Saturday 20 / April / 2024
Muscat: His Majesty Sultan Haitham bin Tarik’s Royal Decree issued to expand free zones in Oman is a step in the right direction to boost the economy and attract much-needed foreign investments to the country.
The free zones in Muscat, Salalah, Sohar and Duqm will help diversify the state income and bring in prospective trading partners.
Economic diversification
Experts say the move marks a significant shift as Oman seeks to align itself with international standards and move towards a global investment scenario.
“The free zones will bring in huge economic benefits to the country,” said Peter Hays, a former senior banker at Citigroup. “The move will align Oman with global financial standards and move forward to partner with the biggest international investors. This is what is needed right now to help diversify away from the backbone of the economy that relies heavily on energy income.”
Free zones
Oman has four airports in cities across the country, and all of them have both economic and free zones. The Royal Decree will encourage the expansion of business and trade freedoms for investors such as exemptions of taxes like corporate and import duty for international companies operating there.
The first economic zone in Oman was established at Salalah in 1986 and both Sohar and Duqm free zones were set up in 2014. Muscat Airport, built in 1973, went through a three-year renovation with a new runway and a $1.8 billion new terminal that was opened in March 2018.
“Oman has some experience in economic zones and the Royal Decree will give more confidence to big players around the world to set up manufacturing units there knowing that they will enjoy huge benefits,” added Hays. “This is how countries like Singapore have become global trade posts over the years because they know what it takes to bring in investors.”
Both Salalah and Sohar are home to big foreign investment projects in methanol, aluminium, solar power, petrochemicals, fertiliser and iron and steel while Duqm has a world class dry dock, a refinery, fisheries, logistics and plastic and desalination plants. All four towns also have ports and very good road networks.
Duqm, the ‘trump card’
According to Hays, the strategic locations of all four towns are excellent but Duqm provides the ‘trump card’ to the future expansion of Oman’s exports. “Duqm is strategically located since the town is away from the Strait of Hormuz,” he said.
“What is more important is that the port there is located by the open seas, and is a gateway to the Indian Ocean and the rest of the world. Without any doubt, Duqm is the trump card of the future of the Omani economy and it is generating huge interest among global powers.”
The government has already granted an array of incentives to investors, including a 30-year licence to develop and operate facilities in the free zones.
Among those who have benefited from incentives offered by the government to encourage businesses to set up operations in special economic zones and free zones is Yogendra Katiyar, the CEO and founder of We Network LLC, a telecom company specialising in infrastructure, IT services and clean energy.
Katiyar recently received a 10-year residency visa as part of the Investor Residency Programme launched by the Ministry of Commerce, Investment and Investment Promotion.
“We chose to set up in Knowledge Oasis Muscat so that we could benefit from many incentives available to us: 100 percent foreign ownership with its inspiring, excellent network opportunities, collaborative environment, favourable Omanisation percentages and excellent facilities.
“As an eligible tenant, We Net is able to bid for government tenders,” added Katiyar, who set up his offices in Oman in 2011.
“State of the art office facilities, excellent communication partner channels, robust diversifying economy, legal transparency and investor-friendly environment would attract any foreign Investor to hatch their ideas with a great amount of optimism and diligent entrepreneurship. I have been offered all sorts of investor assistance and hassle-free establishment of my firm with easy terms and conditions.”
