Haider Al lawati –
Oman is aspiring to increase the contribution of the logistics sector to the GDP by almost RO 14 billion by 2040, according to a statement made recently by Dr Ahmed bin Mohammed al Futaisi, Minister of Transport and Communications. It gives hope that the logistics sector will be the second major source of GDP in Oman, turning it into a global logistics hub by 2040.
In 2016, Oman was ranked high on logistics performance, according to the latest World Bank indicators, securing 48th position globally as against 59th in 2014. It has moved 11 spots up the list over the past two years. This highlights the efforts made by the government and private institutions in providing logistics services to Omani economy.
Data published in the Tanfeedh book shows that growth rate in Oman’s logistics sector has been relatively stable at 8 per cent since 2010, with over 60 per cent coming from the land and sea transport sectors.
Data also indicated that all GCC States are strategically positioned to be a global hub for logistics, but have only attracted 3.5 per cent of overall global trade. As for the Sultanate, despite a 75 per cent decline in trade balance during 2014-2015 because of its dependence on oil, the total volume of circulated commodities has risen from 93 to 103 million tonnes.
Considering the cost of export and imports, the Sultanate is known for its low-cost competitiveness compared with other GCC States and logistic centres.
Nevertheless, there are many challenges facing logistics services sector. Despite the growth of the sector and the low cost of export and import, the Sultanate kept losing its share of container traffic through GCC’s ports despite the rapid growth in air cargo sector by 33 per cent and increase in air cargo traffic to GCC States from 6.6 per cent to 10 per cent of the total global share.
In addition, the World Bank report notes that the level of efficiency and speed of customs clearance process and the shipment tracking system are still below the required levels in the country. Also in sea and air transport, destinations covered by Omani seaports and airports worldwide are lower compared with the neighbouring countries.
Moreover, business practices in Oman take longer than other logistics centres in some GCC States. As for opportunities and potential in this sector, the business environment in the logistics sector is associated with many factors affecting its business operations.
Logistics sector is primarily based on infrastructure as its availability makes it easier for investors and employees in the sector to develop and expand their business activities.
Investors in the sector face challenges related to investment laws and procedures for clearance of goods in transit, which require simplification and facilitation.
Technology and digital services are important factors in improving the business environment, keeping abreast of global developments and increasing investment and global business traffic. Attracting private sector to invest in logistics will improve the sector and facilitate the development of its business environment.
Data from Tanfeedh book shows that public sector indicators targeted at this stage of the programme put contribution of this sector to the GDP to around RO 2 billion by 2020 and aim at increasing the number of job vacancies provided by the logistics sector from 67,469 in 2016 to 100,000 and upgrading investment by at least RO 1 billion by 2020.
There is also the target of reducing the timeline for finalising procedures for clearing imported cargo in sea freight from 7.2 to 1.5 days and increasing capacity in ports from 3.1 to 7 million tonnes (equivalent to 20 feet capacity) by 2020, in addition to establishing the port community system across the Omani ports.
The lack of an integrated electronic system containing all documents and information relating to goods headed for all Omani ports will reduce the efficiency of processes and procedures associated with the system.