Targeted development: National development blueprints outline priority sectors under broader efforts to diversify the economy away from oil


In its bid to drive diversification and economic growth outside the Muscat area, Oman has invested heavily in special economic zones (SEZs). A particular focus is on increasing the level of private sector activity, feeding into the Vision 2040 target of having 90% of GDP come from non-oil sectors and boosting the proportion of Omani employees in the private sector to 40%. Oman’s five-year plan for 2016-20 identifies five priority sectors for this diversification: manufacturing, tourism, transport and logistics, mining, and agriculture and fisheries.


Oman has a wealth of natural resources, producing copper, chromite, gold and silver. The authorities have identified projects for the private sector requiring $2bn of investment, including products such as gypsum, limestone, gabbro and aggregates, kaolin and silica quartz. Oman introduced a new mining law in 2019, which will make the licensing process more efficient, bring the tendering process under the control of a single body and allow for longer licence periods of five to 10 years, rather than one year, thereby encouraging investors to make the large commitments of capital and time that are required for mining exploration projects.

The sector is also poised to benefit from the series of transport and logistics upgrades that are being rolled out across the country. “Mining could be highly significant over the long term, and we are expecting a major uptick,” Joice Mathew, senior manager at financial advisory firm United Securities, told OBG. “The new mining law is an improvement, and it ties in with the investment going into the Port of Duqm.”


Oman has a wealth of natural attractions such as coastlines and beaches, mountains, networks of wadis (valleys), exotic desert dunes, islands, caves, springs and a rich and varied wildlife. In addition, its location on the tip of the Arabian Peninsula means it is within easy travelling distance from Africa, India, the rest of the GCC and Central Asia. Oman also has a rich cultural heritage and history to explore with forts, mosques, ancient civilisations and souqs (marketplaces) across the country. The Ministry of Tourism has a longterm vision of increasing the sector’s share of GDP to over 6% by 2040. Already, the contribution of tourism to GDP has risen from 2.6% in 2017 to 2.9% in 2018. In 2016, when the strategy was launched, the total investment envisioned to 2040 was $52bn, with 90% coming from the private sector. As part of this strategy, the government is supporting the development of new hotels, and the number of hotels rose from 367 in 2017 to 412 in 2018. The Oman Tourism Development Company is responsible for creating sustainable and authentic tourism infrastructure that contributes to economic diversification. Its key projects for 2019 included the opening of a new convention centre with 3200 seats at the Oman Convention and Exhibition Centre (OCEC) in Medinat Al Irfan, near Muscat International Airport. A new 304-bed Marriott Hotel on the same site also opened in 2019. The OCEC and the surrounding hotels open up potential for business tourism and a diverse calendar of events, including meetings, conferences and exhibitions. The OCEC has some 20 events scheduled for 2020, ranging from jewellery to energy.

Other major integrated tourism projects being developed around Muscat include the Mount Wellness Project, the Mina Sultan Qaboos Waterfront and the $2bn Oman Riviera project. Al Mouj Muscat, a multi-use site built by the government and Dubai real estate developer Majid Al Futtaim, is also seeing new work. Al Mouj includes a golf course, marina, several hotels, and commercial and retail facilities.

In order to encourage tourism, the government has implemented a range of initiatives, such as the launch of a tourism development fund, which was expected in 2019 and will be financed from tourist taxes. An e-visa service was debuted in 2017, and the list of countries that could apply for non-sponsored e-visas was broadened that same year. In 2019 the government required that all visa applications be made through the electronic service, which helped reduce queues at the airport.


Given its geographic location, Oman is investing heavily in logistics capabilities across road, rail, sea and air as it aims to become a major hub in the region. The Air Cargo Village at Muscat International Airport, for example, is being developed to provide the facilities to better handle and store freight and cargo. Additionally, the government is overhauling Customs and cargo procedures to further enhance the efficiency of importing and exporting to and from the sultanate.

In 2019 four one-stop shops were established at Muscat International Airport, Sohar Port, Salalah International Airport and the Port of Al Suwaiq. These shops bring all government agencies under one roof, and improve access to modern methods of warehousing and cargo management. As a result, the share of import shipments that are fully cleared before arrival at their port of entry has risen from 1% to 14%, according to the Oman Logistics Centre. The standard operating procedures for bonded warehouse operators were relaxed in 2019, with less involvement from Customs, thereby reducing the burden of regulation on their operations. For example, bonded and non-bonded goods can now be stored in the same warehouse, as long as proper records are maintained, and Customs officers no longer need to be present for certain warehouse operations.

