Oman Free Trade Zones take major economic strides

A safety inspector looks over containers alongside the Jebel Ali Free Zone in Dubai (Credit: The New York Times)

Although the Sultanate of Oman's free zones are relatively new compared to the regional and international free zones, they hold a huge potential to transform the country's economic scenario.

The Free Zones Law was promulgated in 2002 by the Royal Decree No. 56/2002. Free zones provide a bunch of investment incentives and facilities. The foremost of these facilities is tax exemption, simplification of procedures associated with the licences and permits, import of all permissible goods for handling in the country, exemption of the minimum limit for investment, freedom of using currencies, and exemption of income tax among other incentives.

Ahmed bin Hassan Al Dheeb, undersecretary of the Commerce and Industry Ministry affirmed that the government is attaching great importance to the free zones. These initiatives have encouraged sustainability of investment, granted lands, and provided better infrastructure.

The undersecretary said: "As of now, three free zones have been established in the Sultanate, the first of which is Al Mazyouna Free Zone, which started operation in November 1999. The zone is located in the Governorate of Dhofar, near the Yemeni borders (260km from the wilayat of Salalah, 245km from Al Ghaidha, and 500km from Sai'oun in Yemen).

"In 2010, the executive by-law for the Al Mazyouna Free Zone, operated by the Public Establishment for Industrial Estates was issued. An investment agreement for three million square metres was recently signed with one of the Gulf investors," he confirmed.

"The second free zone is the Salalah Free Zone which was established in 2006. This sone is operated by Salalah Free Zone Company. The executive regulation for the zone was issued in February this year.

Awad bin Salim, chief executive officer (CEO) of Salalah Free Zone, said that the zone had attracted foreign investments, which would provide a boost to the economy. He pointed out that coordination at the highest level is under way to ensure the success of the projects and to boost investments at these free zones.

Consultancy studies

In a statement to Oman News Agency (ONA), Awad bin Salim said that Salalah Free Zone is expected to attract more than $6 billion during the next five years. Consultancy studies will be completed soon for the development of land plots in Raysut and Adhan.

Salalah Free Zone by-law has also been completed. The by-law includes all the rules and regulations that would guide the operations in the zone.

Al Shanfari added that the future vision for the Salalah Free Zone centres on making it an international investment hub, in line with the government's policies that aim at diversifying sources of national economy and providing job opportunities for citizens. The zone will focus on attracting vital projects in fields such as logistic services, warehousing, re-distribution, textiles, petrochemicals, pharmaceuticals, plastic recycling, and assembly.

The third free zone is the Sohar Free Zone, which was established by the Royal Decree No. 123/2010 issued on December 20, 2010. The zone is operated by the government owned Sohar Free Zone Company.

Gamal bin Aziz Tawfiq, CEO of Sohar Free Zone said that the infrastructure work for the zone has already started. The first stage of land levelling and external boundary, which would cost $3 million or RO1.2 million, have been completed.

He added that many companies have applied for setting up projects in this zone. He also pointed out that early this month, a loan agreement worth $60 million was signed with BankMuscat to develop the first stage of Sohar Free Zone on 4,500 hectares at a cost of RO30 million.