Oman_At the cutting edge_2006

Oman_At the cutting edge_2006
DISTRIBUTION: 11 QPS C M Y K VERSION 00 B FILENAME HEREXX XXXX DOMES- EUROPE XX ASIALATIN AM A CENTURIES OF TRADE HAVE GIVEN THE SULTANATE A UNIQUE VISION. TODAY, IT IS USING AN OIL PEAK TO MAXIMIZE ITS OPTIONS Oman: at the cutting edge An aromatic gum resin found in the Dhofar mountains first put Oman on the world map. The intense perfume obtained from frankincense is said to have exercised incantatory powers over consumers. Trade in the early Middle Ages reached as far as Alexandria, from where it was loaded onto vessels headed for Genoa. A nation of seafarers, Omani merchants later spread the mystique of frankincense to Zanzibar, where it is still sold at out- door markets. History can offer smart parables. Oman is located on the southern tip of the Arabian Peninsula, midway between Asia and Europe. The nation governed by Sultan Quaboos has learned to cultivate globalization on its own terms ever since its forebears explored the Indian Ocean in intrepid dhows. It comes as no sur- prise then that it is beginning to lay the foundations of what it sees as a future knowledge-based society. It has liberalized mobile networks and opened R&D labs in Muscat, the capital, to maximize its options. But Oman is much more than the sum of its historical feats. Natural gas, a clean-burning fuel, offers a conduit to future economic sustainability. The Sultanate is a classic small, open economy where the tax regime is flexible and inflation is low. Future mone- tary union with members of the Gulf Cooperation Council (GCC) will serve to anchor macroeconomic policy. "We are coordinating policies, designing institutional support and national data systems," says Central Bank President Hamood Sangour al Zadjali. For decades, policymakers knew that oil reserves were finite. In 1998, a downturn in oil production forced a rethink of economic opportunities. Output of oil and condensates is down to 735,000 barrels per day (bpd) in 2005. According to the state- owned Petroleum Development Oman (PDO), this year marks a low point ahead of a projected rise back up to 800,000 bpd in 2009. Not to worry. Oil peaking is often a definitional concept tied to the availability of new technologies. Geography, it turns out, is a useful ally. Oman is on the world energy map not only because of its crude output. Its exports of natural gas will generate $24 billion over the next 25 years, according to Minister of National Economy Ahmed Macki. The reason behind this explosive growth is a global switchover to natural gas at elec- tricity plants. By 2010, world gas demand will surpass 40 million cubic meters per day. "The strategy to reduce our dependence on oil is multidimensional. Our share of oil in GDP has decreased from about 70% to 40%. The completion of our LNG project is thus a major achievement," says Macki. With oil prices showing little sign of weakness, petroleum has not lost its appeal. But on a conceptual level, it is losing momentum to private sector initiatives. Part of the momentum was lost in 1998 when oil prices fell below $10 per barrel. The authorities launched a diversification program known as Vision 2020, which involved gas sales to finance infrastructure projects. The objective of Vision 2020 is to gradually build the base for a competitive workforce in IT. In the meantime, Oman has opened a high-tech transshipment seaport to tap container traffic. Within two years, the port of Salalah has picked up contracts with shipping companies in Singapore. It now competes with Abu Dhabi. At the marine terminals in Sohar, fer- tilizer plants were added to marine terminals to maximize industrial uses. Natural gas pipelines feed both seaports. Minister Macki thinks GDP will grow 9% in nominal terms in 2006. Of that figure, he attributes 5% to the non-oil sector. Omani entrepreneurs are looking forward to projects spinning off of the privatization program. Many will be gas-based, but others will reflect how well Oman has adapted to globalization: mobile networks and airport services. "Since the private sector will take the lead in job creation in the long term, we are accelerating the sell-off program. The main privatization targets will be in power, water and telecommunications," says Macki. By then, Oman will have come full circle from trade in frankincense to sales of cellular bandwidth. SPECIAL ADVERTISING FEATURE OMAN At the cutting edge BusinessWeek PHOTOS LEFT AND CENTER: WERNER THIELE; RIGHT: HANNE & JENS ERIKSEN. ALL PHOTOS COURTESY OF MINISTRY OF TOURISM As seen in Special Advertising Sections opyright 2006 The McGraw-Hill Companies, Inc. As seen in Special Advertising Sections Copyright 2006 The McGraw-Hill Companies, Inc. As seen in Special Advertising Sections © Copyright 2006 The McGraw-Hill Companies, Inc.
