Duqm SEZ Oman’s next economic growth engine
The man handpicked by the Omani government to crystallise
and spearhead the initial development of a Special Economic Zone (SEZ) at Duqm
says the mega hub has the potential to unlock transformational economic growth
for the Sultanate over the long term.
Singaporean national Lee Chee Khian (pictured) describes his
remit as the outgoing CEO of the SEZ Authority at Duqm (SEZAD) as “daunting yet
momentous”: daunting because of the breath-taking scope of the government’s
vision to create an uber-scale industrial, maritime and urban development in a
remote, windswept corner of Oman; and momentous because the essential
underpinnings of that grandiose economic vision are now essentially in place.
“An idea on the scale of an SEZ at Duqm, covering around 2,000 sq kilometres –
an area bigger than many European or East Asian countries – can only be the
product of great vision and monumental boldness. The government demonstrated it
had both in abundance and pressed ahead with its ambitious venture from the
outset. That made my job as CEO meaningful and productive.”
Earlier this year, Lee handed over the reins to his long-serving deputy, Dr
Ismail bin Ahmed al Balushi, who assumed charge as CEO with effect from January
1, 2020. Speaking to the Observer just prior to his departure last week, back
to his native Singapore, Lee spoke about the SEZ’s potential to serve as a new
engine of economic growth for Oman spanning the next half century and beyond.
“Duqm as the new centre of gravity for industry and maritime trade in the
region, coupled with Oman’s geopolitical characteristics as a politically
stable and safe nation, lend it immense competitive advantage that investors
can leverage to access huge markets in the Middle East, Indian subcontinent and
East Africa. This is the essence of Duqm.” Lee, a veteran of his native
Singapore’s pioneering decision to embrace free trade zones as a powerful
vehicle for economic development, lists a number of sectors and activities
that, he insists, hold particular promise from the standpoint of Duqm’s
competitive advantage.
Petrochemicals
The opportunities are immense, says the former CEO of SEZAD. He explains: “Oman
is already an Oil & Gas producing nation, which must now go increasingly
downstream to optimise value production from its natural resources. From crude
oil and natural gas, you can produce a wide array of petrochemicals, such as
methanol, acetic acid, ethylene chloride, olefins, PET and other intermediate
or finished products. Once you have the basic building blocks of petrochemicals
in place in Duqm, investors will come in to add value to these products.
Polyester, for example, can be converted into fibres which can then be made
into blankets, clothing, and so on. Opportunities for the manufacture of car
components and other products abound. The potential is limitless.”
Duqm Refinery – part of OQ (formerly Oman Oil and Orpic Group) – is investing
in excess of $15 billion in the development of a grassroots refinery and
downstream petrochemicals complex, along with its Kuwaiti partner. The
availability of all kinds of feedstock is expected to pull in investors,
according to Lee.
“Businesses investing in downstream petrochemicals will be attracted by the
opportunity to co-locate their plants with feedstock producers in Duqm, thereby
taking advantage of reduced transportation and logistics costs, and at the same
time, bolstering their competitiveness. New players are expected to move in as
well, offering common products and services for multiple clients. This creates
a multiplier effect that offers better margins and competitive value for
everyone operating across the value chain.”
Mining
An abundance of limestone in the hinterland of Duqm unleashes opportunities for
investment in a wide array of industrial activities, says Lee. High-purity
limestone (99 per cent) is perfectly suited for use in steel manufacturing,
water treatment, desulphurisation of fuel gas for coal power plants, and so on.
A slightly inferior grade (85 – 97 per cent purity) can be used in cement
manufacturing and for agricultural purposes. Lower grades of limestone can be
used in the production of aggregate for building and construction purposes.
Fisheries and aquafarming
A major fisheries port and industrial fisheries complex under development in
the SEZ augurs well for the growth of large-scale fisheries and processing
activities in Duqm, says Lee. “The focus should be on sourcing feedstock for
the many private-led investments that are envisioned in this sector. For
example, can we invest in an ocean-going commercial fishing fleet that can
operate in the Indian Ocean, capitalising on quotas allocated by the Indian
Ocean Tuna Commission? Other fleets will also come to Duqm to discharge their catch
if we have suitable support facilities, such as bunker fuel, supplies and so
on, as well as ice-making plants and fish processing factories.”
To supplement sources of feedstock for fish processing plants, Lee advocates
for investments in aquafarming activities at key locations along the Wusta
coastline. “Strong winds and choppy seas during the summer months prevent
fishermen from venturing out to sea for about three months (June – August) of
the year. By investing in aquafarms, we can ensure there is a steady source of
raw material supply for the fish processing plants that would need to operate
round the year in order to be sustainable.”
Food processing and distribution hub
Investments in cold chain infrastructure necessary to support a thriving
fisheries and processing industry in Duqm can also be optimised to support a
wider food processing and distribution hub in Duqm, according to Lee. For
example, livestock shipped in from Africa can be slaughtered halal style and
processed to supply not only Oman, but the wider region. Further value addition
can be created through investments in canned or processed foodstuff.
“Besides, given Duqm’s environmental conditions and remote location, imported
livestock can be held in bio-secure settings until they are ready for slaughter
and processing. Investments in grain storage and animal fodder will add to the
value chain and support the growth of an integrated livestock processing
industry. Processed foodstuff can either be shipped to overseas markets in
reefer containers or by air, taking advantage of the presence of an airport
with a full-fledged air cargo terminal at Duqm. In the return direction,
empties can bring in vegetables and fruits for processing in Duqm to help
create a more broad-based and diversified food production and distribution hub
in this part of Oman.”
African Market
With many countries in Africa currently on a strong trajectory of growth, Duqm
should home in on products and commodities that are an ideal fit for this
booming market. Building materials custom-produced for the African market are
particularly promising. Omani investors can either set up operations in Duqm to
serve the African market, or consider operating within this market while
sourcing their raw material requirements from Duqm. Besides, East Africa has a
special affinity for Oman because of longstanding historical and cultural
links. Swahili is also spoken in Oman, given local investors an edge in making
inroads into Swahili speaking parts of Africa.
Soft infrastructure
As investment inflows into Duqm begin to pick up, the demand for a wide range
of soft services, notably banking and insurance, catering and entertainment,
health care, and so on, will proliferate as well. At some point, Duqm will have
its own university as well, with a dedicated R&D component to support the
needs of local industries.
“A university can be indispensable to Duqm’s long-term growth aspirations
particularly as investors look at high-end sectors, such as pharmaceuticals,
for example, that may require a bit of R&D. With the presence of a
well-equipped university, investors can outsource their R&D requirements to
local scientists. Besides, the university will be a good source of high quality
human capital for local industries. A culture that enables entrepreneurship,
leadership and innovation to thrive will create a multiplier effect for the
wider economy.”
Logistics
There is no underestimating the potential of a thriving logistics industry in
Duqm centring on its expansive maritime port and airport. The growth of
industries in the SEZ will open up Duqm to inflows of copious varieties and
quantities of raw materials, semi-finished goods and components and
intermediate products, effectively paving the way for an upsurge in logistics
related investments and activities, adds the former CEO of SEZAD.
