ECONOMY

Oman has put Dhofar at the heart of a major economic transformation

With the inauguration in .November1998 of Port Salalah, the Sultanate of Oman has confirmed the economic policy of diversification, privatisation and self-reliance decided on by His Majesty Sultan Qaboos. The three objectives have now materialised for all the world to see.
Once again, Oman has shown that combination of audacity and wisdom, which had made its reputation for thousands of years. That fantastic project is now a dream come true, generating new projects and new economic possibilities for the Dhofar, giving it a new lease of life and a new sense of responsibility.
The Dhofar has always played a major role in the trading history of Oman. It was the land of the purest of frankincense, the starting point of the many trading routes, by land or sea, that took that precious resin to Asia Minor, to the Far East and the Mediterranean...Frankincense first, then horses and spices...The Dhofar has always been a trading nation.

Oman's orchards and granary A leading producer of coconut and bananas

Dhofar has always essentially been a farming country. Even today, it is considered as the granary and orchards of Oman. Its tropical climate and the monsoon rains during the summer months, from the end of June to the end of September, guarantees enough water for all the crops of fruit, vegetables, sugar cane, grains (corn and wheat) and animal fodder grown in the plains.
The water comes from two sources, the fresh water wells and the springs at the foot of the mountain which flow down together into streams to the coastal plains. Salalah is nestled in the midst of huge coconut and banana plantations, papaya gardens, orchards and orange groves.
The Dhofar is the major contributor to Oman's 93% self-sufficiency rate in fruit. It produces 7000 tons of coconut of which 1700 are exported. The coconut plantations cover 400 hectares of the arable land. The government is at present looking at the possibility of opening factories to produce long-life pasteurised coconut milk, charcoal and manure but this would require 320 ha of land producing 3 million coconuts to be viable. The Dhofar is also the main producer of bananas. PAMAP (the Public Authority for Marketing Agricultural Produce) manages and operates a banana ripening and packing factory in Salalah.
In addition we must not forget the frankincense tree and its lovely white crystal beads which yields 7000 tons and represents a revenue of 30 million Omani rials. A tree can produce between 10 and 20 kg of crystallised gum, which seems quite substantial when one sees the size of the beads that run down the tree to crystallise on the ground. Nowadays, frankincense is bought mainly by the perfume industry, although it is still widely used in religious ceremonies in many countries of Asia.

Pastures and cows-an unexpected sight in Oman And maybe soon, thanks to the agriculture and the important fishing resources, a new food industry

It can be very surprising, especially for tourists, to see on the slopes of the Dhofar mountains herds of cows, Dutch or other, as beautiful as Jerseys. There are also herds of goats and camels in the mountains and in the desert. Two third of the Dhofari population of 222000 inhabitants is involved in live stock farming! So it is obvious that this activity plays an important part in its economy. In addition, the recent discovery of underground water reserves in the Nejd is opening the possibility of transforming 2 500 hectares of desert into an oasis. Another dream that could come true.
Fishing is another sector of the economy which is in full expansion in Oman. In Dhofar the ocean's huge resources (sardines, lobsters, abalone, sharkhah, safilah and rubiyan...) are opening export possibilities and creating new industrial activities: animal food (dried sardines) or fertilisers and canning factories. These are often been set up as . -^tort, joint-ventures with foreign export companies and follow the new policy drawn by the Sultanate. Another interesting example and a direct spin off from the new port is the opening at the Raysut Industrial Estate of the Dhofar Fisheries, a joint-venture with a Spanish company with whom the Omani have signed several fishing agreements.
Thanks to the Sultanate's investments in agriculture and fisheries a food processing industry is developing in Dhofar. The Salalah Flour Mills Company which settled on the Raysut Industrial Estate in 1997 is a shining example. Its objective is to produce high quality wheat flour and various types of flour based product. A year on, the company has successfully penetrated the East African market commanding a premium over the heavily subsidised European products. Several large Omani groups, Shanfari, Galfar, Muscat Overseas Group, jointly with ASB and Jobcorb have invested in this company, knowing the need Oman had for wheat flour. It was built by the Swiss and equipped with state of the art technology. Its production capacity of 300 MT per day can easily provide for the needs of the country and for export. This justifies its location near the port of Salalah within easy reach of the markets in East Africa and Yemen.

Two kilometers from the new port, Raysut Industrial Estates is ready to welcome new industries set up in joint-ventures with foreign companies

Raysut Industrial Estates was set up in November 1992, like other industrial estates, to encourage Omanis to invest in their country's industrial development, in order to diversify and privatise the economy. These zones can be found in the main areas of Oman, fully equipped to welcome Omani companies and joint ventures. They offer definite financial and fiscal advantages (exemption from custom duty on imported raw material and machinery required for industrial production, 5 years of tax exemption that can be extended another five years...). Raiysut Industrial Estates is 15 kilometers from Salalah, near the port. That proximity is a definite advantage that will help in its development (1,030,000 m2 now extendable, 158 industrial plots ranging in area from 1350 to 12,000 m2 and a zone of heavy industry). Leading industrial companies can be found there: Raysut Cement, Salalah Flour Mills, Dhofar for Vegetable Oil, Dhofar for Fish Industry, Agricultural Fertilizers, Salalah Medical Supplies, paper mills, aluminium products, leather...25 in total at the moment, but this figure is quite likely to increase before the year 2000. The port like the Raysut Industrial Estates benefits from an excellent road network which links Salalah to Muscat, and Salalah to Yemen through a very picturesque road cut through the mountains.
Salalah airport has already been extended to make it possible for three planes to land at the same time.
However, further work will be carried out soon as there has been a demand from the business community for direct flights to the GCC countries. Salalah Port Services would also like to offer sea-air transhipment facilities like in Dubai and the airport needs to be equipped accordingly. This should increase the traffic at the airport and bring in large cargo planes.

