Oman’s free zones, special economic zones and industrial zones have a central role in advancing Oman’s industrial development through a combination of incentives and targeted efforts to attract investors. The Public Authority for Special Economic Zones and Free Zones (OPAZ) was established in August 2020 to oversee three free zones in Salalah, Sohar and Al Mazunah – a key node on the border with Yemen serving as trade gateway into the country. OPAZ is responsible for implementing related regulations and initiatives. In June 2022 OPAZ assumed the policy-making and executive prerogatives of the Public Authority for Industrial Estates, also known as Madayn, making OPAZ the entity responsible for the high-level direction and management of Oman’s 10 industrial cities, as well as the technology park Knowledge Oasis Muscat.


Foreign investors in OPAZ zones can hold 100% ownership of their companies and benefit from no minimum or lower capital requirements, zero value-added tax, exemption on corporate profit tax for periods ranging from 25-30 years depending on the zone, Customs exemptions and relaxed Omanisation requirements. Additionally, there are no restrictions on profit repatriation. From an administrative point of view, OPAZ provides a one-stop-shop for all processes pertaining to licences, certifications, permits and visas. A similar service is also offered in industrial cities.

From an operational point of view, the Duqm, Sohar and Salalah free zones are all adjacent to deepsea ports capable of handling all varieties of cargo. The Port of Salalah – a global trans-shipment node in East-West corridors crucial to trade with East Africa and through the Red Sea – was the world’s second-most-efficient port in container handling, facilitating the trade of 16.9m tonnes of cargo, according to the World Bank’s Container Ports Performance Index 2021. Elsewhere, the Port of Duqm holds long-term potential to become one of the largest ports in the Middle East. Formally inaugurated in February 2022, it supports various operations in the zone through activities such as the import of project cargo for the construction of Duqm Refinery, as well as other important projects in oil and gas. The Port of Duqm hosts one of the largest dry docks in the MENA region, with a maximum load capacity of 600,000 deadweight tonnes. Ten ships can be repaired at a time, including large-scale tankers.


Established in 2011 as the largest zone spanning 2000 sq km, the Duqm Free Zone constitutes the focus of Oman’s ongoing industrialisation efforts. Two large-scale projects present anchor opportunities in the oil refinement and petrochemicals sectors in Duqm, and activities in the downstream petrochemicals segment will follow with the completion of Duqm Refinery, a joint venture between OQ and Kuwait Petroleum International that will have a refined oil production capacity of 230,000 barrels per day.

The second project is being developed by the Oman Tank Terminal Company. The Ras Markaz crude oil storage sites, spanning 1200 ha, were under construction in the free zone as of early 2023. The terminal will have a capacity of 200m barrels upon completion. The free zone benefits from the wealth of mineral ores in Al Wusta and the adjacent region. In particular, there is high availability of raw materials for gypsum manufacturing, dolomite-based industries, silica sand production and calcium carbonate production.

Fisheries and fish processing industries are also of great importance for Duqm. Fishing banks around the zone are numerous, and the geographical and oceanic conditions favour fish farming. Infrastructure to tap into this is already in place, with Duqm’s fishery port being the largest in Oman, and an adjacent purpose-built Fishery Industrial Area ready to support fish processing, packaging and freezing, aquaculture and value-added services.

Sohar Freezone

Created in 2010, Sohar Freezone has traditionally focused on primary and secondary metallurgical activities, with over half of its industrial tenants belonging to that sector. Global industry leaders are already established in Sohar, including Brazil’s metal and mining firm Vale, India’s Jindal Shadeed and China’s Jiangsu Changbao Steel Tube. In November 2022 the Ministry of Commerce, Industry and Investment Promotion signed a memorandum of cooperation with Vale to conduct a feasibility study for the development of a comprehensive industrial complex in Oman.

The well-established petrochemicals cluster in Sohar Freezone caters to the plastic segment. In particular, plastic producers in the zone benefit from the presence of the $6.7bn Liwa Plastics Industries Complex. A major producer of polyethylene and polypropylene, the Liwa facility provides large quantities of raw materials for the production of plastics. Indeed, OQ and other investors view Oman as a global centre for polymer-based product applications in areas such as the health care, automotive and textile industries, increasing the appeal of Sohar as a plastics cluster.

Emerging Areas

Sohar is looking to expand into more nascent activities, one example being pharmaceuticals. In April 2022 two Omani entities, the National Bank of Oman and Sohar Freezone signed an agreement to establish the Penicillin General Integrated Industrial Company, with the plan being to build a factory that will produce penicillin G and 6-APA, key chemical compounds in the most widely used group of antibiotics. The project is expected to be completed within two years and have an annual capacity of 3025 tonnes. This follows the National Veterinary Vaccines Company’s land lease agreement with Sohar Freezone signed in December 2021, which is anticipated to result in the sultanate’s first animal vaccine manufacturing facility, producing 144m doses per year.

Salalah Free Zone

Established in 2006, Salalah Free Zone hosts major players in the petrochemicals industry, such as OQ for methanol and liquefied petroleum gas, and PET packaging manufacturer and supplier OCTAL for polyethylene terephthalate. Additional opportunities may arise from the presence of the local supply of propylene, butadiene, benzene and xylenes, which are used to make synthetic rubber, plastics and dyes, among other materials. The chemical and material processing facilities located in the free zone facilitate the establishment of standalone or joint venture operations to leverage local resources. Meanwhile, the free zone’s manufacturing and assembly cluster harbours both capital- and labour-intensive assembly and packaging of equipment.

In February 2022 the Salalah Free Zone Company announced its plan to establish a dedicated area for food industries to meet increasing investor demand, and develop commercial and value-added industrial opportunities. The zone benefits from its proximity to the agricultural areas in Najd, located around 150 km from Salalah, as well as to large fishing banks. As of January 2022 the number of food industries projects in Salalah Free Zone was 27, eight of which had initiated production while 19 were under construction.