There is a quiet revolution underway along the Sultanate of Oman’s land borders. It does not involve speeches or summits alone—it is being built with asphalt, concrete, and cross-border customs corridors. At a time when global supply chains are fracturing under the weight of tariff wars and maritime disruptions, Oman has chosen to answer with infrastructure. Two special economic zones—one facing the UAE, the other facing Saudi Arabia—are being constructed not merely as industrial parks, but as economic bridges between three of the Gulf’s most consequential economies.
The numbers speak clearly. Total committed investment in Oman’s economic and free zones crossed RO 22.4 billion by the end of 2025, rising 6.8 per cent year-on-year. Over 138 new investment contracts were signed in the first half of 2025 alone, with the industrial sector accounting for 97 per cent of incoming capital. The zones now employ nearly 85,000 workers, including over 30,000 Omanis—a localization rate of 36 per cent that is quietly becoming one of the most effective job-creation engines in the country.
AL RAWDAH: THE OMAN–UAE INDUSTRIAL CORRIDOR
On the eastern frontier, the Al Rawdah Special Economic Zone in the Wilayat of Mahdha, Al Buraimi Governorate, represents a historic first: a joint venture between Oman and the UAE to build a shared industrial ecosystem. The agreement, signed in May 2025 by OPAZ and Mahdah Development Company—a joint venture majority-owned by DP World—covers a 50-year usufruct period. Phase 1 spans 14 square kilometers, with the master plan allowing expansion to 25 square kilometers.
What makes Al Rawdah genuinely distinctive is geography. Positioned just 10 kilometers from the UAE border, equidistant from Sohar Port and Jebel Ali Port, the zone offers dual-market access from a single location. Goods manufactured here can reach Dubai’s global shipping lanes or Oman’s Indian Ocean trade routes with equal ease. Bilateral non-oil trade between Oman and the UAE reached a record AED 56 billion in 2024—a 9.8 per cent jump—and Al Rawdah is designed to accelerate that trajectory.
Phase 1 targets manufacturing, logistics, pharmaceuticals, food processing, plastics, mining, and automotive components. A 200,000-square-metre dry port is under development. The incentive package is aggressively competitive: a 10-year income tax exemption extendable for two additional terms, zero customs duties, 100 per cent foreign ownership, and a one-stop-shop licensing process. By January 2026, OPAZ and DP World had confirmed the Phase 1 roadmap, and leading UAE firms—including Conares, Apparel Group, and Al Bayader—had signed Letters of Intent.
EZAD: THE OMAN–SAUDI ARABIA GATEWAY
On the western border, the Special Economic Zone at Al Dhahirah near Ibri tells a complementary story. Spanning 388 square kilometers, EZAD is being developed in coordination with Saudi Arabia’s Economic Cities and Special Zones Authority. Phase 1, covering 20 square kilometers, had reached 14.9 per cent completion by early 2026, with 17 kilometers of roads, a 6.3-kilometre wadi diversion system, and solar-powered infrastructure already taking shape.
EZAD’s strategic anchor is its four-square-kilometer dry port, operated by ASYAD Group, complete with veterinary quarantine and specialized customs facilities. This inland terminal directly addresses the congested Al Rubaa Al Khali border crossing, enabling customs clearance and consolidation before goods reach the Saudi border. EZAD aligns seamlessly with Saudi Arabia’s Logistics Corridors Initiative, which seeks to redirect cargo flows toward the Red Sea coast—transforming Oman into a genuine land bridge to the Kingdom’s interior.
TRADE AGREEMENTS: THE MULTIPLIER EFFECT
World-class infrastructure needs market access to deliver returns. The Oman–India Comprehensive Economic Partnership Agreement, signed in December 2025 and ratified via Royal Decree shortly after, is the first bilateral trade pact of its kind between India and a single GCC nation. Oman has eliminated duties on 98 per cent of tariff lines, encompassing 99.4 per cent of Indian exports by value. India has opened 78 per cent of its tariff lines in return.
For manufacturers considering either zone, the CEPA creates a compelling proposition: source raw materials from India at preferential rates, add value inside an Omani SEZ under generous tax conditions, and re-export finished goods across the Gulf, Africa, and Europe. The broader GCC–India Free Trade Agreement remains under negotiation, with talks expected in the second half of 2026. Until then, Oman’s bilateral CEPA provides a head start into a 1.4-billion-consumer market that no neighboring state currently holds.
RAIL, ROAD, AND RESILIENCE
Underpinning both zones is the Hafeet Rail corridor—the Arab world’s first cross-border railway—linking Abu Dhabi to Sohar Port via 2,500 meters of tunnels through the Hajar Mountains. Each freight service moves the equivalent of 300 trucks, cutting emissions by 80 per cent. For Al Rawdah, rail means rapid access to global shipping. For EZAD, overland corridors combined with deep-water ports create routing that avoids both the Strait of Hormuz and the Red Sea—a supply-chain insurance policy whose value grows with every geopolitical tremor.
Both zones sit at the heart of Oman’s 11th Five-Year Development Plan (2026–2030), targeting 4 per cent annual GDP growth, 300,000 new Omani jobs, and private-sector output reaching 56 per cent of national income. Manufacturing is projected to grow at 5.9 per cent annually, transport and logistics at 7 per cent, and the digital economy at 10.8 per cent. Royal Decrees 38/2025 and 39/2026 have consolidated OPAZ into a single-window regulatory authority covering licensing, environmental approvals, and municipal services. That OPAZ’s top ranking in Oman’s Government Institutions Performance Index in 2025 reflects institutional seriousness that shapes investor confidence.
For businesses in pharmaceuticals, food processing, metals, logistics, chemicals, automotive components, and clean energy, the case is grounded in specifics: competitive operating costs, duty-free access to India’s vast market, connectivity to two major ports and the region’s first cross-border rail network, and a 50-year development horizon backed by transparent regulation. Al Rawdah’s Phase 1 plots open from late 2027; EZAD’s roads and dry port are materialising now.
Oman’s strategic insight is deceptively simple: in a world where borders are increasingly becoming barriers, the nations that turn theirs into gateways will lead the next chapter of global trade. That is precisely what these two zones are designed to do.
Oman Observer is now on the WhatsApp channel. Click here
