INTERVIEWS The nation’s free zone leaders discuss their outlook and strategies for growth in 2018

ANALYSIS A breakdown of data trends and forecasts for the logistics and transportation sectors

NATIONAL VISION Vision 2020 and the Logistics Strategy 2040 create opportunities for free zone investors

OMAN 2018

C O U N T R Y S E R I E S

OMAN 2018CONTENTS

6 ForewordForesight is 2020Banu Senel

YEAR IN REVIEW

10 FeatureBuilding Bridges and Walking Tightropes

14 InFographIcThe Year in Numbers

16 Sector overvIewManufacturing 2017/2018

18 Sector overvIewFisheries 2017/2018

20 Sector overvIewTransport & Logistics 2017/2018

22 Sector overvIewMining 2017/2018

24 Sector overvIewTourism 2017/2018

26 ForumAdjusting to ‘lower for longer’ oil prices

BANKING & INVESTMENT

30 FeatureCredit where it’s due

34 IntervIewThe Old FirmAbdulaziz Mohammed Al Balushi

38 vIewpoIntProbing the frameworkAhmed Al-Esry

40 artIclePrivate eyes, national assets

42 IntervIewObjectively speakingAhmed Al-Esry

SPECIAL ECONOMIC ZONE AUTHORITY AT DUQM46 Feature

Grand Strategy Comes to Duqm

50 IntervIewA Model ExampleHE Yahya Al Jabri

54 proJect hIghlIghtNot Camping. Living. Stephen Thomas

56 InveStment hIghlIghtWho Invested in 2017?

57 mapPlanned Masterfully

58 IntervIewNational treasureIsam Bin Saud Al Zadjali

60 artIcleA bilateral berth

62 at a glanceSEZAD

63 companY hIghlIghtAcid test Khalid Bin Hilal Al Maawali

64 ForumWhy Duqm?

66 companY hIghlIghtSeamless Reggy Vermeulen

1 2 3

SALALAH FREE ZONE

70 FeatureSouthern Hospitality

74 at a glanceSalalah Free Zone

76 vIewpoIntMagnetic AttractionAwadh Al Shanfari

80 InFographIcHow Does Salalah Compare?

82 artIcleShip to ship

84 IntervIewSea of opportunityAndrew Dawes

86 InveStment hIghlIghtOman Oil in the Zone

87 mapPort of Salalah: A leader by scale

88 IntervIewWhat’s mine is oursDean Cunningham

SOHAR PORT & FREEZONE

92 FeatureStraight, not Strait

98 InFographIcThe Projects Shaping SOHAR Port & Freezone

100 at a glanceSOHAR FreezoneThe Detail

INFRASTRUCTURE & DIGITAL

104 StrategY hIghlIghtBeyond Infrastructure Talal Said Al Mamari

110 IntervIewTransformersLeo Hong

112 IntervIewAl Mazunah makes its markHilal bin Hamad Al Hasani

116 proJect hIghlIghtPEIE: INDUSTRIOUS BY NATURE Hilal bin Hamad Al Hasani

118 IntervIewRefined and ReadyRay Richardson

LOGISTICS

122 artIcleMulti-billion-dollar game plan

126 InFographIcLogisticsTomorrow’sWorld

128 ForumThe ASYAD effect

130 IntervIewSoftly, SoftlyTarik Al Junaidi

134 artIcleOman’s ports keep pace

138 vIewpoIntThe runway to integrationMustafa Al Hinai

140 companY hIghlIghtA dreamliner come true Abdulaziz Al Raisi

142 IntervIewThe view from aboveAiman Bin Ahmed Al Hosni

144 vIewpoIntStart me upCapt. Mohamed Ahmed

4 5 6 7

T his year marks twenty years since the conception of Oman’s Vision 2020. Back in 1998, oil prices had fallen more than 100 percent on their 1997 highs, languishing at around the $10-mark. The challenge faced by Oman’s

authorities was that of recalibrating economic growth forecasts and the outlook for public spending. In response, the nation’s policymakers launched a diversification programme known as Vision 2020, which, over the years, involved hydrocarbons sales to finance infrastructure projects, significant petrochemicals investments from Oman Oil Company, the national petroleum investment company, and an emphasis on logistics and other non-oil sectors.

Twenty years later, the similarities are striking; a difficult oil price climate in recent years has precipitated domestic fiscal constraints and challenges. This time, however, Oman has the blueprint for recovery, as well as the benefit of its past efforts to lean upon. The government has begun working towards Oman’s Vision 2040, while the focus in the short and medium terms remains the key non-oil sectors, which are set to create jobs and growth for the foreseeable future. Logistics and transport, fisheries, manufacturing, tourism and mining are pillars of the Ninth Five Year Plan, the last chapter of the Vision 2020 programme. Each of these sectors has something unique to offer to the economy, and to potential investors.

