Hilal bin Hamad Al Hasani,
Chief Executive Officer, Public Establishment for Industrial Estates (PEIE)
Marketing itself as the ‘Gulf gateway’ for transit trading to the Republic of Yemen and East Africa, Al Mazunah Free Zone offers a wide range of investment opportunities across the commercial, light industrial and services sectors. The free zone was established in 1999 and is dedicated to the trade and storage of vehicles, automotive parts, fruits and vegetables, livestock, fresh and frozen meat, machinery and equipment, and other merchandise.
Free Zone Watch: What was the rationale and main objective behind the creation of Al Mazunah Free Zone?
Hilal bin Hamad Al Hasani: We have been seeking for a partnership with the private sector to build and equip a free commercial zone to act as a business hub and attract local and foreign investments. Al Mazunah Free Zone has been developed by the Public Establishment for Industrial Estates in partnership with the private sector. The Free Zone was established as the first area of its kind in the Sultanate of Oman, located in the far south-west of Oman on the land bordering with the Republic of Yemen. The Free Zones Law No. (56/2002) grants incentives, benefits and the other related facilities to Al Mazunah Free Zone. The same regulation regulates the establishing and managing of free zones in the Sultanate of Oman, and grants incentives and exemptions for the investors as well.
FZW: Is Al Mazunah Free Zone legally designated as a free zone or an industrial estate?
HAH: Al Mazunah Free Zone is legally designated as a free zone rather than an industrial estate. The Royal Decree no. 103/2005 stipulates the establishment of a free zone in Al Mazunah. Article Two of the mentioned Royal Decree states that PEIE shall operate the said free zone and develop the services therein. As per the Royal Decree, the incentives, benefits and facilities stipulated in the Free Zones Law shall apply to Al Mazunah Free Zone.
FZW: What incentives do residents of Al Mazunah Free Zone enjoy and how might these differ from other zones or industrial estates?
HAH: The incentives offered by Al Mazunah Free Zone for potential investors include permission to import goods to the zone without import permit; exemption from the minimum limit of investment capital stipulated in the Commercial Companies Law or any other law; allowing the Yemeni workforce to work in the Zone without entry visas or an Omani permanent residence permit (provided that the zone ensures non-entry of such employees into Oman, in coordination with the concerned authorities); and reducing the Omanisation percentage for the operating company to 10 percent, subject to the Omani Labour Law. Additionally, the customs statements issued by the Yemeni Customs Centre shall be considered by the Zone Customs Section for the purpose of entry of the goods imported from the Republic of Yemen without the need to pass through Al Mazunah Customs Section. The zone shall also issue certificates of origin (free zone products) or of foreign origin. Furthermore, the labour clearances and entry visas for the investors and their non-Omani employees shall be obtained through the One-Stop Shop system. In addition to that, the incentives allow establishment of a commercial representation office of the operating company within the customs territory subject to the registration thereof in accordance with the Commercial Registry Law. The process of setting up a company takes between 5 and 10 days, depending on the investors’ submission of documentation.
FZW: How have investment levels into the zone changed over the years and what do you believe to be the main drivers of the change?
HAH: The free zone has been witnessing an improving investment climate. Speaking in numbers, the cumulative number of companies that have signed contracts in the free zone has reached 160, representing various nationalities. As of March 2018, there are a number of investment applications that are under study, and around 30 projects are under construction. By the end of 2017, the free zone had witnessed an active commercial upswing as the volume of re-exported goods exceeded 64,468 tons, and the number of re-exported vehicles exceeded 11,675. We are currently establishing a storage area of 10,000 sqm, taking into consideration the increase noted in the volume of goods. Indeed, there are certain drivers that have contributed in the enhanced investment environment in Al Mazunah. These include the efforts undertaken by PEIE and related governmental bodies to facilitate the investment procedures in the zone. There is a continuous follow up and attention paid by the chairman of free zones committee His Excellency the Minister of Commerce and Industry. The Royal Oman Police has also made significant efforts in facilitating the procedures of security approvals. The development of the free zone has also played a role in creating job opportunities for the youth of Al Mazunah.
FZW: How would you assess the level of infrastructure available to corporate residents of Al Mazunah Free Zone?
HAH: Without any doubt, having a comprehensive infrastructure attracts more investments. By the end of 2014, the free zone had completed the development of the first package of infrastructure projects, which included basic facilities of the free zone – gates, customs offices, warehouses, and infrastructure such as electricity, water, telecom, road networks, sewage networks, among other services. More recently, a tender was floated to provide the second package of projects that will complement the first package to provide the basic services in the free zone. A tender was also issued by Oman Broadband Company to connect the fiber optic network in the area. The latter is expected to be completed by the beginning of the second quarter of 2018.