Sohar Aluminium plans to set up a $100 million alloy wheels plant

Sohar Aluminium plans to set up a $100 million alloy wheels plant

Manufacturing fuels Oman’s growth

The acceleration in growth comes amid efforts to broaden the manufacturing base and increase its contribution to GDP to 15 per cent by the end of the decade, as part of Oman Vision 2020

November 2018

Oman’s increased focus on manufacturing as part of its economic diversification efforts appears to be paying off as new data reflects encouraging trends.

Manufacturing grew by 17.8 per cent year-on-year in the first quarter of 2018, according to data issued by the National Centre for Statistics and Information (NCSI).

The sector outstripped the overall GDP growth rate of 6.5 per cent for the period and helped drive the broader industrial sector, which grew by 2.6 per cent, Oxford Business Group said in a report.

This strong performance builds on expansion of 9.2 per cent in 2017, according to the Central Bank of Oman, lifting the sector’s share of non-oil GDP from 45.3 per cent in 2016 to 48.6 per cent last year.

The 2017 result saw manufacturing account for 9.6 per cent of GDP, slightly down on the 10.2 per cent average recorded over the preceding two years, which the bank said was due to increased contributions from other sectors.

The acceleration in growth comes amid efforts to broaden the manufacturing base and increase its contribution to GDP to 15 per cent by the end of the decade, as part of Oman Vision 2020, the sultanate’s economic development strategy.

A series of new investments look set to boost manufacturing output in the coming years. In mid-August local firm Sohar Aluminium announced it was partnering with Indian auto parts producer Synergies Castings to construct a $100 million plant to produce alloy wheels for the overseas vehicle market.

The plant, to be located in the northern city of Sohar, will manufacture 2.5 million units annually once fully operational. Construction is expected to start before the end of the year, with initial production set for 2020.

By providing 24,000 tonnes of processed aluminium per year as feedstock, the new investment aligns with Sohar Aluminium’s strategy to promote and support the development of downstream manufacturing capacity and deliver sustainable in-country value, according to Said al Masoudi, the company’s CEO, who spoke to local media.

This was followed by local media reports in late August that Chinese investors were planning to develop a $98 million carpet and blanket factory in the eastern port city of Duqm. The company will use synthetic materials sourced from petrochemical processing.

The proposed plant is part of a wider China-Oman Industrial Park, for which the authorities are targeting investment of $3.2 billion for the first stage. It will include facilities for the manufacture of solar panels, pipes and building materials, as well as petrochemicals and other products. Duqm has also been selected as the site for a large building materials complex, to be developed by local company Assarain Concrete Products.

The plant will be built on a 60,000-sq-metre plot close to the city’s port, and will produce concrete blocks for the construction industry, along with tiles, paving slabs and kerbstones, to be used in a series of infrastructure projects around the region, company officials said.

The push to increase manufacturing investment is further supported by government plans to quicken the pace of privatisation.

In July plans were being finalised for the sale of up to OR700m ($1.8 billion) worth of state enterprises by 2021, according to the government’s Implementation Support and Follow-up Unit, the body charged with overseeing the realisation of economic policy.

Among the firms targeted for privatisation is Oman Food Investment Holding Company, which has stakes in a number of food production and processing ventures, along with manufacturing support services such as logistics and utilities.

Such moves are in line with recommendations included in the IMF’s latest report on Oman, which called for the government to promote greater private sector involvement in the economy to support growth and diversification, which in turn would boost momentum towards Vision 2020 targets.

The IMF has predicted that Oman will become the fastest growing economy in the GCC region next year. The sultanate’s real GDP is expected to grow by more than five per cent in 2019, the IMF said in its World Economic Outlook report.

The Fund has revised up Oman’s 2019 growth forecast from 4.1 per cent projected in its April 2018 World Economic Outlook report. The IMF expects Oman’s economy to grow by 1.9 per cent this year.

The Oman government has been pursuing its diversification strategy since the past several years and many avenues have been opened. Public private participation in various projects, Tanfeedh and changes in the investment law are the core areas where the government is focusing.

More Stories