Asyad Group CEO Abdulrahman Al Hatmi

The Sultanate of Oman is a high-income economy and needs to ensure the continued affluence of a growing and very young population – around 50 percent of which is between 20 and 40 years old. So, to diversify, the government is now looking to use the country’s strategic location and bring logistics into play as one of the key sectors supporting the national economy. Following the launch of its 2040 Logistics Strategy (SOLS 2040), the Omani government established Asyad in 2016, with the mandate to act as a holding company that implements the national logistics strategy and manages Oman’s investments in ports, rail, maritime and land transport, as well as free zones. In addition, its role is to activate the private sector in any future developments.

Asyad Group CEO Abdulrahman Al Hatmi is looking to drive the 2040 Logistics Strategy forward and enable the logistics sector to become major source of national income, thereby enabling the Sultanate to position itself on the international logistics map.

“We are fully determined to greatly strengthen Oman’s role as a logistics hub in the next 3-5 years,” says Al Hatmi. “We are looking at moving ahead by using our strategic location, combined with state-of-the-art facilities and services, such as three logistics corridors around our ports at Salalah, Duqum and Sohar that combine sea, road and air transport plus free zones, thus enabling us to offer multi-modal capabilities both by the Gulf of Oman and the Arabian Sea.” 

“Over the past three years, the Sultanate has made great strides strengthening the logistics sector infrastructure, with five four-kilometer-long runways at the airports in Muscat, Salalah, Sohar, Duqm and Ras Al Hadd, in addition to work on the passenger and cargo terminals at Muscat and Salalah airports being completed,” says Al Hatmi, who also clearly recognizes the importance of trade facilitations in terms of the laws governing transportation and goods movement to ensure seamless and speedy movement of goods to and from the Sultanate.

WELL CONNECTED: The port at Duqm.

Major investments in infrastructure

Located on the south-eastern coast of the Arabian Peninsula, Oman has a strategically important position on the Arabian Gulf and Indian Ocean. It shares land borders with the U.A.E., Saudi Arabia and Yemen and marine borders with Iran and Pakistan, including the Strait of Hormuz. This opens up possibilities for transporting goods by land and sea from a number of ports which the Sultanate has developed in the past decade, including Sohar, Salalah and, most recently, Al Duqm.

The Omani government is investing heavily in key infrastructure projects to the tune of around several billion per annum. Total state investment spending rose from 5.5 percent from 2014 to $7.3 billion in the first 11 months of 2015, even as the government ran a deficit, according to Arabian Business. Infrastructure investments include the modernization of airports with key focus on freight handling capacity, and the Al Duqm special economic zone, some 550 kilometers to the south of Oman’s capital Muscat – the single largest economic development project in Oman’s history. Bloomberg recently reported that “Oman’s sovereign wealth fund is planning to start a $1 billion infrastructure fund to boost investment in projects including the Gulf state’s road, transport and energy systems, according to people familiar with the matter.”

According to Frost & Sullivan, the logistics industry in Oman, which accounted for $8.81 billion in Oman’s GDP in 2015, is likely to grow at a compound annual growth rate (CAGR) of 6.9 percent by 2020. The company predicts overall logistics growth in Oman at 7 percent.

LOOKING UP: LNG facilities at the port of Duqm. LNG is vital for Oman’s transition from an oil-based economy.

Road freight is currently driven by domestic economic activities to meet local demand and land-based trade with other GCC countries. It will be made much more efficient with the opening of a 450-kilometer (279-mile) road through the Empty Quarter desert, Rub al Khali, between Oman and Saudi Arabia and currently undergoing border checks.

According to Ali Thabet, DHL Express Country Manager Oman, continued strong government support for key projects such as the infrastructure transformation is key to diversification. He comments: “DHL Express was the first express company in Oman. We have grown alongside the country for 36 years now and were a part of its transformation into a modern and prosperous state under His Majesty Sultan Qaboos. We are keen on being a partner to business and government as the Sultanate takes its next and important step, diversifying away from oil into other sectors. Logistics is our core business and we believe in Oman’s potential in that area, especially once all infrastructure projects have been completed.”

