Since 1983, when the sultanate opened its first industrial estate at Rusayl in Muscat, specialised zones for manufacturing, heavy and light industry, IT, chemicals and pharmaceuticals have flourished. These now form part of Oman’s overall economic strategy, as it diversifies away from hydrocarbons by boosting alternative sectors. Employment is also a goal of the estates, helping to find work for young Omanis and expats.
Leading Role
Oman’s main government body for managing its industrial zones is the Public Establishment for Industrial Estates (Madayn), which was set up in the early 1990s to administer the sultanate’s growing estate portfolio. At present, there are nine such sites: Suhar, Buraimi, Rusayl, Knowledge Oasis Muscat, Nizwa, Sumail, Sur, Raysut and Al Mazunah Free Zone, which lies on the border with Yemen.
In addition, there are the special economic zones. These are Salalah Free Zone (SFZ), managed by the SFZ Company and attached to the Port of Salalah; Duqm Special Economic Zone (DSEZ), run by the DSEZ Authority, which includes all the economic activities in the new city, among them the port, ship repair yards, refinery and petrochemicals complex; and Sohar Port and Free Zone, managed by the Sohar Industrial Port Company.
All of Madayn’s sites offer tenants incentives, including a renewable 30-year lease period on land and facilities; the right to sell or lease buildings on the leased land; the right to involve new partners in the lease contract; exemption from tax on net profit for a period of five years for industrial projects; and exemption from Customs duties and taxes on production input.
In line with Tanfeedh, the national strategy to promote economic diversification, Madayn has adopted a programme to strengthen public-private partnerships in order to support private companies to become the focus of industrial development. The programme aims to increase Madayn’s contribution to the sultanate’s diversification drive and to develop the manufacturing sector to become a key part of these efforts. Based on this, in the coming years the private sector will have an important role in constructing, managing and operating industrial estates and economic zones.
Expansion
As of late 2018 Madayn operated seven industrial estates, an IT park and a free zone with a total area exceeding 100m sq metres. In June 2018 Madayn had 2071 projects, a workforce of 56,887 and a total investment volume of OR6.5bn ($16.8bn).
Going forward, Madayn is keen to see foreign investors increase their share, with about 48% of investment in the estates coming from outside Oman in mid-2018. Madayn has made efforts to update its legal system and restructure its operations to become more competitive and attractive to investors. Under these new regulations, managers of individual industrial estates now have the authority to approve investment applications of up to 100,000 sq metres without the need to consult central management, while a rapid response time has been set for replies to investor queries. Moreover, regulations have been established concerning the work of contractors and suppliers to the estates, while activity by non-licensees has been restricted. These measures aim to protect tenants.
Madayn has recently established the Oman Investment and Development Holding Company, which aims to develop and improve the operational process of its industrial estates. The company plans to take over the management of the existing estates in 2019, starting with Rusayl and Knowledge Oasis Muscat, working in partnership with local and international developers to raise productivity, increase income and offer comprehensive services for the investors operating in these estates, as well as providing new job opportunities.
Omanisation and in-country value requirements are stated in new investment contracts so that the rights and obligations of all parties are clearly understood. Going forward, industrial estates will spearhead diversification in the sultanate. With more expansion and investment, Madayn will likely have a busy year in 2019.
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