Oman’s strategic importance

Written by Rio Praaning Prawira Adiningrat on 20 July 2018

China, India, US, served by Major Omani-European Ports Partnerships, writes Rio Praaning Prawira Adiningrat.

Donald Trump’s Helsinki summit with Vladimir Putin seems to boast at least one concrete result – a potential US/Russia/Israel pact on Iran.

Simultaneously Russia and Iran, as partners of Syrian President Bashar Assad, are decisive for what may be the end of the world’s bloodiest internal conflict, killing over 300.000 people, displacing tens of millions of people and causing a damage and repair budget estimated by the World Bank to be around $226bn.

Elections in Iraq indicate Iran-US competition impacting on its restoration process. The US sides with Saudi Arabia in the Yemen conflict while guaranteeing Israel’s security.


Meanwhile China cleverly builds up its own strategic relationships in this war torn region. Beijing now takes in 80 per cent of all of Syria’s export. India, increasingly concerned over Beijing’s ‘Belt & Road Strategy’, announced plans to invest $20bn in Syria. Both focus on geo-strategic and economic key roles in this region.

Last week’s Sino-Arab summit in Beijing hosted by Chinese President Xi Jinping confirms China’s strategic interests in the Gulf. Its $10bn investment plan in Oman’s new port of Duqm – side by side with Belgium’s Port of Antwerp – heralds the use of Oman as China’s Middle East ‘restoration hub’.

Oman, with its ‘Friends of All, Enemy of None’ policy, evidently is the region’s safe haven. Uniquely its three world class ports include three key European partnerships. Salalah, a rapidly growing Gulf-US channel, is built and co-operated by Maersk from Denmark.

Sohar, built and co-operated by the Dutch Port of Rotterdam, focuses at all Gulf traffic and rapidly develops as the region’s safe food hub. Duqm is still under construction through an Omani-Belgian partnership.

In short, Oman aligned itself with Europe’s first and second largest ports and with one of the world’s largest maritime companies to safely serve global interests in the Gulf.

"Oman, with its ‘Friends of All, Enemy of None’ policy, evidently is the region’s safe haven"

Salalah, built at the initiative of the region’s most experienced and respected ruler Sultan Qaboos Al Said, is a central hub for container traffic and distribution between East and West. It registered traffic increases of 19 per cent in 2017 compared to the previous year, or 3.9 million tons.

In total, Salalah handled 13.5 million tons of cargo in 2017. The Port and Freezone of Sohar recorded an unlikely 36 per cent container traffic growth from 2016 to 2017. On average, Sohar processed over a million tons of cargo every week in 2017. An additional 40-hectare food cluster including a flour mill, a sugar refinery, and a grain silo complex stands for further expansion.

Duqm port is expected to start operations this year. Typical for Oman, China, India, the US and the UK all share in Duqm’s future wealth and strategic relevance. Just under 90 international companies already set up business in its free trade zone. The industrial sectors include food processing, metal-working, mineral-processing and logistics while a refinery and potentially one of the world’s largest oil reserve storage facilities will be constructed.

Perhaps unsurprisingly the Sultanate of Oman last year recorded a record economic growth: 8,7 per cent. Among Oman’s current major trading partners are the United Arab Emirates, the US, China, India, Saudi Arabia, Qatar and Italy.

To take this fascinating growth to the next level, Oman decided to combine all ports, infrastructure and free trade zones into one new State Owned Enterprise with an international board.

"Historically Oman – for ancient European powers such as the UK, The Netherlands and Portugal and for Iran and China – has played a crucial role in their international trade and domestic progress"

This company, ASYAD, is led by an Omani whose first managerial posts were with Shell in The Netherlands. CEO Abdulrahman Al Hatmi is tasked to provide the region with optimized and competitive logistics. Through both domestic and international logistical investments ASYAD is destined to gradually replace Oman’s current natural resources income with ports, trade, advanced and high tech manufacturing and logistics services income.

ASYAD aims to become one of the top 10 global logistics companies. ASYAD’s business portfolio includes expanding beyond core activities and integrating other assets, nationally and internationally, without necessarily owning them all.

Its current strategic plan operates from 2017 to 2020 and aims to acquire 3PL and 4PL capabilities in freight forwarding and contract logistics, and to establish company presence in key geographical regions around the Indian Ocean. The final stage, until 2020, intends to fuel further growth, integrate 3PL and 4PL assets, and obtain fresh capital. His Majesty’s strategic plan for Oman reached fruition.

ASYAD is embedded in a strengthened and disciplined Omani economic development plan. This includes hydrocarbon and non-hydrocarbon sectors growth and fiscal consolidation by rationalizing government expenditure and increasing revenues. Fiscal reform has reduced subsidies and slightly increased domestic corporate taxes.

Free trade zones with zero taxes catalyse foreign investment. Inflationary conditions remain benign. The banking sector has continued to grow, and is currently meeting the needs of all segments, especially Oman’s economic backbone, the Small and Medium Sized Enterprises. By favouring growth in SMEs, the financial sector is supporting economic diversification. Credit to the private sector increased by six per cent to 21.5 bn Rials during the first three months of 2018.

Historically Oman – for ancient European powers such as the UK, The Netherlands and Portugal and for Iran and China – has played a crucial role in their international trade and domestic progress. Through its own colonial empire including parts of India, Pakistan and China and major parts of the East African coast, Oman contributed also to these nations’ prosperity and religious and cultural development.

A majority of Omanis are Ibadhi Muslims – a branch of Islam that cherishes tolerance and internationality. Superb Omani hotels and hospitality branch breath a centuries old multicultural integration – and mark Oman as the world’s safe haven for restoration, trade and indeed reconciliation.

Oman was among the first Arab Gulf nations with female Ministers, female Members of Parliament, female Ambassadors – and female taxi drivers. It records the oldest diplomatic missions to Europe, the US and China. It is ready to receive EU strategic partnership priority and investment.

About the author

Rio Praaning Prawira Adiningrat, Consultant on International Strategic Affairs, Managing Partner of PA Europe.

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