Oman: The emerging global logistics hub

Muscat - 

Logistics sector is the fulcrum around which Oman’s broader strategy of diversifying the economy is positioned. And rightly so.

The sultanate envisions to become a global logistics hub by 2040 targeting the sector’s GDP contribution to rise to RO3bn in 2020 and RO14bn by 2040.

To do that, Oman is looking to integrate and expand its road, airport and port networks. “For quite some time now, there has been a focus on diversifying the economy. And logistics is a sector that Oman will be depending on to achieve this goal,” H E Dr Ahmed bin Mohammed bin Salim al Futaisi, Minister of Transport and Communications had said.
H E Dr Futaisi had said that the sultanate wants to be a global logistics hub by 2040. “The sector’s GDP contribution is targeted at RO3bn in 2020, up from RO1.1bn currently. It is projected to rise to RO14bn by 2040.”

Throughout 2018, the logistics sector played a key role in diversification of the economy and contributing to employment and investment. “As a result of Oman’s strategic location linking the East and the West, as well as being on the route for trade centres in the GCC, India, China, Africa and the Asia-Pacific region, the future is strong for the sector,” stated the Implementation Support and Follow-up Unit (ISFU), Annual Report 2018.
In April this year, the Oman Aviation Group (OAG) announced plans to develop a dedicated air cargo corridor. Speaking at the launch of the project, Mustafa al Hinai, the CEO of OAG, said the planned corridor would improve the efficiency of export outflows and boost connectivity between the country’s export areas and free zones.

To help facilitate the project, the authority is working with the Public Authority for Civil Aviation to sign open skies agreements with the EU and countries in Asia and Africa, allowing for a reduction in customs controls and a streamlining of processing procedures.
The proposed air corridor dovetails with a national strategy to improve air freight capacity. The initiative aims to boost transport connectivity and increase the annual volume of cargo moved by air from 223,000 tonnes to 730,000 tonnes by 2030.

State-owned holding firm Asyad Group, in June this year launched the first trade corridor between Oman and Uzbekistan, with the arrival of an air freight shipment of fruits and vegetables, supporting further trade and investment cooperation between the two countries in the future.
Adding to this achievement, H E Dr Futaisi in a tweet said, that the ministry is focusing on few selected destinations like Russia and the Middle East ‘where we are working to strengthen the connection in the logistics and trade relations with the sultanate. Other projects will also soon materialise’.

Work is also in progress to establish a cargo village at Oman Airports. ‘The cargo village concept brings all services under one roof to streamline the air-freight storage and warehousing, freight handling and forwarding, customs inspection services, shipping and repackaging, value enhancement and distribution apart from facilities for public and as well as the logistics businesses,’ according to ISFU.

Meanwhile, in an effort to boost the logistics capacity of the shipping segment, five new pilot projects are to be launched at the country’s ports. These projects include the construction of a 160m berth for handling goods and equipment at the Port of Suwaiq, and across-the-board plans to reduce the time taken to inspect goods by ten per cent, according to a report by the Oxford Business Group (OBG).
Developing the overall transport and logistics infrastructure as a means to spur innovation and achieve economic diversification is at the centre of Oman’s ninth five-year development plan for the 2016-20 period.

 

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Indeed, as a result of rising investment in these areas, Oman increased its position in the World Bank’s Logistics Performance Index by 16 places between 2014 and last year, and now ranks 43rd out of 160 countries.
The development of Oman’s logistics capacity also enables it to leverage its strategic position and provide an alternative trade route to the congested Strait of Hormuz.

Rising regional tensions following strikes against Saudi oil tankers, coupled with increased hostility between the US and Iran, have seen insurance rates for shipping passing through the strait rise to their highest level since 2005.

With its main ports located outside the Strait of Hormuz, Oman is in a strong position to increase the volume of goods transported through its territory, particularly en route to neighbouring Saudi Arabia and the UAE, with which it has well developed road and sea links, OBG stated.
The connectivity of Oman with its neighbours is set to be further strengthened with the opening of the long-awaited 680km highway through the Empty Quarter desert to Saudi Arabia. The new road, which is expected to shorten the distance between the two countries by 800km, is slated to open in the second half of this year.

The expansion of the country’s transport and logistics sector also offers an opportunity to drive Omanisation, a long-standing policy by which the government seeks to increase the share of Omani nationals in the workforce, particularly in the private sector.

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