work is improved. While PACI was improving cooperation and partnership programmes with international and regional institutions, it also took several measures to develop the Omani crafts sector. Hence, recently it has signed several technical cooperation MoUs with various

sister and friend countries, to improve and develop exports related to craft industries. PACI has signed the joint technical cooperation programme in cooperation with the World Intellectual Property Organisation (WIPO), and an Omani-Moroccan MoU on different craft business fields. PACI has won several international awards for its efforts -- the first of these was the Al Sharjah award for the Omani Dagger. In addition, PACI represented Oman at several regional contests such as the Arab Creativity Award, organised by the Arab Thought Foundation; and participated in the Arab League Educational, Cultural and Scientific Organisation (ALECSO) award in the field of documentary studies for craft industries. Such participation reflects PACI’s efforts to ensure a proper environment to craftsmen. The Omani crafts sector has a lot of investment potential capable of attracting national craftsmen. Keeping this in view, PACI is opening several craft industries investment and marketing outlets, in addition to those already available at the Port Sultan Qaboos, Crown Plaza hotel in Sohar, Nizwa and Khasab castles, Ras al-Jinz Centre for training, textile production and embroidery at Sumail, Centre for training , aromatic plants distillation and production at Jebel Akhdar, Center for training, pottery and crockery production at Wilayt Bahla, and Land of Frankincense Museum in Salalah. PACI has also developed a related logo to develop, promote and support Omani crafts.


retail

UPBEAT PROSPECTS The growth in the retail industry has been robust in recent years in the country, although competition is becoming intense with many new and established retailers joining the fray

T

he United Arab Emirate’s retail majors are trying their luck in Oman. New entrants like Regency Group, Al Maya International and Fathima group are testing the waters, while well-established giants like Lulu, Carrefour and KM Trading are all embarking on massive expansion by spreading their retail networks to even small cities. All are looking at opportunities to grab a slice of the relatively stable Oman market at a time when their home base Dubai is getting saturated. Lulu, Carrefour and KM Trading have already expanded their outlets to interior regions. Of late, Lulu further strengthened its position by opening an outlet in Buraimi, while KM started another hypermarket at Al Khuwair. Nobody denies the fact that the growth in the retail industry has been robust in recent years in the country, although competition is becoming intense with many new and established retailers joining the fray. Salary revision and thousands of young Omanis joining the labour force in the aftermath of a nation-wide protest benefitted retailers tremendously. According to official statistics, over 120,000 people received pay raise in the government sector, with the security forces getting a raise of RO50-200 per month, depending on their financial grades. Apart from increasing the salaries of employees, the government had introduced an unemployment allowance of RO150, raised monthly pension of employees and social security pension for families, and raised expenditure for providing employment through training programmes. Private sector entities too increased salaries of their employees, with leading banks and other corporates giants taking a lead. All these pay hikes have increased disposable income and thereby higher levels of consumer spending. As a result, the retail demand is poised for a solid growth. POSITIVE OUTLOOK The upbeat sentiment was reflected in the results of the latest MasterCard Worldwide Index of Consumer Confidence, released in mid-April, which once again ranked the Sultanate top in the Middle East for its positive outlook, along with Qatar. Both countries were awarded 93.6 in the survey, which placed them well ahead of the other Gulf states and among the top contenders globally. This is the second time that Oman has been included in the index, and the consumers remain extremely optimistic in their expectations for the coming months. The positive sentiment is in line with the country’s robust economic performance and growing per capita income in recent years.

