Salalah Free Zone pulls in new investments in Oman

MUSCAT, JAN 16 – Projects worth several hundred million dollars are currently under various stages of development and implementation in Salalah Free Zone, underscoring the zone’s growing role as a “value creator” for the local and national economy in the Sultanate. According to the Awadh al Shanfari (pictured), CEO, construction is underway on a broad slate of ventures spanning manufacturing, dairy and foodstuff processing, beverages bottling, and logistics and distribution, among other segments. This is on top of the estimated $5 billion in investments, mainly petrochemical, industrial and mineral related, that the free zone has already pulled in previous years.
Speaking at the Oman Ports Conference, organised by Al Roya newspaper on Tuesday, Al Shanfari described the free zone as a key component of the Sultanate’s increasingly pivotal logistics infrastructure, encompassing modern ports, airports, road and transportation corridors, free zones, and support services elements.
Investments pouring into the free zone, the CEO noted, seek to capitalise on its advantageous geographical location adjoining the world-class transshipment port in Salalah, which strategically overlooks the Indian Ocean. Also underpinning SFZ’s investment appeal is its infrastructure, which is being continuously developed based on the customised requirements of investors, he said.
“Our efforts to build the right location value proposition have led us to attract early on a global logistics player to establish operations with SFZ,” said Al Shanfari, referring to logistics giant DHL which is setting up logistics hub with an investment of $12 million. The hub includes warehouses, offices, a logistics training centre and other facilities.
DHL’s success, he further noted, has encouraged SFZ to develop its own warehousing infrastructure with the goal of leasing it to tenants. This strategy has paid off by attracting major international players to set up operations in Salalah, notably in a variety of light manufacturing activities.
Global fashion brand JC Penney, for example, has invested $20 million in a readymade garments enterprise in the free zone, with its output exported primarily to the United States. The venture is capitalising on the Free Trade Agreement (FTA) signed by Oman with the US to secure duty free exports to the United States, he said.
To its credit, SFZ has already attracted two major anchor investors — Octal Petrochemicals, which has invested $1.5 billion in a world-scale PET and APET manufacturing plant, as well as Salalah Methanol which is operating a $900 million methanol scheme in the free zone.
Elsewhere within the free zone, several projects are adding value to Oman’s mineral commodities sourced from mines located in the hinterland of Salalah. Notable is Carmeuse-Majan — a $180 million project that produces quick lime from limestone.
Importantly, several new projects are due to come into operation during the course of 2018, said the CEO. It includes a $50 million milk and dairy production plant of Oman Milk Products, a $2 million foodstuff import and export firm of BMC Al Mehdar, and a $23 million soft drinks and mineral water production facility of Healthy Beverage.
Likewise, Darwesh Investment and Logistics is also developing a cold storage and warehousing complex with an investment of around $10 million.
Buoyed by the billions of dollars in petrochemical, manufacturing and logistics investments, Salalah Free Zone (SFZ) currently accounts for 2.1 per cent of the Sultanate’s Gross Domestic Product (GDP), said Al Shanfari. The zone also contributes around 20 per cent of Oman’s non-oil exports and 22.6 per cent of its manufacturing GDP, he added.

Conrad Prabhu