Construction, a sector in full expansion

The imposing Raysut Cement Company is close to the Raysut Industrial Estates. Over the last two years the factory has been extended and modernised. It is not surprising if one takes into consideration the new infrastructures Oman is setting up to diversify its economy. The roads have improved and the ports and airport have been extended. Tourism in Salalah like in the rest of Oman is in full expansion and requires new hotels. The construction sector is very buoyant in Oman.
In 1997, the demand for cement was about 1.4 million tons and 500,000 tons had to be imported. For this reason, a second production unit was built at the Raysut Cement factory to increase its capacity from 285,000 tons in 1997 to 750,000 tons in 1998. It is now the largest cement factory in southern Oman. The Omanis represent 37% of the workforce. Job training programmes are provided by the company and employees are sent abroad to complete their university studies.

Port Salalah will put Oman on the global map

The year 1998 will go down as an important milestone in the seafaring history of the Sultanate of Oman. It was in this year that a world class container terminal at Port Salalah was dedicated to the Nation as a perfect example of government and private sector partnership. (Abdul Aziz Al Shanfari, Chairman of Salalah Port Services CO S.A.O.G.).
This port, which has one of the most modern container terminals in the world, is a remarkable example of the cooperation between government and private investors (government 20%, Government Pension Funds 11%, Omani private investors 19%, Sea-Land Service 15%, Maersk 15% and public offering 20%) and has been operational since 1 November 1998. That day also saw the arrival of two of the huge container ships that sail the oceans under tighter and tighter rotation schedules.
For these ships, time and easy loading and unloading has become a priority. By offering I ho possibility of transferring cargo onto feeder vessels, which sail to the Gulf, India or the Pakistan, Salalah cuts a few days on their rotation and reduces their costs. It is well known that a mothership costs between 8,000 and 16,000 dollars a day. Bombay, Karachi, Colombo are also very important ports in the Indian Ocean but they have longer waiting time which increases costs. The risks of strikes in those ports are also high.
The geographical situation of Salalah, at the mouth of the Arabian Gulf on the Indian Ocean and close to the great sea routes linking East to West, Asia to Europe and then to America, makes it an ideal port of call. It is a way of gaining access to the Gulf, which is still considered by transport companies to be politically highly sensitive without having to endure the heavy traffic especially through the strait of Hormuz. On the other hand Oman has offered perfect stability for the last 30 years.
Port Salalah consists of a conventional port and a container terminal, both under the authority of Salalah Port Services Co. SAOG. The company has been granted a 30 year concession by the Governement of the Sultanate of Oman to lease, equip, operate and manage the container terminal port facility.
The conventional port was opened in 1974 and extended in 1982. It has six berths with a 5 and 10 meter draught and a jetty for offloading oil tankers where the draught is 12 m. That 300,000 m2 port is still operational, but it is the new 550,000 m2 container terminal (1600 x 345 m) that Oman has just built that is supposed to change the Dhofar economy.
The new container terminal has four berths totalling 1260 m and seven shore cranes operational from July 1999. Six Japanese cranes are the largest in the world with a 53.5M outreach and lift capacity of 65 tons. The draught is 16 meters which would accommodate the current generation of Post Panamax vessels and any anticipated version of the next generation vessels, capable of transporting 10,000 containers.
The turning circle is 500 m in diameter. There are already many facilities for ships, stevedoring, storage of non refrigerated containers, refrigerated container plugs, container maintenance and repair, vessels berthing, tug services, pilotage, medical centre, navigational services, bunkering…
Many additional facilities essential for the development of the port are planned, such as the construction of more container berths and additional ship repair facilities, bulk handling terminals (grain, cement and oil), the setting up of a free trade zone, of an export processing zone and of sea-air transshipment facilities in due time at the Salalah airport.
When one knows the importance of that means of transport in Dubai, one understands that Salalah wants to offer the same services. A steel mill and a refinery are also planned and the oil terminal will be relocated.