DISTRIBUTION: 11 QPS C M Y K VERSION 00 B FILENAME HEREXX XXXX DOMES- EUROPE XX ASIALATIN AM SPECIAL ADVERTISING FEATURE BusinessWeek INDUSTRY OPP: multi-million dollar project The modern Sohar Industrial Port, 250km northwest of capital Muscat, will house the new PP plant which is expected to be up and running by September 2006. The new plant in Sohar will boast a production capacity of 340,000 metric tons per year of PP manufactured in pellet form of various grades. OPP uses the Novolen technology — a tried and true system used around the world — to manufacture its competitively priced product. And in a move to give the project international reach and equip it with technological and marketing know-how, the Omani government has brought Korean giant LG International on board as a strategic partner. Indeed, LG will be responsible for international markets other than those in which Oman Polypropylene LLC is traditionally active, such as the Middle East and the Indian subcontinent. Be it regionally or globally, the PP market certainly is brimming with potential. Worldwide demand has exploded in recent years, reaching 35 million tons in 2003, making polypropylene second only to polyethylene in the plastics sector. And OPP is uniquely positioned to bring value to the market. Says Dr. Mohammed Benayoune, Oman Polypropylene’s Chief Executive Officer: “In our market studies, we came out to be the lowest cost producer, even compared to Saudi Arabia, the reason for this being that our plant is integrated with the refinery. The refinery has all the utilities and storage on its side which means that our costs are lower than that of a normal PP plant.” All of this bodes well for Oman’s future in the petro- chemicals sector. The determi- nation of this smaller country — often in the shadow of regional giant Saudi Arabia — can be seen in the company’s unwavering commitment to national development. Dr. Benayoune explains: “Job creation is one of the major objectives for the government in Oman, and we are hoping to help the government in that respect”. The environment also figures highly among OPP’s priorities, and the company abides by strict environmental protection guidelines. Local and foreign investors have been quick to respond to the opportunities presented by the project. The fact that the new plant is located in the ultra-modern Sohar Industrial Port is particularly attractive, as is the complete technical support that OPP offers its customers. Dr. Benayoune points out that the innovative nature of the downstream PP business has brought plenty of jobs and investors to Oman’s neigh- bours in the Gulf, adding, “We are hoping to do something similar here in Oman, obviously on a smaller scale. We observe closely what other countries have done, and we try to learn from their successful experience.” DESTINED TO BE A KEY PLAYER IN OMAN’S THRIVING DOWNSTREAM INDUSTRY IS THE OMAN POLYPROPYLENE PROJECT (OPP), WHICH AIMS TO MAKE POLYPROPYLENE — A PRODUCT THAT IS INCREASINGLY BEING HAILED FOR ITS VERSATILITY — A CATALYST FOR NATIONAL GROWTH
DISTRIBUTION: 11 QPS C M Y K VERSION 00 B FILENAME HEREXX XXXX DOMES- EUROPE XX ASIALATIN AM SPECIAL ADVERTISING FEATURE OMAN Tourism T Tourism and the economy The successful promotion of tourism any- where relies heavily on the physical attributes that a country has to offer. It is a fact that Oman does have quite a few advan- tages over other beautiful destinations: it is the friendliest, greenest country in the Arabian peninsula, a part of the world which has never lacked fascination. Oman, compared to some Islamic countries takes a more moderate approach to its religion and truly welcomes travelers. “In this troubled world of today where lack of security is a common phenomenon rather than an exception, Oman stands as one of the very few countries where tourists from any nationality can enjoy a safe environment,” says Minister of Tourism Dr. Rajiha Abdul Ameer Ali. The trade routes which Omanis founded or followed for centuries probably have something to do with their easy acceptance of strangers. Apart from Portuguese and Turkish dominance of the coastal regions between 1508 and 1650, it was the Omanis themselves who extended their territories abroad as far as the fabled Zanzibar which nowadays belongs to Tanzania. The Muscat rulers also established trading posts on the Persian coast and went even to Pakistan. Coveted by both the French and the British (who had seized Oman’s overseas possessions) throughout the 19th century, the Sultanate concluded several treaties of friendship with Great Britain. English is therefore widely spoken in Muscat, which tends to make the life of tourists more pleasant. The Ministry of Tourism is engaged in a program of maintaining a considerable number of forts and castles while providing them with the audiovisual means to depict the history of the country. The attractions in Oman, however, don’t stop at passive sight-seeing of monuments to its captivat- ing past: the more adventurous