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Over 120,000 people received a pay raise in the government sector, with the security forces getting a raise of RO50-200 per month


retail According to industry insiders, relatively small retailers will inevitably face severe competition in view of their inability to deal in volume business. As retail business is driven on wafer-thin margins, they need to think of innovation, which includes customer loyalty, to maintain their place in the market. This is very crucial as the survival of retailers, amid tough competition from large players who apply different strategies to dominate the market. According to another study conducted by Alpen Capital, the retail sector’s contribution to the Sultanate’s GDP in 2010 was at about 8.7 per cent. It projects the industry to expand at a compounded annual growth rate (CARG) of 10.7 per cent between 2010 and 2015. The Alpen report also said that

the country’s retail trade in 2010 stood at RO1.94 billion and the market has altered vastly in recent years as markets and small shops are replaced by shopping malls with international brands, with a change in government policy. The government has Omanised small grocery shops in a phased manner some years ago, as part of a larger programme to provide self-employment for local youths. In fact, the shopping habits are also undergoing a sea change with hypermarket and mega malls coming up in different parts of the country and entry of more and more luxury brands, which were reluctant to come to Oman all these days. More than 100,000 sqm of retail space was

under construction in Oman in 2010. This included the 60,000-sqm Muscat Grand Mall and the Opera Galleria. While new mall space will broaden the choice of shops for consumers, it will also increase competitiveness across the sector, as new developments vie with wellestablished malls for business. MONITORING PRICES Oman’s shoppers have already begun changing their shopping patterns, moving away from small retail outlets and opting instead for large-scale centres, usually anchored by a brand hypermarket. Meanwhile, the government is trying to bring in controls to check retailers to take undue advantage on pricing. The Public Authority for Stores and Food Reserves is set to bring in uniformity in the prices of essential food items in different parts of the Sultanate. The ministry’s price monitoring mechanism for essential food items, which is prevalent in Muscat, will be extended to other parts of the country as well. Presently, the Consumer Protection Department officials monitor the prices of essential food items in supermarkets and hypermarkets in Muscat region. Also, there is a concrete plan to ensure food security across the country, especially during cyclone or flashfloods that cut off roads. As part of the initiative, plans are afoot to build 52 warehouses and a marketing outlet, besides establishing silo facilities in Sohar and Salalah. The authority has four main warehouse facilities, which include the storage facilities in Dhofar and Batinah. In Batinah

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Shopping habits are undergoing a sea change with more hypermarket and mega malls coming up


Retail industry will expand at a compounded annual growth rate of 10.7 per cent between 2010 and 2015

retail

region, there are 28 storage facilities and a marketing outlet. The General Secretariat of Food Security has made several recommendations for filling the demand gap and protecting consumers. The agency has suggested an early warning system to ensure enough supply, creating a fund for emergency situations, generating awareness on food security, enhancing local production of red meat, egg, milk and dairy

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products, extending agricultural land for cultivation, creating a separate department for farming, and enhancing investment in fisheries sector. The government is now implementing some of these recommendations, which also include guaranteeing a right price for fish, allocating land for agricultural sector in Batinah and Duqm areas, enhancing cultivation of wheat cultivation and milk and

meat production, and developing a central commodity market for Oman, including a central fish market. The total cost for importing essential food products in the Sultanate in 2010 was $1.4 billion, while its food exports were worth $551 million. Omani households, according to the household expenditure survey of 2010, spend 29 per cent of their total income on food items.


agriculture

FOOD SECURITYTHE NEW BUZZWORD Food security concerns have pushed the farming and fisheries sectors back on the government’s agenda of national priorities for urgent investment and development

H

aving chugged along at a pedestrian pace for the past four decades, the agriculture and farming sector is now poised for a period of energetic growth. The stimulus for this shift in pace is food security – an issue that has weighed heavily on the minds of policymakers in the Sultanate ever since the global food grains crisis of 2007 triggered political and economic instability around the world.

