Oman plans to invest $450 million to extend its free trade zones across the country to attract more foreign investment and diversify its oil-reliant economy, it said on Monday.
Foreign direct investment tumbled last year, and the small crude exporter also needs to create tens of thousands of jobs every year for its fast-growing population of some 2 million nationals.
The government is hoping that by extending its free trade zones it could tackle both these problems at once.
“We are extending facilities of all free zones in a $450 million investment to attract more foreign projects,” the state Free Trade Zones Authority said in a statement.
“The extensions include expanding land, building warehouses, offices, roads, staff accommodations and storages. The effort will help diversify the economy in the long run,” it said.
Oman has four free trade zones: in the northern industrial city of Sohar, the southern port city of Salalah, the central town of Duqm, and in Mazuna near the Yemeni border.
So far, Sohar’s free trade zone has drawn the most interest with some 14 foreign companies investing in metals, minerals and logistics, according to statistics from the Sohar Free Zone.
Foreign direct investment in Oman plunged 31 percent to $788 million in 2011, when protesters demanded jobs and a crackdown on corruption. It was the lowest level since 2004, data from the United Nations Conference on Trade and Development show.
Free zones offer foreign investors a chance to maintain 100 percent ownership, no income tax and simplified trading license procedures. However, businesses willing to set up there need to employ Omanis for at least 10 percent of their workforce.
The government sees the free zones as a way to diversify its income, as hydrocarbons make up around 77 percent of the state budget revenue.
Unemployment among Omanis exceeded 24 percent in 2010, according to an International Monetary Fund estimate based on the latest population census. The government does not issue jobless data.
Omanis formed a mere 14 percent of the private sector labour force of 1.3 million in 2011, a central bank report showed.