Salalah Port Services provides the benefits of superior productivity thanks to its design as a world class transhipment port

A saving of two to three days on rotations, a greater flexibility with the itineraries set by companies, a highly sophisticated equipment to insure quick transhipment operations give Salalah many advantages.
The 15% shareholding of Sea-Land Services Co. and Maersk in Salalah Port Services will certainly inspire other maritime transport companies. The two world class shipping companies expect to have approximatedly 17 vessel calls per week which includes both the line-hauls (mother) vessels and their feeder network vessels that will provide oncarriage of ocean containes to other Indian Ocean Rim ports. Other international carriers have also expressed an interest in using it and will test the port's capacities very soon: 100 moves per hour per line haul vessels. The infrastructure and equipment at the port have been specifically designed to handle that level of work.
Following the success of berths 1 and 2 in November 1998, the government which is responsible for building the infrastructure, has decided to bring forward the work schedule and make berths 3 and 4 operational in May 1999. The expected capacity when completed will reach 2 million TEUs.
The East-West route shows an annual increase of 9%. According to Jack Helton, the General Manager of Salalah Port Services, Salalah offers excellent distribution routes, so many international companies will be able to set up their own distribution hubs for various commodities, particularly for the Indian Ocean rim. A lot of companies have already approached them to establish warehouses. The big ships will also need back up in terms of maintenance repairs, stores...The feeder vessels required for distribution will create economic growth and development. Salalah's transhipment hub is a very important strategic development which has the potential to alter radically the structure of feeder patterns in the Gulf and South Asia.

Port Salalah has already created over 500 new jobs, expected to reach 800 soon. These figures are full of promises for the Dhofaris. The ratio of Omani nationals working at the port is over 60%. Training courses will increase this percentage considerably. These new jobs have led to a programme of construction of housing, schools and hotels for all the families and the businessmen who will come to Dhofar.
The port has also led to the development of the Raysut Industrial Estate and to the project of a new free trade zone. Many people are interested in the economic free trade zone because they would like to provide value-added service to some commodities that would be sourced from the Indian Ocean rim. The mother ships can give the importers or exporters direct service to anywhere in the world.
The port will give producers instant access to markets, making them competitive, especially for fresh produce, fruit and vegetables.
The new terminal will act as a catalyst to the national goal of internationalisation of the Omani economy.

Tourism A multi-faceted sector in full development

Amongst the outstanding construction projects, there is the Hilton, near the port at Salalah. It is a magnificent 5 star hotel (opening in August 1999). Set in beautifully landscaped gardens on the beach, this low rise hotel has been thoughtfully designed to reflect Omani tradition. It initially has 147 rooms and two separate wings, one reserved for the business community and the other for tourists, so the ones do not disturb the others. The idea is quite interesting. The hotel will also offer long stay formulas (up to 45 days) for those who work in Dhofar and even for tourists who would like to stay with their families. The hotel also boasts meeting rooms, a large function hall and even a shopping mall. Sports and recreation facilities include 2 flood lit tennis courts, state-of-art gymanasium and an attractive pool complex.
The hotel is also a good example of private investment (Hilton 20%, the Omani group Oryx 20^, 40^ has been floated on the market and the balance was provided by other Omani investors).
Tourism in Dhofar is in full expansion (56 000 tourists in 1997). Twenty years ago there was one single hotel, the Holiday Inn, the first to believe in tourism in Dhofar. Located on the beach, in the middle of a magnificent garden and surrounded by coconut and papaya plantations, it is also close to the Royal Stables. The hotel has 100 rooms, villas and a conference centre and at its feet lies the longest of the Dhofari beaches. You can walk for miles along the beach, swim or just watch the fishing boats come back.
Now there are several hotels in Dhofar: two large ones at Salalah (Haffa House near the airport with swimming pool, and Hamdan a hotel with 45 luxury villas, swimming pool and tennis). Dhofar Tourism Development is building, beyond Mirbat, a very large seaside resort. The coast there is wonderful, the small creeks are unspoilt, and the colours of the sea are magnificent.
Dhofar is endeavouring lo develop two kinds of tourism: a seasonal tourism during the monsoon. This is when families from Oman, the other GCC countries or the Middle East come to Dhofar seeking freshness, rain and greenery. They stay quite a while. The Oman Air flights are fully booked, the four wheel drive come in droves, ready to face the 1000 km drive from Muscat to Salalah for a glimpse of the Omani Switzerland. The families either stay in hotels or hire villas.
In the 9 months that follow the monsoon, the tourists are more likely to come from Europe, Australia, Asia or America to discover Oman or go on a cruise. Many cruising ships stop at Salalah. These tourists want to discover everything about Dhofar, they want to retrace its history, visit its mountains, its desert, its old villages and make the most of its lovely beaches. In Dhofar combining tourism with holiday is easy.
It would be a pity not to enjoy this country which now has such excellent roads. One of the most spectacular is without a doubt the one that has been cut through the mountain from Mugsayl to Yemen. It is a remarkable achievement which has excellent economic repercussions for the port. It also offers tourists magnificent views of Jebel Al Qamar, a landscape which is very different from other mountains in Oman showing us Omani diversity.
It is also necessary to add to this outline ol the Omani economy, the dynamism of the Chamber of Commerce and Industry of Salalah. It is always there for companies wanting to settle in Dhofar to help with procedures, installations and to facilitate contacts with the various authorities. It is also present abroad, promoting Dhofar to investors and tourists. It is a driving force in the new economic policy in Oman, within its three main objectives (diversification, privatization and autonomy), which is perfectly illustrated by Salalah Port Services.