Mindful that any food crisis in the future would have disastrous consequences for net food grain importers like Oman, the government has made food security an objective of top national priority. Alongside plans for strategic stockpiles of staples, such as wheat, rice, sugar and other essential commodities, the agriculture, farming and fisheries sectors have been singled out for heightened investment and development, so they can contribute effectively to the country’s long-term food security goals. Thus, food security is one of the underlying objectives behind allocations to the agriculture and fisheries sectors in the 8th Five Year Development Plan (2011 – 2015). The Vision 2020 Charter envisions a 3.1 per cent contribution from the agriculture sector to the gross domestic product (GDP) by 2020, on the basis of an annual growth rate of 4.5 per cent. On the other hand, the fisheries sector’s contribution to the GDP is projected at around 2 per cent, with an annual growth of 5.6 per cent. While both sectors have been performing near or above the norm, the trend has been downward over the past three years, much to the consternation of authorities. In 2011, the agriculture and fisheries sector grew at a combined 5 per cent, down from 8.2 per cent a year earlier. Growth averaged 10.5 per cent from 2008 to 2010. The combined share of agriculture and fisheries in the GDP was only 1.1 per cent in 2011 compared to 1.2 percent in the previous year. It is against this backdrop that allocations to the agriculture and fisheries sector have surged in recent years. In 2011, the government earmarked RO227 million for projects related to, among other things, the construction of fishery harbours, enhancement of crop yields, investments in livestock breeding technologies, establishment of public auction and market areas, and distribution of modern farming and fishing equipment, irrigation systems, beehive

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Food security is one of the underlying objectives behind allocations to the agriculture and fisheries sectors in the 8th Five Year Plan


agriculture gear, and so on. NET FOOD IMPORTER While these investments are designed primarily to generate jobs for Omanis and enhance the livelihood of farmers and fishermen, the underlying objective is to promote and strengthen food security. Oman forked out around $1.4 billion for importing food staples in 2010, according to a recent study by the Majlis Addawla. Consumption averaged 470,000 tonnes of cereals, 16,000 tonnes of poultry products, 129,000 tonnes of dairy products, 40,000 tonnes of vegetable oils and derivatives, 8,000 tonnes of fruits and vegetables, and 5,000 tonnes of sugar.

To help ease the country’s dependency on imports, the Public Authority for Stores and Food Reserves (PASFR), which has the mandate to secure the country’s requirement of food staples, is working closely with the Ministry of Agriculture and Fisheries to boost local production of key commodities. One option being actively considered towards this end is the relocation of existing farms to the semi-arid Nejd of Dhofar governorate where groundwater, albeit brackish, is plentiful. Another study conducted by the General Secretariat on Food Security moots the establishment of farm cooperatives, enhancing research in agriculture, and allocating suitable sites for agricultural development in Al Batinah and Duqm areas. It

also calls for steps to boost wheat cultivation through research, while advocating an allout increase in the output of key essentials, including red meats, poultry products, eggs, milk and diary products. MARINE BOUNTY But it’s the fisheries sector that holds out greater hope of being an effective contributor to the government’s food security strategy, as well as the larger goal of providing sustainable livelihoods for thousands of Omanis. An estimated 40,000 Omanis currently work as fishermen, operating between them some 18,000 traditional boats, over 700 fishing dhows and 49 commercial-scale coastal fishing vessels. In 2010, the total catch was estimated at 1.58 million tonnes valued at RO 117 million, reinforcing the sector’s importance as a key contributor to the country’s non-oil economy. The 8th Five-Year Plan earmarks in excess of RO100 million for the development of the fisheries sector. The lion’s share will go towards the construction of ports and other fishery-related infrastructure. The ultimate objective is to have a fishing port in every coastal town in Oman by the end of the plan period. Part of the allocation will also help finance the upgrade of the fishing fleet, marketing chain infrastructure, training, exploration of new markets, and improvements in the quality of fish. At the same time, the ministry has expanded the coverage of its subsidy scheme to cover not only greater numbers of deserving fishermen, but also other segments of the fishery industry. Under new legislation introduced in 2011, the subsidy was raised by 100 per cent, and expanded as well to

126PROGRESS‘12

An estimated 40,000 Omanis currently work as fishermen


Warmest Greetings to

His Majesty Sultan Qaboos Bin Said and the people of the Sultanate of Oman on the joyous occasion of the

42nd Renaissance Day

EMPOWERING

GROWTH

OMIFCO is one of the leading industrial successes in the Sultanate of Oman. We are proud of achieving excellence in all aspects within a very short period, the most important of which is in the environment, safety, productivity, Omanisation and corporate social responsibility.