ROADS WORK: A road-building program is underway in Oman.

Thabet also believes the country's human resources are also a key to its success: “Its people are one of Oman’s strongest assets, and we are proud that our local operations comprise primarily local talent. It already makes over 70 percent of our workforce and our aim is to further grow these numbers. The Omani government is keen on nourishing local talent, and from our side it is great to have a growing talent pool of local experts, who we can groom with our global knowledge in the express and logistics fields.”

Roy Scaria, Country Manager DHL Global Forwarding, is optimistic about developments in Oman’s logistics market. “Once fully completed and synchronized, the infrastructure developments currently underway will significantly enhance both transit speed and efficiency, and they will help Oman add weight to its logistics ambition. In partnership with the Bahwan Group, we are engaged in several key energy projects in the country, and for us as freight forwarders, developments at ports and airports are key enablers, as are developments in road transport, as they in turn enable us to deliver excellence to our customers.”

PLANT LIFE: The LNG facilities at Duqm.

Al Duqm – Creating a major transit hub

Conceptualized as a major transit hub, Al Duqm – situated to the south of Oman on the Indian Ocean – features a refinery, petrochemical transfer facilities, a dry dock and a container port, which could potentially connect GCC states to the Indian Ocean, bypassing the Strait of Hormuz.
With its deep draft, long quay walls and expansive basin, the Port of Duqm is intended to become an integrated, multimodal logistics hub comprising sea, road, air and rail modes of transportation. An airport is under construction and the proposed rail freight and passenger network will eventually link Duqm with a national and GCC-wide rail system. The Port of Duqm is a 50:50 joint venture between the Omani Government and the Consortium Antwerp Port (CAP).
Duqm Special Economic Zone comprises several developments: Duqm Port, an industrial area, a new town, a fishing harbor, a tourist zone, a logistics center and an education and training zone. With a land area of 2,000 square kilometers and 70 kilometers of coastline along the Arabian Sea, Duqm Special Economic Zone (SEZ) is the largest in the MENA region, also ranking among the largest in the world.
www.duqm.gov.om

Overseas investment

As recent low oil and gas prices have dented Oman’s income, private investment is more than welcome, and investors from China have reportedly been found for a 1,172-hectare industrial park at Al Duqm, with planned investments said to include an oil refinery, a cement plant, a factory making pipes for the petroleum industry, an automobile assembly plant, and a one-gigawatt solar power generation facility.

Competitive environment

Oman has a strategic advantage due to its location, which enables shipments to bypass the Strait of Hormuz, and with a multimodal setup, its logistics offering could become very strong. Competition is fierce – from the U.A.E. which has transformed itself into a sleek regional logistics hub with global ambition and infrastructure and processes to match. The final development of Dubai South, including Al Maktoum, Dubai’s second international airport, and its logistics corridor comprising Jebel Ali Port and Freezone, are a hard act to follow. Then there is Saudi Arabia, poised to make it to the top ranks of the global logistics index, with investments to be fuelled by the forthcoming Saudi Aramco IPO.

But while it might be more modest and much lower key than many of its neighbors, Oman follows its own steady path – a strategy, combined with a diplomatic path set by its ruler, H.M. Sultan Qaboos, that has served the country well.

“We are working steadily on our core pillars, investing in infrastructure, facilities and processes, developing our human capital and setting the foundations to allow the country to capitalize on its strategic location,” says Al Hatmi. “Asyad will play its role in putting Oman on the map in logistics terms and raise awareness plus attract business globally.” Michelle Bach

Updated: March 2018
 

Images: MATTES Rene / hemis.fr; Lutz Jaekel/laif; Getty Imgages; PR Port of Duqm; Shell International Ltd; mauritius images/Charles Stirling/Alamy; Comet Photoshopping / Georg Gerster; mauritius images / Godong / Alamy; PR GlassPoint; Fotolia; Thomas Imo/Photothek via Getty Images

Graphic: ddp images