Development clusters: High-priority sectors set to receive boost from a series of large- scale construction projects

The aims of Oman’s latest five-year plan are being realised, as new developments spring up with a focus on the sectors with the most growth potential. Input from both public and private developers is spurring work on major projects catering to the transport and logistics, tourism, manufacturing, fisheries and mining sectors, while new incentives are also being offered by the government to attract foreign investment.

China-Oman Industrial Park

In May 2016 a landmark agreement was signed between officials from Oman and China that will see the latter invest $10bn in an industrial park adjacent to the Port of Duqm by 2022. The development’s primary investor is Oman Wanfang – a subsidiary of Ningxia China-Arab Wanfang Investment and Development – and the project will be constructed on a 1172-ha site divided into three sections. The first of these will be an area of around 870 ha allocated to heavy, medium and light industry, as well as mixed use. The 10-ha second zone has been set aside for a tourism project, while an oil refinery with a capacity of 230,000 barrels per day and a petrochemical complex will be constructed at the third zone, which spans 292 ha.

When the agreement was signed, 35 projects had been identified for the industrial park, including 12 heavy industrial schemes and another 12 for light industry. In heavy industry, Chinese businesses will produce concrete, building materials, glazing, methanol, steel, aluminium, vehicle tyres and petrochemicals, while light industrial goods, like batteries, tools, pipes and drilling equipment, among other things, will be manufactured or assembled in the park. The mixed-use area of the site will have a training centre, school, medical facilities and sports centre. As part of the contract, work on the 10-ha tourism project must begin within two years, and 30% of the divisible land must be developed within five years. Oman Wanfang also has permission to build accommodation for 25,000 people, and the firm anticipates a workforce of around 11,400, excluding construction workers, will be employed at the park.

Oman Wanfang is backed by the government of Ningxia, an autonomous region in north-west China with 6m residents. It represents a consortium of companies from that region, including Ningxia Shunyi Asset Management, Ningxia Residence Group, Yinchuan Yushun Petroleum Materials, Yingchuan Fangda Electronic Systems Engineering and the Ningxia Association of Small and Medium-Sized Enterprises. Ningxia Construction Engineering Group, another member of the consortium, will carry out construction. Under the agreement, 10% of the jobs will be for Omanis, with potential to grow, and 1000 Omanis will be offered vocational or university education in China.

Duqm Special Economic Zone

Chinese companies building new factories at the industrial park will enjoy close proximity to Duqm’s seaport, which is one of eight integrated components of the Special Economic Zone (SEZ) at Duqm in central Oman. As well as the port, the Duqm SEZ is composed of an industrial area, residential zone, fishing harbour, tourism centre, logistics hub, central business district and education and training area. The port of Duqm is being developed and operated as a joint venture between the government of Oman and Belgium’s Consortium Antwerp Port. Its 18-metre inner basin can accommodate eight container or general cargo vessels and is served by a 2.25-km by 350-metre commercial quay, while a separate 1-km quay will serve ships from Oman’s Royal Navy, coast guard and a new fast ferry service. “Duqm is promising, and it makes sense to take advantage of its geographic attributes, namely being closer to the main shipping lanes and being linked directly by road to the biggest GCC economy Saudi Arabia,” Ghassan Shammas, general manager of Omani engineering company Target, told OBG. “To take advantage of the infrastructure, ways must be found to further entice investors from abroad.”

Duqm also has road links inland to the UAE and Saudi Arabia. In the summer of 2016 a new highway opened that reduced the journey from Oman to Saudi Arabia by 800 km, allowing vehicles to travel across Rub Al Khali, also known as the Empty Quarter, and past Saudi Aramco’s Shaybah oilfield. These overland links allow freight to avoid passing through the Strait of Hormuz between Iran and Oman – a detour required for any cargo vessels planning to unload at Jebel Ali Port in Dubai. Oman’s Duqm, Sohar – north of Muscat – and Salalah ports, are all expanding to capitalise on their strategic locations along this shipping route; however, location alone is not always enough to attract foreign investment, and all three port areas have developed zones designed to entice international businesses with special rules on duties, taxes and business ownership.

