Oman announced on Monday it is planning to invest $450 million to extend its free trade zones across the country as part of its bid to attract more foreign investment and diversify its oil-based economy.
Foreign direct investment registered a decrease last year, a discouraging sign for non-OPEC crude exporter which is trying to create tens of thousands of jobs every year for its fast-growing population of some 2 million nationals.
Muscat hopes to tackle these issues by expanding its free trade zones.
“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.
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.
Protests for jobs and a demand to crackdown on corruption in Oman led to a 31% drop in foreign direct investment in 2011. Data from the United Nations Conference on Trade and Development showed it was the lowest level since 2004.
Free zones offer foreign investors a chance to maintain 100% ownership, no income tax and simplified trading license procedures. However, businesses willing to set up there need to employ Omanis for at least 10% of their workforce.
The government sees the free zones as a way to diversify its income, as hydrocarbons make up around 77% of the state budget revenue.
According to an International Monetary Fund estimate based on the latest population census, unemployment among Omanis exceeded 24% in 2010. The government does not issue jobless data.
A central bank report showed Omanis formed a mere 14% of the private sector labour force of 1.3 million in 2011.