OMAN INDIA FERTILISER COMPANY S.A.O.C

PO Box : 67, PC : 411, Sur, Sultanate of Oman Tel.: (+968) 25532000, Fax: (+968) 25562847 Website: www.omifco.com Email: omifco@omifco.com


The government recently announced a moratorium on the exports of more than a dozen varieties of fresh fish

agriculture

cover as many other related parties, such as traders, processing plants, and all kinds of people active in the fisheries sector. Further, with a view to ensuring that part of the catch is marketed locally to meet domestic demand for fresh fish, the ministry has invested in the development of wholesale auction centres in a number of areas around the Sultanate. Auction centres are currently in operation in Qurayyat, Al Seeb, Barka, Al Rustaq, Al Tharmad, Sohar, Shinas and Sinaw. They function every day from 6am to 9am, with inspection staff on hand to ensure that a certain minimum percentage of the catch is channeled to the local market in line with government regulations. In a further bid to ensure that adequate supplies do reach domestic consumers,

128PROGRESS‘12

the government recently announced a moratorium on the exports of more than a dozen varieties of fresh fish. The ban came into effect on June 1, 2012 and ends on September 15, 2012. The move extends the remit of an existing ban, which restricts exports of five key species of fish, including kingfish and tuna. While restricting exports of a dozen-odd types of fish, the ministerial decision allows exports of eight other fresh fish species, provided the fisherman concerned agrees to set aside half of his catch for local sale. An export permit then allows him to ship the balance half, typically across the border to the UAE or Saudi Arabia. The moratorium will not impact exports of processed or canned fish. FISH FARMING Of late, it’s aquaculture that has caught the eye of the Ministry as a promising economic

industry with the potential to contribute significantly to GDP growth, employment generation, and export earnings. Equally, a thriving aquaculture sector is seen as vital to bolstering supplies of fresh fish to the local market, and thereby contributing to the national food security strategy. According to the Ministry of Agriculture and Fisheries, the economic benefits linked to aquaculture investment are immense. A study compiled by the ministry envisages output from aquaculture based activities soaring to 220,000 tonnes by the year 2030, if the appropriate supportive measures and incentives are in place. Furthermore, the Council of Ministers has already adopted aquaculture as an initiative of national necessity, while the relevant authorities have mooted its pursuit in the interest of enhancing food security.


Output from a homegrown aquaculture industry is projected to reach 18,500 tonnes by 2015

agriculture

It is argued that the Sultanate’s lengthy coastline, along with the diversity of its inshore waters and environmental attributes, augurs well for the development of a fullfledged aquaculture industry in Oman. As many as 111 locations along the Sultanate’s coast have already been identified for aquaculture projects. At the same time, the Ministry of Housing has allocated special sites for the development of aquaculture projects on land. In fact, a lot of planning efforts had already gone into the study and conceptualisation of a strong and viable aquaculture industry in the Sultanate. Sultan Qaboos University has conducted a number of feasibility studies, while other public sector institutions are committing

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resources for the training of Omani cadres. For its part, the government is focused on the establishment of a legal framework to support the growth of the industry. It is also in the process of setting up a national company to spearhead the development of a new aquaculture-based industry in the Sultanate. Among the fish species deemed ideal for aquaculture are kingfish, cofur, sea bream, shrimp and other types with a high nutritive and biomedical value. It is estimated that output from a homegrown aquaculture industry is projected to reach 18,500 tonnes by the year 2015, rising to 29,000 tonnes by 2020, before topping 220,000 tonnes a decade later. This

compares with a current average annual production of around 150,000 tonnes from wild fishing activities. Among the many spinoffs from a thriving aquaculture industry will be employment generation. For every 1000 tonnes of aquaculture produce, there will be a requirement of 50 people to work on the farms. Going by this strategy for developing the sector, the employment potential is estimated at 11,000 new jobs. And with aquaculture associated with over 40 different ancillary and spinoff activities, the multiplier effect in terms of job generation will be correspondingly high, it is pointed out.

progress-2012-eng  

progress-2012-eng

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