should know that coral lined fjords, going as deep as 40 meters, afford some of the best scenery in the diving world. Dolphin, whale watching or surfing are also popular options with visitors, and more options including eco-tourism are being developed. Within the framework of diversifying the economy away from oil, tourism should play an impor- tant role. The annual growth rate of the sector’s GDP has been of over 3% and the private sector is being seen as a strategic partner with which to capitalize on all the assets the country offers. “We are working on increasing private sector activity in tourism by the intro- duction of an appealing incen- tive package on the one hand and encouraging foreign investment on the other hand,” says the Minister. A project for the construction of three top-class hotels at Barr al Jissah should be commissioned in joint public-private venture this year. The idea is that even- tually the government role would be con- fined to the development of infrastructure. “We have achieved remarkable progress in the last thirty years in building a network of roads, communications and public utilities all over the country,” adds Dr. Rajiha Abdul Ameer Ali. Such infrastructure projects will certainly serve to increase the availability of diverse experience to even the most jaded travelers. RUGGED MOUNTAINS, DEEPWATER FJORDS, SPECTACULAR SAND DUNES, GREEN HILLS AND QUIET BEACHES ARE ASSETS TO THE COUNTRY’S TOURISM MARKETING STRATEGY Dr. Rajiha Abdul Ameer Ali, Minister of Tourism PHOTO HANNE & JENS ERIKSEN, COURTESY OF MINISTRY OF TOURISM
DISTRIBUTION: 11 QPS C M Y K VERSION 00 B FILENAME HEREXX XXXX DOMES- EUROPE XX ASIALATIN AM BusinessWeek SPECIAL ADVERTISING FEATURE In the world according to Omzest, dreams can come true. And dreams deliver handsome profits. Omar Zawawi, founder and CEO of the Omzest group of companies, has turned a simple tenet into the cornerstone of his 34 years in business. The formula has struck a chord in the Sultanate of Oman, where Zawawi has deals in construction, banking, manufacturing, logistics and education. The 70 companies in the Omzest family cover a vast territory of dreams. By thinking ahead, there is never a deficit of ideas. “We constantly assess customer needs and work out the technical viability of projects. Later, we figure out how to add value to our product line,” says Zawawi. His life as entrepreneur harks back to 1973, when Zawawi built a series of medical complexes in record time. Within 18 months, six different Omani towns got their hospitals and schools. This was in the days when Oman boasted dirt roads and inland towns were off boundaries to strangers. That same year, Omzest,with a group of investors, paid for machinery to start Oman Flour Mills. Zawawi was soon behind port services and the precursor of Oman’s national airline. Cement factories followed. The race of diversification led Omzest to penetrate the world of broadcast media. Decades before Al Jazeera went on the air, Zawawi’s group as contractors for the Government of the Sultanate of Oman constructed the Gulf’s first color television station. The whole process, from first contract to first newscast, took less than 8 months. Oman came into the 20th century with a Technicolor makeover in 1974. To continue its expansion, Omzest began to seek internal sources of finance and created Oman International Bank, the first 100% Omani-owned financial institution. Zawawi then entered a joint venture with the Overseas Trust Bank of Hong Kong and Singapore. This led to the formation of the Oman Overseas Trust Bank, later bought out and renamed as BankMuscat. It was one of the first signs that the Sultanate was fully integrated in the global economy. Three years ago, in association with the Birla Institute of Technology in India, Omzest started the Waljat Colleges of Applied Sciences. At Waljat, students receive top-notch training and hands-on experience with an emphasis on R&D. It is a unique way to further the goals of Omanization of the workforce. “Training and education are vital sectors,” says Zawawi. “In our own way, we hope to contribute to the aspirations and growth of our employees.” However, the manufacturing sector is still a priority for the economy, long dependent on exports of natural resources. From footwear to decorative glass, manufacturing activity contributes 41% of Omzest revenue and accounts for two-fifths of turnover. The factories in the holding export production to 90 different world markets. Certificates of quality, such as ISO/HACCP, are creating new demand. And a wealth of small and medium-sized enterprises ensures long-term employment and keeps workforce skills versatile. Today, due to the Leadership and unique foresight of H.M. the Sultan, Oman is proudly reclaiming its historical legacy as a seafaring nation. The port of Salalah has become a case study for its forward- looking approach to 21st century transhipment flows. And the beaches of the Musandam Peninsula are drawing divers from as far as Moscow. Furthermore, the stability - economic, political and social has paved the way for entrepreneurs like Omar Zawawi with a knack for anticipating trends to succeed. OMZEST thinks the unthinkable Omar Zawawi, founder and CEO of the Omzest group of companies
