Logistics to account for top GDP share after oil in Oman

Oman’s rapidly developing logistics sector is being positioned as the biggest contributor to the Sultanate’s Gross Domestic Product (GDP) after hydrocarbons — the nation’s long-standing economic mainstay, according to Dr Ahmed bin Mohammed al Futaisi (pictured), Minister of Transport and Communications. Delivering the keynote address at the Oman Ports Conference, which was held at the Grand Millennium Muscat yesterday, he said the logistics sector has been singled out by the Omani government to hasten the Sultanate’s economic diversification away from its current reliance on oil and gas to support GDP growth.

“As our GDP is still dependent on oil, it remains sensitive to changing oil prices; consequently as soon as there is a dip in oil prices, our GDP goes down as well. Thus, for quite some time now, there has been a focus on diversifying the economy, and logistics is a sector that Oman will be depending on to achieve this goal,” Dr Al Futaisi said. “We want logistics to be a second source of GDP and for Oman to be global logistics hub by 2040. Based on our qualitative and qualitative ambitions, the sector’s GDP contribution is targeted at RO 3 billion in 2020, up from RO 1.1 billion presently. It is projected to rise to RO 14 billion by 2040 — very ambitious indeed, but not impossible to achieve!” he explained.
The daylong event, organised by Al Roya in cooperation with the Ministry of Transport and Communications, opened under the auspices of His Highness Sayyid Shihab bin Tareq al Said, Adviser to His Majesty the Sultan. Also in attendance were presenters from Pakistan and China, as well as top officials representing a wide array of port, transport and logistics entities operating in the Sultanate.
Oman’s strategic geographical location overlooking the Arabian Sea and Indian Ocean lends it a natural advantage in its quest to become one of the Top 10 global logistics destinations by the year 2040, said the Minister. Given this location astride international and regional shipping routes, goods despatched from any Omani port can reach any international port anywhere in the world in less than 14 days. Additionally, the Sultanate can serve as a gateway to consumer markets in the Arabian Gulf, he stated.
Underpinning the robust transport and logistics infrastructure that Oman has since put in place are three principal ports at Sohar, Duqm and Salalah. But far from being mere maritime ports, these ports are integral parts of full-fledged “economic zones” at these three locations, the Minister pointed out.
“These three ports are designed to be complete economic zones complemented by airports, free zones, industrial estates, road connectivity, and a link to the GCC Railway Network in the future,” Dr Al Futaisi said.
The proposed railway project will be key component of the logistics strategy when it is eventually implemented, the Minister stressed. “Although the project hasn’t yet commenced, the entire network has already been designed. We are also trying to preserve the corridors for the future as and when the GCC Rail Project is revived. We are looking forward to linking our three economic gateways at Sohar, Duqm and Salalah with the GCC network. In the meanwhile, we have started work on a smaller version of the rail project, which will be designed to carry mineral commodities to Duqm Port. This project is still under study.”
But although the “hard” components of the nation’s transport and logistics infrastructure — encompassing ports, airports, roads, free zones and so on — is substantially in place, this will not in itself secure Oman’s long-term logistics ambitions, Dr Al Futaisi pointed out. Equally imperative for success, the Minister stressed, is the “soft infrastructure” necessary to ensure, among other things, speedy delivery of goods, cost efficiency, and competitive tariffs.
“Going forward, the focus is now on the soft infrastructure. We will work, over the next 5 to 10 years, to develop the enabling factors to speed up the clearance of cargo, put in place laws and procedures to support this goal, adopt modern technologies, and boost efficiency. We have worked very hard over the last two years to bring the entire sector under one roof with the Ministry serving as a policy-maker and as a link with the Cabinet.”
Significantly, logistics already employs 80,000 workers — a goal set for achievement in 2020, Dr Al Futaisi said. By 2040, this figure is set to soar to 300,000, along with a position for Oman among the World Bank’s Top 10 Logistics Index.
“We have a clear vision with targets and ambitions in order for us to achieve this vision. However, it is not the hard infrastructure that will help achieve this goal alone, but soft infrastructure as well, in the form of trade facilitation, human capital, technology and improved marketing.”

Conrad Prabhu