Monday, August 2, 2010

In the News: Al Mazunah Free Zone

The development of free trade zones across Oman has been a centerpiece of the Sultanate’s plans to diversify the national economy beyond the oil sector by spurring the growth of value-added, export-focused industries such as refining, manufacturing, shipping and logistics. Free zones serve as catalysts for this growth by providing infrastructure (e.g., roads and ports), a streamlined regulatory framework (e.g., fewer visa and entry/exit restrictions) and financial incentives (e.g., income tax and customs duty waivers) that encourage high-end foreign and domestic companies to set up operations. By attracting these companies to Oman and locating them together in a concentrated, business-focused environment, the free zones aim to build an industrial and trade base that will help bring the Sultanate new technology, jobs and sustainable economic growth in higher value-added fields.

The large free zones in Salalah and Sohar are now well-known features of the Omani economic landscape. However, it is a smaller, lesser known free zone that has recently been capturing headlines: the Al Mazunah Free Zone, located in the Dhofar region near the Oman-Yemen border.

The Omani government recently signed an agreement with a Kuwaiti-based company, Golden Hala Trading, to develop the infrastructure for the Al Mazunah Free Zone. Golden Hala, a part of Kuwaiti development conglomerate Jawaharat al Fanar Group, has pledged to invest an estimated 680 million Omani Rials in the project over the next five years, and has already launched an intensive marketing campaign to lure companies to the free zone. Among the generous incentives that the free zone offers companies are a 30-year exemption from income tax, the right to import commodities duty-free, and the allowance of 100 percent foreign ownership. Golden Hala has cited the processing, storage and shipment of produce from the Dhofari agricultural heartland, along with the automobile and industrial vehicle trade, as potential focus areas for the free zone’s growth plans.

With Al Mazunah thus gearing up to take its place alongside Salalah and Sohar as a major industrial hub, Oman’s free zones appear poised to play an increasingly important role in the Sultanate’s economic future and are a sector to watch closely for companies that already do business in Oman and those that seek to do so in the future.