DISTRIBUTION: 11 QPS C M Y K VERSION 00 B FILENAME HEREXX XXXX DOMES- EUROPE XX ASIALATIN AM SPECIAL ADVERTISING FEATURE OMAN Telecom BusinessWeek O Oman has a lot of bandwidth. With a population of 2.5 million and seas of sand between its urban centers, it is no conventional market for mobile operators. Still, this is one of the most profitable mobile markets in the Middle East. The reason has to do with competition. The Sultanate is the oldest independent state in the Arabian Peninsula. Until recently it was virtually cut off from the rest of the world. But this is in stark contrast to the dynamism with which telecoms have picked up business ever since. Mobile subscribers (24.2%) now far surpass the number of fixed line subscribers (9.2%). In Muscat, systems suppliers are busy devising end-to-end solutions and managers are talking to their customers. Oman likes the fact that mobile operators not only introduce jobs and competitive prices, but also training in cutting-edge technology. Students at Sultan Qaboos University can now gain prac- tical knowledge from internships in Siemens or Ericsson. With e- government projects in the works, their skills will come in handy. And by rolling out ADSL networks, Omani businesses can open new markets in the GCC. Ahead of deregulation in the telecommunications sector, the government drew up a Telecom Regulatory Authority (TRA). In February 2004, Omantel, the comfortable state monopoly, was forced to spin off Oman Mobile. The TRA required that the new operator be listed at the Muscat Securities Market to ensure transparency and an accurate valuation of assets. Telecom: the focus is coverageBUNDLED SERVICES, ROAMING CONTRACTS, INTELLIGENT NETWORKS, MISSED CALLS, SMS, GSMS: COMPETITION IS BRINGING MORE SERVICES TO MOBILE CUSTOMERS IN OMAN According to the Minister of Communications, Mohammed al Harthy, by 2009 the number of mobile subscribers is likely to reach 1.5 million, a penetration rate of 51.7%. But things are fast-paced in the cellular world and business focus is changing. “Before, the network was the priority. Now it’s coverage. We go as far as possible in our claim that we have 95% coverage of the populated area of Oman,” says the managing director of Oman Mobile, Amer al Rawas. Oman Mobile runs a GSM network based on 2.5G technology. Its prepaid service, Hayyak, accounts for 62% of its customer base. With the entry last year of Nawras Telecom, a Danish and Qatari-led consortium, Oman Mobile shifted priorities to the con- sumer area. “We don’t want to flaunt the fact that we are a big company in Oman that makes a couple hundred million dollars. We want to talk about the shift that we are undergoing. Now we can begin to show results,” says Rawas. For Oman Mobile, the best position in the market is as a con- sumer-oriented organization. In the Sultanate, this is measured by reliability of service. Oman Mobile has several competitive advan- tages: nationwide coverage and technical quality. It is currently working with Siemens to develop a high-end intelligent network. Will its prepaid customers ask for an upgrade? SABCO Group, established in 1977 during the early Renaissance days, has varied interests in investments, real estate, retail business, services and manufacturing, through wholly owned companies, joint ventures, equity participation and public companies. Many of the group companies are leaders in their respective industries such as SABCO Art in advertising and media, Amouage in the exclusive perfume business, SABCO Centre in retailing, and Al Hail Investments in asset management, to name a few. This family owned group has some of its founding members devoted entirely to the government activities while other members’ focus is entrepre- neurial. SABCO Group’s Chairman, Khalid bin Hamad Al Busaid, an MBA graduate from the prestigious Henley Management College (Europe), has been instrumen- tal in restructuring the group by focusing on creating proper corporate governance using the model of the public company; a unique approach by a family owned business. He has introduced key phased systems and policy processes, creating transparency and credibility securing the interests of the stakeholders. Today, the reforms are showing progress, enabling the Group to reach even higher levels of success, contributing to the socio-economic development of Oman. RESEARCH: M. Monte - MARKETING: C. Johansson - TEXT: P. de Zardain - DESIGN: J. Berrio www.vegamedia.coma VEGA MEDIA creation “As one of the leading groups in Oman, Sabco is committed to its vision of progress while contributing to the development of the country.” Khalid bin Hamad al Busaid, Chairman FOCUS: SABCO GROUP

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