[oman-l] Digest Number 71

[Farida Abdul Halim]

Middle East Focus - Omani port to gain free zone
Thomas Hussain
 Development at Mina Raysut will allow new mega container vessels to dock.
WORK IS set to begin early next year on a free zone adjacent to the southern
Omani container port of Mina Raysut, a move that will boost the two-year-old
facility's capacity to attract third-party liner business.

Salalah Port Services (SPS), which already holds a 30-year concession for
Mina Raysut, has been appointed project manager for the Salalah Port Free
Zone Company, while Dallas-based Hillwood Development is to act as
specialist developer.

The first step in this direction came in the form of a memorandum of
understanding inked by Oman's Minister for Commerce and Industry, Maqbool
bin Ali Sultan, and SPS chief executive, Jack Helton, at a ceremony in
Salalah.

"The establishment of Salalah Port Free Zone is a natural and inevitable
evolution of the events that led to the establishment of the container hub
at Salalah almost two years ago.

"The interest by the international business community in Salalah is clear
evidence of the important role that Oman can play in the services sector,
owing to its strategic geographic location, stable political structure,
availability of natural resources and finance," Sultan said.

SPS and Hillwood will advise the government on the first phase development
of the free zone on the designated 180-hectare site, due to begin next
spring.

It would make available 500,000 square metres of industrial and office space
to the distribution, light manufacturing and hi-tech enterprises the Omani
government wants to attract.

Before that can happen, the two partners have to finalise a series of plans,
to be submitted to the Omani government for approval, after which it will
enact covering legislation, issue regulations to govern the free zone, and
establish an oversight committee.

SPS and Hillwood have to formulate business, financial and marketing
strategies to attract enough Omani investment to cover 20 per cent of the
project cost, and recommend incentives for the free zone's prospective
clientele.

They must also prepare a master plan for the development of the free zone,
an exercise that will also determine the scale and type of infrastructure
required to support the facility.

Once these plans are approved, the memorandum between SPS and Hillwood will
be converted into a 30-year concession under which the partners would
develop, manage and operate the free zone.

The free zone is the missing ingredient in Mina Raysut's recipe for success,
which has fast-emerged as a regional trans-shipment hub since it opened for
business in November 1998.

The involvement of Maersk Sealand, which holds a 30 per cent stake in SPS,
ensured the rapid growth of the terminal's business, which totalled 649,005
TEUs in 1999, a figure which is projected to cross one million TEUs this
year.

Mina Raysut's capacity was boosted to 1.2 million TEUs in June this year,
when a third berth became operational.

The terminal's overall expansion will mature by the time work begins on the
free zone in early 2001, when the arrival of additional state-of-the-art
gantries will push Mina Raysut's capacity up to two million TEUs per year.

The on-going infrastructure expansion at Salalah is specifically aimed at
establishing it as the prime destination for the new class of 10,000-12,000
TEU-capacity mega container vessels.

SPS is still in search of business from third-party carriers, but the
development of the free trade zone next-door to Mina Raysut does offer the
prospect of generating attractive volumes of outbound cargo for prospective
line clients.

However, it has a long way to go before it can compete with Dubai's Jebel
Ali Free Zone, which generated US$9 billion worth of trade last year, the
equivalent of 15 per cent of the UAE total.