You are here
Special zones help to attract foreign investors
OMAN has set up several export-oriented special zones to attract foreign investors to the country to help promote its economic development. Altogether there are five such zones, of which three are free zones and two are special economic zones.
The three free zones are: Salalah Free Zone, Sohar Free Zone and Al Mazunah Free Zone. And the two special economic zones are: the Duqm Special Economic Zone and Knowledge Oasis Muscat. The objective of setting up these special zones is to attract different types of businesses to Oman. Different zones are catered for different sectors and all are designed for foreign companies to leverage Oman's position as a regional manufacturing and distribution base.
"There is no minimum share capital requirement for Oman's free zones. Importers enjoy tax exemptions as no duties are imposed on goods imported and exported from the free zones. Oman free trade zone companies are allowed to trade within Oman without a local agent," says Mr Anwar Muqaibal, the Consul General of the Sultanate of Oman to Singapore, in an interview with The Business Times.
The Special Economic Zone (SEZ) at Duqm is the newest, and was established in 2011. The SEZ is the biggest in the Middle East region. It includes functional zones: a deepwater port (Duqm Port), a dry dock, a regional airport, a heavy/medium and light industries complex (including a refinery and petrochemical complex), a residential and commercial area, a tourism area, a logistic services area and an industrial fisheries complex with a port.
"The port entered into an early operations phase in 2012 and currently remains in this stage with a fully functional commercial quay capable of handling heavy lift project cargo, general cargo, dry bulk and containers," says Mr Muqaibal.
The development, management and regulation of the SEZ is overseen by the Special Economic Zone Authority at Duqm (SEZAD). It is responsible for the management of all economic activities in Duqm, including long-term strategies of infrastructural development and investment. It is also required to oversee the urban expansion of Duqm city while protecting the environment.
"Oman has taken important steps to make its economy more competitive and conducive to foreign direct investment. Incentives include a five-year renewable tax holiday, subsidised plant facilities and utilities, and custom duties relief on equipment and raw materials for the first 10 years of a firm's operation in Oman," says Mr Muqaibal.
"Oman's strategic location connecting the Persian Gulf and the Indian Ocean with east Africa and the Red Sea could also boost the country's economy. The Duqm special economic zone, which is among the largest in the world, could become the commercial thread between Oman, South Asia and China's Belt and Road Initiative."
Trade exhibitions and investment promotions at a global level are also planned to attract more foreign investors. Upgrading the skills of Omanis so that they can be hired by foreign investors which then contribute to the economy is also planned.
"As the Sultanate remains a very stable country, Oman has good prospects and is an ideal location with its easy market entry," adds Mr Muqaibal.
Turning to Oman and Singapore bilateral relations, he says that ties between the Sultanate of Oman and Singapore date back centuries. "Both countries share the same aspiration for economic prosperity and social stability. In many areas, including economic and business, companies have established footings in each other's country, creating interdependent ties between each other. The Oman and Singapore ties have continued to progress and diversify positively in the recent years, displaying the growth and interdependency of both nations."
Mr Muqaibal says that his priorities in the coming months would be to enhance the economic relations between the two countries by promoting investment opportunities in Oman and encouraging Singaporean businesses to explore them. With the gradual opening up of the tourism sector in the country, promoting the sector is also a priority, as Oman is a very attractive destination being unique in the region, and largely untouched and not commercialised.
Another item on his list of priorities - to build up further bilateral ties between the Sultanate of Oman and Singapore - is promoting the visit of high-level Omani officials and specialists from different sectors to Singapore for exploring and investing in different sectors, especially health, logistics and manufacturing.
Key Singapore investments in the Sultanate of Oman include the contract secured by Hyflux in 2009 to design and supply a desalination facility for Salalah Independent Water and Power Project (IWPP). This was Hyflux's first desalination project in the Sultanate of Oman and its first IWPP project.
After which, in 2014, Hyflux and the National Power and Water Company were awarded a US$250 million contract to design, build, own and operate an independent water project in Qurayyat.
Another Singapore company, CrimsonLogic, established an office in Oman in 2014. It is developing a customs management platform that will allow trading communities to lodge standardised information and documents with a single entry point to fulfil import, export and transit-related regulatory requirements. The company has also signed a memorandum of understanding (MOU) with local small- and medium-sized enterprises (SMEs) in the IT industry.
In 2009, SembCorp won a 15-year contract to supply power and water to the Oman Power and Water Procurement Company.
"Singapore businesses should be looking into investing in agriculture and fisheries, manufacturing, logistics and transport, energy and mining, and tourism," says Mr Muqaibal.
"As the Sultanate looks into diversifying away from oil and gas, investing in manufacturing, logistics and transport, energy and mining and agriculture would be an ideal investment opportunity. Singapore is also expanding its agriculture. Both countries can work together and provide the necessary resources for each other to progress. Investing in logistics and transportation is also lucrative in view of the increase in e-commerce business," he adds.
"Locating businesses in Oman will allow Singapore businesses to reach the Gulf countries, Africa and countries along the Indian Ocean. And as a country which offers stability and security, businesses and investors are more confident to establish businesses in the Sultanate of Oman," says Mr Muqaibal.
Significantly, there are a number of Omani businesses in Singapore. Bank Muscat has a Singapore Representative Office (SRO) which was established in October 2011. This is the bank's first office in the South-east Asian market. It is focused on supporting trade and investment flows between the Gulf countries and Asia through Bank Muscat's regional branch network covering the Gulf Cooperation Council states. The Bank Muscat SRO is registered with the Monetary Authority of Singapore.
The OQ group, previously known as Oman Trading International, is a combination of nine business units. Oman Trading International was established in 2011 and the eventual merger between Oman Oil and Orpic Group established the OQ Group.
As for political and high-level visits between the two countries, Mr Muqaibal says that unfortunately due to the Covid-19 pandemic, most of the high-level visits have been placed on hold. Both countries are looking forward to reconnecting and having delegations visiting in the near future. Currently, Zoom video calls are done to keep in touch with each other.
Mr Muqaibal says that the Sultanate of Oman, amid its popular neighbouring country, is a hidden jewel in the Middle East region. With its untouched breath-taking natural beauty, interwoven with a kaleidoscope of history and legends, Oman welcomes tourists with open arms as if you are returning home.
"The people of Oman indeed have top notch hospitality where you will leave with a heavy heart. The Sultanate of Oman is a wonderland for travellers with a keen interest in geology due to its many rock formations. The coastline views are mesmerising and at any given time you are greeted by a smiling Omani," he adds.
"While externally Oman has a modern outlook, however, the core aspects of its culture and heritage are deeply rooted in its people, making the Sultanate of Oman a perfect travel destination for those seeking an authentic Arabian experience. For those seeking an overall experience of modern and traditions intertwined beautifully, the Sultanate of Oman is the place to be."