FREE ZONE STORYNew to the nation’s industrial landscape, compared to twenty years ago, is the emergence of special economic zones or ‘free zones’. We use the term ‘free zone’ to mean all designated areas in which a resident company can benefit from government-sanctioned incentives, including tax reductions or exemptions, often as a way to attract direct and foreign direct investment. Around the world, as companies attempt to expand into countries which are as close as possible to their supplier or consumer markets, the case for free zone investment is ever stronger.

BANU ŞENELFree Zone Watch, Chief Executive Officer

Foresight is 2020

6 FOREWORD

The phrase ‘strategically located’ is overused in the brochures and websites of many free zones, but Oman’s zones have every right to make the claim. Located in the south-eastern quarter of the Arabian Peninsula, adjacent to (but outside of) the Strait of Hormuz and on the coast of the Arabian Sea, Gulf of Oman, and the Arabian Gulf, Oman’s free zones offer access to Europe, Asia and Africa — billions of people in emerging and developed economies.

PROUD TO PRESENTPart of a wider narrative of the nation’s return to growth and stability, even amid challenging global economic and political realities, ‘Free Zone Watch: Oman 2018’ is also a timely assessment of the investment opportunities arising from the growth of the country’s free and economic zones. For the domestic economy these zones promise to yield a higher rate of domestic employment, in-country value and diversification. For investors, the benefits of ongoing investment in logistics, infrastructure and support services form part of a very compelling package of ‘pull factors’.

Free Zone Watch is proud to put forward the inaugural publication in its Oman country series. Our team regards this publication as an important part of our commitment to provide insight and promote investment into free zones and special economic zones. We would also like to thank the government ministries, free zone authorities and companies which partnered with us, without the support of whom this publication would not have been possible.

Banu ŞenelB. Ş.

7OMAN 2018

1

YEAR IN REVIEW

A LOOK BACK AT 2017 FOR THE NATION’S FREE ZONE INDUSTRY.

THE YEAR IN NUMBERS

Oman has identified manufacturing, downstream industries, logistics and transportation and tourism as

just some of the key drivers of economic diversification. Unsurprisingly the bulk of project activity in 2017

also came from these sectors. Analysis from MEED Projects puts the growth of project activity in 2017 at

31 percent, supported by the award of contracts worth $5.7bn for the giant Duqm refinery project.

The total, cumulative amount of investment captured by Salalah Free Zone, which has in its sights the goal of becoming a major industrial and petrochemicals hub on the Indian Ocean, has surpassed the $5 billion mark, according to reports from the nation’s oldest free zone. The figure includes more than $1.3 billion in capital investments committed single-handedly by Oman Oil Company, the energy and strategic investment arm of the Omani government, in 2017.

31%

$5.6BNINVESTMENT

20 17GROWTH IN PROJECTS AWARDED

14 YEAR IN REVIEW

INFOGRAPHIC

The commencement of a 40-hectare food cluster was a major achievement for SOHAR Port and Freezone in 2017. Located at the port — which now operates a terminal dedicated exclusively for the food cluster — the development will include a state-of-the-art sugar refinery, with production of 1mn tonnes per annum. A grain silo factory and a flour mill with daily production of 500 tonnes will also be part of the cluster. The latter will be operated by Sohar Flour Mills, while the planned sugar refinery will be owned and operated by the Oman Sugar Refinery Co.

In 2017, the Special Economic Zone Authority at Duqm (SEZAD) secured a number of investment projects and signed 87 usufruct and development agreements with local and international companies. The value of the projects granted last year was OMR 610.2 million ($1.6 billion). The less reported, but equally important, figure is the number of jobs to be created. With the influx of local and international investment, for projects spanning 1.9 million square meters, officials expect the creation of more than 2200 jobs for Omani and foreign nationals.

The total, cumulative amount of investment captured by Salalah Free Zone, which has in its sights the goal of becoming a major industrial and petrochemicals hub on the Indian Ocean, has surpassed the $5

billion mark, according to reports from the nation’s oldest free zone. The figure includes more than $1.3 billion in capital investments

committed single-handedly by Oman Oil Company, the energy and strategic investment arm of the Omani government, in 2017.

According to data from the Ministry of Transport and Communications, Oman’s ports handled approximately 4.8 million containers in 2017, an increase of 21 percent compared to 2016, and about 18 million tons of general cargo, an increase of 25 percent over the year 2016. The growth is reflected in the nation’s major free zone connected ports. In SOHAR, container traffic was up 36 percent on 2016 levels, while in Salalah, 2017 was a record year for both container and the general cargo business, with an increase of 18.7 percent and 4.2 percent respectively.