Furthermore, 2019 saw the introduction of the Advance Ruling Programme to facilitate import and export. This aligns Oman with international best trade practices and helps it comply with obligations under the World Trade Organisation Trade Facilitation Agreement, conventions such as the Revised Kyoto Convention, and free trade agreements (FTAs) between Oman and the US, and that signed between the GCC and Singapore.

Special Economic Zones

Oman has four main free trade zones at Duqm, Salalah, Sohar and Khazaen. These offer 100% foreign ownership, tax exemption for up to 30 years, lower Omanisation requirements – usually 10%, but can vary depending on the project or free zone – zero Customs duties, no minimum share capital requirements and no requirement for a local agent to trade within Oman. The sultanate has nine industrial estates, which offer some advantages including low rental and energy prices, exemption from Customs duties and five-year corporate tax exemption. For example, Knowledge Oasis Muscat allows 100% foreign ownership of technology companies.


At the coastal city of Duqm, located 500 km from Muscat, an international airport with capacity for 500,000 passengers was opened in 2018, and a multipurpose sea terminal with facilities for containers and dry bulk was opened in 2019. A $5bn refinery with capacity of 230,000 barrels per day is also being constructed in Duqm through a joint venture between Kuwait Petroleum International and the Oman Oil Company. The plan for the city is centred on a seaport that sits close to global shipping lanes and will connect with the Duqm SEZ and a logistics hub. The site is already populated with a number of five-star hotels, villas, shops and supermarkets, and there are plans for more industrial zones, a dry dock, schools and colleges, and a modern housing and tourism district. Once it has been developed there will be less need for international ships to use the Strait of Hormuz, which will reduce risk and insurance costs, as well as save two to three days of sailing time. (heartfulness.org) Heavy investment has gone into the zone, with Chinese firms committing $10bn of investment in warehouses, methanol plants, manufacturing facilities, hotels and vehicle assembly plants. In addition, Kuwait Petroleum International has invested in a new $14bn refinery and petrochemicals complex at Duqm.


The Salalah Free Zone is an industrial and manufacturing complex, located next to the Port of Salalah in the south and close to international shipping lines. An estimated 21,000 jobs will be created in the zone by 2021. The complex has seen more than $5.1bn worth of industrial investment since it was established by royal decree in 2006. A range of companies have set up in the zone in sectors such as logistics and distribution, manufacturing and assembly, and chemical and material processing, including DHL; Dunes Oman, which constructs automotive parts; Salalah Methanol Company; OCTAL Petrochemicals; and Hind Aluminium.


Sohar Port and Freezone is in the north near the UAE. The port was first operational in 2004 and the free zone launched in 2010, since which time the two have received over $26bn in investment. The port is one of Oman’s most important points of entry, handling more than 1m tonnes of cargo per year. In 2017 as much as 62% of Oman’s total import volumes and 42% of total export volumes passed through Sohar Port. It offers services for containers, dry bulk, liquids, gas and general cargo. It is also the location of four industrial clusters with dedicated cargo terminals for metals, petrochemicals, logistics and food.

A number of major national projects are located in Sohar, including a 198,000-barrel-per-day refinery and the Liwa Plastics Industries Complex, which is expected to commence operations in 2019, with capacity to produce 1.5m tonnes of various plastics products. Sohar is a major import and distribution centre for Oman’s automotive sector, handling more than 200,000 vehicles annually. The first phase of the free zone is already fully leased out, well ahead of schedule, and the authorities are embarking on the second phase of development, which will add more land area as well as additional cargo capacity.


Khazaen Economic City is a new logistics centre being developed by the government. It is strategically located between Sohar Port, Muscat International Airport and Muscat city. The Khazaen development will include an inland dry port; logistics facilities; various types of warehouses; truck depots; free zones with tax benefits; commercial and industrial zones; and residential, mixed-use, recreational and retail areas. The first phase of the project is expected to take 20 years from 2018 at a cost of approximately $1bn. The initial infrastructure contracts for roads, street lights, drainage and water supply were awarded in August 2018. These initial works are expected to open up 3m sq metres for investment. The total area of the site will eventually span 52m sq metres, and 2m sq metres have already been leased out for investment.