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.
Monday, August 2, 2010
In the News: Al Mazunah Free Zone
Monday, May 4, 2009
Focus on: the Salalah Free Zone
On June 20, 2006, the Sultan of Oman, Qaboos bin Said, promulgated Royal Decree No. 62/2006 creating the Salalah Free Zone (SFZ), furthering progress toward the Sultanate’s goal of being a desirable and advantageous place to do business. A ‘Free Zone’ is a territorial carve-out in which business-friendly laws may be instituted to promote foreign direct investment, trade, entrepreneurship and business development.
The 19 million square metre SFZ is endowed by the government with world-class infrastructure and support services providing start-to-end-function facilities for both multinationals and start-ups. Other advantages include close proximity to the ‘Super Hub’ port at Salalah, one of the world’s largest container terminals. Strategically positioned on the Indian Ocean, the port at Salalah accommodates the world’s largest container ships, is equipped with the world’s largest container-handling cranes, and can handle up to 4.4 million TEU/year.
Apart from its strategic location and well-developed infrastructure, a whole host of other investment-friendly incentives are available to businesses operating at SFZ, including a competitively low initial cost of setting up, and a one-stop-shop arrangement for licenses, permits, visas, customs clearances, etc. Businesses at SFZ will even be able to participate in existing export guarantee arrangements provided to Omani companies by Omani financial institutions.
The specific activities permitted in the free zone are:
The array of special incentives offered includes:
Businesses may apply for the following kinds of licenses from the SFZ:
It should be noted that for all types of businesses located in SFZ, sales in Oman must be carried out through a distributor or any company based in Oman that holds a valid trade license with the same business activity.
