By Bader Al Kiyumi — A new economic sector centring on transport and logistics activities is taking shape in the Sultanate. Oman’s government has shown commendable resolve in putting in place the underpinnings of this promising sector — goaded no doubt by the sharp downturn in global oil prices. After all, it is often in times of economic crisis that we are able to discern the contours of emerging and new opportunities waiting to be unlocked for the benefit of the nation and its people.
Indeed, the Ministry of Transport and Communications has moved quickly to capitalise on the inherent strengths offered by the Sultanate’s strategically advantageous geographical location to kickstart the development of logistics as a potentially lucrative economic sector.
Our seaports, airports, free zones, industrial parks, expressways, carriageways, and a future rail network to boot, are all pieces of a jigsaw that if suitably pieced together can unlock synergies of a logistical kind.
That these synergies have the potential, within the next 25 years, to propel Oman into the ranks of the Top 10 logistically enabled economies of the world speak to the long-term vision of our nation’s policy planners.
While logistics in itself is a relatively new economic pursuit, its constituent elements have long been the subject of strong investment and development over the four decades of Oman’s modern renaissance. Several billions of Omani rials have been ploughed into the construction of, among other elements, world-class carriageways, seaports and airports.
The goal now for the Omani government and stakeholders in the public and private sectors, is to leverage this infrastructure to drive the growth of logistics-related activities in the Sultanate. And given Oman’s distinctive geographical location, within relative proximity of booming consumer markets in the wider Gulf and Middle East, South Asia and East Africa, it’s not hard to see why logistics is such a promising economic pursuit.
Tanfeedh — The National Programme for Enhancing Economic Diversification — has studied the potentially immense economic contribution that logistics can make to the nation’s Gross Domestic Product. Along with the manufacturing, tourism, mining and fisheries sectors, logistics has singled out by Tanfeedh as an emerging industry with promising potential.
But advantageous geography alone does not translate into revenues or jobs for the Omani economy.
Trade and investment will likely flow only to destinations that have business-friendly regulatory frameworks, speedy and efficient bureaucratic processes, and technology-driven licensing systems.
Last week, I had the opportunity to meet with prospective investors weighing investments in logistics related activities. Some cited bureaucratic delays and other challenges that must be addressed if Oman’s investment appeal is to be enhanced. There was also broad consensus on the need for digitised services to drive the growth of this industry.
“Licensing processes should be simplified, on the one hand, and expedited, on the other,” one investor commented to me. The remark was not an isolated one. At its ‘Labs’, Tanfeedh too acknowledged challenges in providing speedy licences and approvals in response to investor applications, alongside the deployment of online and digital systems to aid this process.
Not surprisingly, Tanfeedh has called for processing licensing applications within 1.5 days, down from the present norm of 7.2 days on average.
A World Bank report on Oman has also deplored the relatively tardy handling of customs clearances of goods and the tracking of shipments. Air and maritime connectivity with destinations around the world, which is key to enhanced trade and commerce, is simply inadequate, according to the report.
Fortunately, the government and other stakeholders are taking bold steps to address these and other shortcomings that may constrain the nation’s ability to deliver on its long-term strategic logistics goals.
Construction work, for example, on a new land route between Oman and Saudi Arabia is being completed. When operational, the new road will cut the distance between Suhar and Riyadh by as much as 800 km. It will replace the existing 2000 km route via the United Arab Emirates (UAE).
Likewise, there needs to be a concerted effort to leverage our very well developed logistics infrastructure to attract more shipping lines and businesses to Oman, while targeting new markets overseas. Our deep water ports at Suhar, Duqm and Salalah have much to offer international investors and businesses. Each has enough capacity to handle new maritime traffic and cargo throughput.
Clearly, the need of the hour is to sign up new economic agreements and bilateral trade pacts with friendly countries around the world with a view to bolstering trade volumes. Given Oman’s excellent road networks, more should be done to facilitate overland trade with our neighbours. Also indispensable to the goal of developing the logistics sector of Oman is the need to sign up new air and maritime links with destinations in the region and beyond.