Industrial estates: The state we're in

26 April 2002

Manufacturing industries are set to become the driving force behind the Omani economy

By 2020, the government expects the sector to account for 15 per cent of gross domestic product (GDP), up from about 5.4 per cent at present. If the ambitious target is reached, the government’s programme of building industrial estates will be well and truly vindicated. In addition to the gas-based heavy industries soon to be established in Sohar and Sur, the government is working hard to attract high-technology investors to free zones being developed in Muscat and Salalah.

‘Setting up industrial estates has not only provided a direction for potential local and international entrepreneurs, but it has proved our commitment to encouraging investment,’ says Ali Masoud al-Sunaidy, under-secretary at the Commerce & Industry Ministry.

A number of major schemes based around existing industrial developments are now at an advanced stage of development. The government is planning to invest RO 7.5 million to develop a 4,000-hectare industrial site in Sur, located 14 kilometres from the city centre. The estate will accommodate small and medium-sized industries that will feed off the larger developments at Oman LNG’s terminal at Qalhat and the new $960 million fertiliser plant that is planned nearby.

Sohar is another industrial area that will benefit from neighbouring project activity. Apart from the existing small industries based on the 1,300-hectare Sohar industrial estate, several large schemes are at various stages of implementation, destined for the industrial port nearby. These include a 75,000-barrel-a-day refinery and associated polypropylene (PP) complex, a methanol plant, a fertiliser project and an aluminium smelter. The total investment for these schemes is estimated to be more than $2,500 million. The government expects they will act as a catalyst for growth in Sohar, which is emerging as the major industrial township midway between Muscat and Dubai.

Further south, another free zone development will soon take shape near Salalah port. The scheme, which is being developed by a group of investors led by Salalah Port Services Company (SPS), involves the development of a 6,000-acre site. Construction work on phase 1A of the scheme is expected to start this year. This will involve the development of road infrastructure, architectural work and the construction of a ‘speculative building’ - intended to gauge the commercial viability of the venture.

‘The project is part of the regional masterplan for Dohfar,’ says Jack Helton, chief executive officer, SPS. ‘This includes the port, airport and free zone. No scheme is planned in isolation. When you open a free zone you need the airport and port infrastructure close by.’

The government is also planning a major technology-focused development adjacent to the existing Rusayl estate near Muscat. IT Park Muscat (ITPM) will eventually comprise four ‘tech’ blocks of 10,000 square metres each and a computer training college. The park will also be serviced by an uninterrupted power supply (UPS), international gateway access from marine landing fibre optic lines and a network computer backbone system. The main contractor, Abu Hatim Company, has already started work on the park’s basic infrastructure, and the US’ Lucent Technologies and Cisco are in negotiations with the government to act as vendors for the site’s structured cabling, networking and electronic infrastructure. An agreement has also been reached with Germany’s Siemens to establish a commercial facility at the park.

Building industrial estates is one thing, but attracting investment is another. ‘You don’t want to spend money developing infrastructure that is not going to be used,’ says Helton. The government has taken several policy initiatives to encourage small businesses including soft loans, duty exemptions on the import of raw materials and equipment, and tax holidays.

Foreign investors have not been ignored. The government is updating its foreign capital investment law to allow for 100 per cent foreign equity participation in specific projects. Technology projects and schemes requiring an investment of more than RO 150,000 will automatically qualify. ‘We are trying to attract bigger investors,’ says Al-Sunaidy.

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