2,200

40HECTARES

$51PER BARREL

4.8MNCONTAINERS

JOBS

20 17

15OMAN 2018

“Manufacturing is expected

to represent 11% of GDP by

2020, up from 9.8% in 2016.” NINTH FIVE YEAR PLAN

SECTOR OVERVIEW16 YEAR IN REVIEW

B etween 2000 and 2014, the contribution of manufac-turing as a percentage of

GDP increased from 5.7 percent to approximately 10 percent. The Ninth Five Year Plan, which began in 2016, is credited for the progress seen in the sector over 2016/17. In 2020 the government forecasts that the sector will account for 15 per-cent of GDP, a target which is only achievable alongside the growth and success of the nation’s free zones and industrial estates.

Fortunately, for the tenth year in a row, Oman’s industrial estates have seen growth in output and investment. Preliminary figures from the Public Establishment for Industrial Estates (PEIE) show that the volume of investments secured across various industrial estates in 2017 was OMR 329 million — ap-proximately 5.5 percent of the OMR 6.32 billion worth of investments secured since 1993. PEIE is also becoming a major contributor to employment, with 19,000 Omanis employed across the network of in-dustrial zones. By the end of 2017, the total number of PEIE projects, at various stages of implementation and completion, had risen to 1,873. According to Free Zone Watch re-search, 64 percent of these projects are existing, 20 percent have been allotted with spaces, and work is underway to establish 16 percent of the projects. Around 62 percent of these projects are industrial,

27 percent are commercial, and 11 percent are service projects. More than 695,000 square meters of the lands have been leased by investors in the various industrial estates during 2017. The total leased area had reached approximately 34 million square meters by the end of 2017. 48 percent of investments into PEIE projects is foreign di-rect investment.

In a challenging oil price climate, manufacturing is one of the sectors being relied upon to diversifying the economy, particularly through the development of local manufacturing capabilities and facilities. Minister of Commerce and Industry, Dr. Ali bin Masoud Al Sunaidi, has said that he believes “that manufacturing can do better to help compensate for the diminishing returns from oil, here; the way forward would be through industrial innovation.” Subject to improvements in na-tional infrastructure, both digital and electrical, adopting automated and digitalised processes would also allow Oman’s manufacturing firms to compete with the low cost and high scale of Chinese and Indian companies. Speaking to delegates at the national Industrial Innovation Forum in 2017, the minister also assured investors that the govern-ment is improving the regulatory environment to support in-country research and development, partic-ularly through the expansion of the government’s intellectual property

Manufacturing 2017/2018

department and the capacity to pro-cess and review more patents.

Key non-oil sectors for Oman’s manufacturing and industrial in-vestors include chemicals, textiles, construction materials, agro-in-dustry, food, plastics, metals, and precision engineering. T

17OMAN 2018

PUBLISHER BNA New Media FZE

CHIEF EXECUTIVE OFFICER Banu Şenel

ACCOUNT DIRECTOR Carolina Tenzer Pinto

EDITOR-IN-CHIEF Joel Sam

CREATIVE DIRECTOR Alvaro Beleza | LaBarca.Design

INFOGRAPHIC DESIGNER Romualdo Faura

BUSINESS DEVELOPMENT OFFICER Onat Tayaz

CONTRIBUTING EDITORS Jesse Samasuwo Nicholas Triolo

CONTRIBUTING DESIGNER Nuno Caldeira

WEB EDITORS Serdar Yılmaz Cengiz Gönültaş Serhat Kırci

PHOTOGRAPHY CREDITS Port of Salalah Salalah Free Zone SOHAR Port & Freezone Special Economic Zone Authority at Duqm Sophie Lafont

PRINTING Muscat Printing Press LLC

EMAIL invest@freezonewatch.com

VISIT www.freezonewatch.com www.freezonewatch.com/events/oman

DISCLAIMER Free Zone Watch: Oman 2018 is a trading title of BNA NEW MEDIA FZE. Copyright is retained by BNA NEW MEDIA FZE. All rights are reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission. BNA NEW MEDIA FZE has made every effort to ensure that the content of this publication is accurate at the time of printing. However, the publisher makes no warranty, representation or undertaking, whether expressed or implied, nor does it assume any legal liability, direct or indirect, or responsibility for the accuracy, completeness or usefulness of any information contained in this publication.

ACKNOWLEDGEMENTS

Free Zone Watch would like to thank the following companies, government entities, and individuals for their participation and support.