Andrew Taylor, general manager of Bahrain-Belgian joint venture Sarens Nass Middle East WLL, believes Oman’s ports could stand to benefit from stronger trade links, particularly given the nation’s tradition of cooperation with Iran. “New cities such as Duqm offer great potential for us as a company, just as Sohar has done already, and I believe that with its long-standing links with Iran, Oman itself has a great opportunity in the new Iranian market,” Taylor told OBG.

As well as Duqm, there are three other free zones in Oman: the Sohar Port and Freezone, the Salalah Free Zone and the Al Mazunah Free Zone in Dhofar. These sites offer various benefits, such as tax holidays, lower Omanisation requirements, up to 100% foreign ownership and waivers and reduction of corporate tax and Customs duties. The rules on tax exemption are pegged to the Omanisation rates of the companies, with foreign businesses at Sohar Port and Freezone expected to increase the proportion of nationals on their staff in stages: from 15% in the first 10 years to 50% by the 20th year of operation. In the Duqm SEZ there are additional incentives, including a 10% Omanisation rate and free repatriation of capital and profits.

Air Connections

In Muscat two major projects will serve as centres for travel, communications and commerce when complete. The first of these is a new terminal at Muscat International Airport, which has been under construction since 2010. The second is the national Oman Convention & Exhibition Centre (OCEC), being built next to the airport. In 2015 the airport handled 10m passengers, and the new terminal will bring annual capacity to 12m passengers, with subsequent phases of expansion allowing for 48m. The existing terminal will also be remodelled for budget airlines.

Oman Airports Management Company (OAMC), a state-owned enterprise that operates both the Muscat and Salalah international airport, has indicated that the expanded airport will serve as a focal point for the development of new businesses, facilities and homes, with three zones in the Seeb area around the airport already earmarked for future real estate and retail development. When it opens, the OCEC will be conveniently placed for international travellers attending conferences, conventions and meetings, and will house a tiered auditorium with seating for 3200 people, as well as 14 meeting rooms with seating for between 70 and 360 attendees. The OCEC will also have 22,000 sq metres of column-free exhibition space.

Tourism & Leisure

The convention and exhibition centre is the first phase of an $800m mixed-use site called Madinat Al Irfan, which is being developed by Omran, the government’s state-owned investment arm. The project aims to establish a new urban centre within Muscat with a focus on integration, sustainability and inclusive living. In March 2016 Omran invited international delegates to the Oman Economic Forum, in which it outlined $1bn worth of investment opportunities in Madinat Al Irfan and the transformation of Muscat’s traditional port and harbour into a tourism, leisure and commercial centre called Mina Sultan Qaboos.

The Mina Sultan Qaboos Waterfront Project is to include a super-yacht and leisure boat marina, fisherman’s wharf, fish souq, five-star hotel, four-star family hotel and apartments, as well as cafes, boutiques, offices and waterfront restaurants. The aim is to have this phase complete in time for major upcoming cultural and sporting events in the region, such as Expo 2020 in Dubai and the 2022 FIFA World Cup in Qatar. A sports centre, health club and two more hotels are anticipated as part of the second phase of work, while in the final development period additional berthing for cruise liners, ferries and coast guard ships will be added, along with branded residential apartments and new retail and hospitality areas. The final phase is scheduled for completion by 2027 and will also include a budget hotel, logistics zone and employee accommodation.

In September and October 2016 the Supreme Council for Planning held workshops bringing together public sector bodies, private sector specialists and academics to discuss strategies for growth in the tourism sector. These events, known as Tanfeedh, the National Programme for Enhancing Economic Diversification, were attended by experts from Malaysia’s Performance Management and Delivery Unit, which advised the Malaysian prime minister on the country’s Economic Transformation Programme. The SCP is hoping the workshops will generate ideas to support Omran diversify the economy.