Q: Why do you think Sohar was among fDi’s 2016 Free Zones of the Year?
A: Despite the currently low oil prices and all the global economic volatility we’ve been seeing, we have had a very good run recently at Sohar. Throughput at the port continues to increase steadily and recently surpassed one million tonnes a week for the first time. Last year we had more than 2,500 ships visit the port and we’re on track for more growth in 2016. The port and our adjacent Freezone are interrelated, in the sense that more port traffic generally means our Freezone businesses are flourishing: importing feedstock and raw materials and exporting more finished goods. We’re particularly proud of the fDi Investment Award as we had some key anchor projects push through like the Jiangsu Changbao Steel Tube Company deal. Chinese investors are building a greenfield steel mill to produce seamless steel pipes for a broad range of industries, including oil and gas extraction, chemicals, automobiles and machinery manufacturing.
Q: What achievements stand out from the past year?
A: The past 12 months have been exceptionally busy: the official completion of our new, automated, 1.5 million TEU container Terminal C, which together with a new automated truck appointment system has significantly increased efficiency at our container terminal; the start of our new Food Zone, with a dedicated agro-terminal, which will create many new opportunities for downstream food processing and packaging businesses in the Freezone; the completion of many new and uncongested highways, connecting Sohar to the UAE and Saudi Arabia, which will significantly reduce journey times for our clients’ trucks; more than 200,000 vehicles a year arriving at our general cargo terminal, many destined for two new, presales finishing centres in the Freezone; and, of course, many new Freezone clients.
Q: What are the zone’s prospects for future growth?
A: Growth is always dependent on a number of factors and Sohar seems to have found the right mix for this region. Our location is obviously key, and being located next door to one of the world’s fastest growing ports with over 2,500 ships a year and an abundant supply of feedstock is clearly a big plus for SOHAR Freezone. Add to that excellent landside connectivity, with new and uncongested highways to the UAE, Saudi Arabia and the other Gulf States. Available energy at reasonable rates is also important, along with a good supply of local labour at various skill levels. Finally, the right legal and regulatory framework is vital: Sohar allows 100% foreign ownership and free repatriation of capital and profits; corporate tax holidays of up to 25 years; and no personal income tax, currency restrictions or duty on imports and exports. And thanks to our One-Stop-Shop system, that handles all the permits that need to be granted, setting up a business in the Middle East has never been easier. At present we are focusing a lot of our efforts on Iran and have been taking our first steps to build a stronger profile among Iranian businesses through a number of events in Tehran and Isfahan. As Iran reopens for international business, we know there is a huge upside potential for Oman in general and SOHAR in particular.
Q: What has been the biggest challenge overcome?
A: We have been very fortunate to be able to tap into a wealth of expertise from Port of Rotterdam. As Europe’s number one port, Rotterdam has probably been doing most things longer and better than almost any other port in the world. So there was no shortage of know-how when it came to setting up Sohar. The main challenge was to build awareness for Sohar within the relevant set of Oman. Our neighbours in Dubai have been in this business since the mid-1980s, so the world is very aware that they are there and the good things they have to offer. We set out to do things a little differently in terms of marketing and have expended a great deal of effort over the past few years to put ourselves on the map. We know that investors all over the world are starting to sit up and take notice of what we are doing here in Sohar, and we continue to grow strongly. When investors find out about us, our prime location and the many advantages we offer, the usual reaction is: ‘That’s amazing, why didn’t we know this before?’
Q: In terms of Oman in general, there has been a diversification drive from the government. How are free zones helping encourage economic diversification?
A: Although all the GCC economies still rely on oil as the main source of revenue, their concerted efforts over the past decade have resulted in a much more diversified economy than was the case at beginning of this century. The current low oil prices have given an additional incentive to all the GCC economies to push ahead with their economic diversification plans. Oman is concentrating on the logistics and transportation sector through a consolidated and long-term logistics strategy. The plan is to improve soft infrastructure, support mechanisms and national institutions, to catapult the Sultanate into the top ten of the world’s most logistics-friendly economies by 2040. As one of the region’s prime logistical hubs, SOHAR will play a critical role in these plans. We envisage developing the Freezone as a hub for innovation, especially in the logistics sector, and we will continue to promote a thriving SME culture. We know that SMEs are the best way to create jobs, build prosperity and create a solid foundation for a sustainable and diversified economy.