AL-Mazunah Free Zone www.mfz.om

Arabian Industries www.arabian-industries.net

Arkan Majan

Central Bank of Oman www.cbo-oman.org

Coral Muscat Hotel & Apartments www.hmhhotelgroup.com/coralmuscat

EY Oman www.ey.com/em/en/about-us/oman

Grand Hyatt Muscat www.muscat.grand.hyatt.com

Huawei Oman www.huawei.com

Kunooz Holdings www.kunoozoman.com

LaBarca.Design www.labarca.design

Meethaq www.meethaq.om

Ministry of Transport and Communications www.motc.gov.om

Ministry of Commerce and Industry www.moci.gov.om

Muscat Printing Press LLC www.mctprint.com

Nasma Telecommunications www.nasmatel.com

National Bank of Oman www.nbo.om

National Centre for Statistics and Information (NCSI) www.ncsi.gov.om

Oman Air www.omanair.com

Oman Airports Management Company www.omanairports.co.om

Oman Aviation Group

Oman Oil Company www.oman-oil.com

Oman Shipping Company www.omanship.co.om

Omantel www.omantel.om

Oman Wanfang LLC

OMINVEST www.ominvest.net

Petrofac Oman www.petrofac.com

Port of Duqm www.portduqm.com

Port of Salalah www.salalahport.com

Public Establishment for Industrial Estates (PEIE) www.peie.om

Renaissance Village Duqm www.duqmvillage.com

Salalah Free Zone www.sfzco.com

Salam Air www.salamair.com

Sebacic Oman SAOC

SOHAR Port & Freezone www.soharportandfreezone.com

Sophie Lafont Photography

Special Economic Zone Authority at Duqm www.duqm.gov.om

Thrifty Car Rental www.thrifty.com

SEZD (Special Economic Zone of Duqm) is distinguished by: • Its strategic location on the Arabian Sea, near

international shipping lines. • Moderate climate year-round• (2000 km2) of available lands for

investment.• Multi-purpose port.• A dry dock yard for ship repair

and maintenance.• A refinery and

petrochemical industries area.

• A regional airport.

Phone: +968 24507500Fax: +968 24587400P.O. Box: 25 P.C.: 103 Bareeq Al ShatiEmail: info@duqm.gov.om Website: www.duqm.gov.om

Special Economic Zone Authority at Duqm (SEZAD)

Duqm..Environment InvestmentPromising

SEZD (Special Economic Zone at Duqm) in the Sultanate of Oman offers a variety of investment opportunities in different fields such as Industrial sector, logistics, trade, tourism and fisheries with many incentives that include:

• Up to 30-Year tax exemption, renewable.

• 50-Year usufruct agreements, renewable.

• A comprehensive array of services to investors through the One-Stop Shop.

1- Provides necessary in-formation and data for investors, and guidance and advice on investment opportunities available in SEZD and investment procedures.

2- Provides registration ser-vices in SEZD commer-cial register.

3- Issues land usufruct licenses and registers usufruct contracts.

4- Determines the location of the plot allocated to investor, issues survey Krooki, and hands over plot marks.

5- Issues licenses to prac-tice activities in SEZD, including industrial, tour-ist, mining and other economic activities.

6- Provides public services, such as registration of lease contracts, issuance, renewal and modication of building permits, issu-ance of completion certif-icates, and issuance of utility extension permits (electricity, water, tele-phone, etc.), licenses and health cards.

7- Issues environmental permi ts.

Through its branches in Duqm and Muscat, the one-stop shop in the Special Economic Zone Authority in Duqm (SEZAD) provides various services necessary for the projects implemented in the Special Economic Zone in Duqm (SEZD).

WE ARE WITH YOU WHEREVER YOU ARE : DUQM, MUSCAT

ONE-STOP SHOPYOUR GATEWAY

TO INVEST IN DUQM

Phone: +968 24507500Fax: +968 24587400P.O. Box: 25, P.C: 103, Bareeq Al ShattiEmail: invest@duqm.gov.omWebsite: www.duqm.gov.om

1- Provides necessary in-formation and data for investors, and guidance and advice on investment opportunities available in SEZD and investment procedures.

2- Provides registration ser-vices in SEZD commer-cial register.

3- Issues land usufruct licenses and registers usufruct contracts.

4- Determines the location of the plot allocated to investor, issues survey Krooki, and hands over plot marks.

5- Issues licenses to prac-tice activities in SEZD, including industrial, tour-ist, mining and other economic activities.

6- Provides public services, such as registration of lease contracts, issuance, renewal and modication of building permits, issu-ance of completion certif-icates, and issuance of utility extension permits (electricity, water, tele-phone, etc.), licenses and health cards.

7- Issues environmental permi ts.

Through its branches in Duqm and Muscat, the one-stop shop in the Special Economic Zone Authority in Duqm (SEZAD) provides various services necessary for the projects implemented in the Special Economic Zone in Duqm (SEZD).

WE ARE WITH YOU WHEREVER YOU ARE : DUQM, MUSCAT

ONE-STOP SHOPYOUR GATEWAY

TO INVEST IN DUQM

Phone: +968 24507500Fax: +968 24587400P.O. Box: 25, P.C: 103, Bareeq Al ShattiEmail: invest@duqm.gov.omWebsite: www.duqm.gov.om

CLICK HERE TO PURCHASE THE FULL REPORT