Oman: A Future Logistics Hub Of The Middle East

Last Updated: 22 November 2017
Article by Omar Omar and Arif Mawany

The growth and development of Oman's transportation and logistics infrastructure has recently received a number of catalysts with the aim of building on Oman's ability to compete with other players and potentially acting as a key logistics hub in the Middle East.

While the road, air, port and rail sectors have all been prioritised for growth by the Government, it is the port sector that has benefited the most from external investment and recent political developments in the Middle East. Set out below is a description of recent activity which has taken place in the transportation sector in Oman along with key legislation that applies to certain specific sectors.

Sea

Historically, the prominence of the port at Muttrah in Muscat was acknowledged by the Greek geographer Ptolemy who saw Muscat's importance in acting as the last watering place for ships heading out of the Gulf to India, East Africa and beyond. Nowadays, the port at Muttrah is used predominantly for tourism purposes after commercial operations were relocated to Sohar. 

The main commercial ports in Oman are situated in Sohar, which lies midway between Muscat and Dubai, and Salalah, which sits on the southern coast of Oman ensconced on the Arabian Sea. Readers will immediately recognise that the geographical locations of these ports offer quite different benefits to the transportation of goods by sea and these benefits were fully acknowledged when Oman was considered a pioneer in seafaring and maritime transportation during the 18th and 19th centuries. As the Government of Oman realigns various facets of its economy away from hydrocarbons, this historical feat may repeat itself with evidence in recent months highlighting that trade between Oman and Qatar has increased by 2000% since June 2017 as logistic companies continue to be attracted to Sohar. 

The current major investment story in Oman is the development of the Port of Duqm which was established as a joint venture between the Government of Oman and the Consortium Antwerp of Belgium and recently attracted an $11bn investment as part of China's One Belt One Road initiative. Although very much a long term project, the opportunities at Duqm are large scale and its key advantage is that it is not positioned near the Straits of Hormuz and consequently does not suffer from the usual problems which are associated with busy trade routes.

The Sohar freezone was created by Royal Decree No. 123 of 2010 and the emergence of Sohar Port as a serious logistical hub in the Gulf region is demonstrated by an 11% increase in container volumes and a 24% increase in dry bulk cargo during Q2 2017, when compared with the same quarter of 2016. Sohar as a city has received significant investment in highway development to enable it to be connected with the UAE and Saudi Arabia, attracting the attention of the region's third party logistics operators. It is also home to one of Orpic's oil refineries and Sohar Aluminium which has an annual production capacity of 375,000 tonnes of high quality aluminium.

Since opening in 1998, the Port of Salalah which has quietly remained one of the largest integrated ports in the region, recently jumped 14 places in the Lloyd's Maritime Intelligence List of the world's top 100 ports following a 29% increase in activity during 2016. As noted above, Salalah benefits from its unbridled location on the southern coast of Oman, joining India and the East with Africa.

To attract growth to the port areas, the Government has offered a range of business incentives including 100% ownership, low share capital requirements, corporation tax breaks, a single licence window and lower Omanisation requirements as well as a favourable customs framework. These and other incentives are set out in the Ministry of Commerce and Industry Ministerial Decision No. 35 of 2016 in relation to the Sohar Freezone and Royal Decree No.62 of 2006 in relation to the Salalah Freezone. 

Air

For many years, capacity at Muscat International Airport was limited to receiving a few million passengers annually. From 2018 the Ministry of Transport and Communications ("MOTC") expects the new Muscat International Airport to be fully operational and with the capacity to accommodate over 12 million passengers annually. Plans are already afoot to gradually increase annual passenger load to 48 million passengers per year so that the Government can fulfil its vision of having Muscat airport among the world's top 20 airports by 2020. 

Following the development of Salalah airport, which can be expanded to accommodate six million passengers annually, links will be enhanced with Duqm, Muscat and the wider GCC. Following the establishment in 2016 of SalamAir, Oman's first low cost airline, Oman's overall air transportation infrastructure has vastly improved for businesses and tourists alike. 

The regulatory and legislative aspects of civil aviation matters in Oman are assumed by the Public Authority for Civil Aviation which was established by Royal Decree No. 33 of 2012 and is also the responsible body for issuing licences, enforcing bilateral air agreements between Oman and other countries and developing policies for the security and safety of airports and air transport.

Roads

Oman's roads were recently ranked by the World Economic Forum in the top eight globally and second in the GCC which reflects the sizeable financial commitment the Government has made to achieve and maintain high quality road infrastructure. High quality road infrastructure shortens travel distances, facilitates movement of goods and people within Oman and to neighbouring countries and improves the efficiency of an economy. 

Several large scale road projects have been planned which will have the effect of enhancing the transportation network, including the Batinah Expressway. Some of the projects involve linking roads to neighbouring countries, major cities and the air / sea ports in Oman as well as improving the overall network of road infrastructure inside the country. These initiatives, coupled with the creation of a public transport regulatory authority, are aimed at reinforcing Oman's potential as a major logistics hub served by a strong road transport sector. 

Currently the regulatory and legislative aspects of road transportation in Oman are assumed by the MOTC.

Rail

Although funding constraints postponed the plan adopted by the member states of the GCC to create a rail network linking each GCC member state, Oman recently announced through Royal Decree No. 24 of 2017 the creation of a 400km railroad to join the mineral mines in Salalah with Duqm. Both Salalah and Duqm are considered by the MOTC as central areas of development for the country. This project is only a smaller part of the wider Oman national railway network which is estimated at 2,135km in length and has been designed to serve mixed freight and passenger traffic connecting the major ports at Sohar, Duqm and Salalah to the rest of Oman.

Oman Rail is the body responsible for rail transportation in Oman under the overall supervision of the MOTC.

One Belt One Road Initiative

As outlined above, China has been working with Oman (among other countries) in an attempt to revive the Maritime Silk Road which was an ancient trading route created many centuries ago. The One Belt One Road initiative involves boosting trade by improving the infrastructure used to transport goods between China, Central Asia, Persia, Arabia, Africa and Europe. A total of $150bn has been committed by China to countries that have agreed to be part of the initiative. In Oman, the prime beneficiary of this initiative is Duqm which recently received an $11bn commitment from China to develop a port, a dry dock, refinery, storage house for construction material, methanol plant, vehicle assembly plant and a hotel. 

The One Belt One Road initiative is a welcome catalyst to the Omani economy. Coupled with the Government's plan to move forward with the projects outlined above in the various transportation sectors, the future of Oman's logistics capability is promising. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions