The Public Establishment for Industrial Estates (PEIE) announced the establishment of a holding company, Oman Investment and Development Holding Company. Wholly owned by PEIE, the new company will manage its assets and increase the involvement of private sector in the management and development of industrial estates. PEIE also announced a number of new plans and steps for further growth and development of industrial estates in Oman at a press conference held at Crowne Plaza Muscat.
“It is hoped that the holding company will commence its operations during the second half of 2018,” said Hilal bin Hamad Al Hasani, CEO of PEIE. “A time-plan has also been prepared to transfer the existing industrial estates to the holding company gradually, which will take into consideration not to affect negatively on the offered services to the companies, investors and clients.”
Al Hasani dded, “Taking into consideration the developments and changes that have been witnessed during the past period, especially with regard to the recurrent financial crises since mid-2008 as well as the rapid decline in oil price over the past four years and the consequences on various sectors; this has made PEIE consider restructuring its legal system, re-engineering all its operations to ensure regional and global competitiveness by attracting foreign investments and preserve the national investments. In addition to that, PEIE has considered its industrial estates to act as business incubators and maximize the advantages of the international conventions and international cooperation agreements related to tax aspects and non-duplication of tax payment among states, absence of restrictions or preferential requirements for national investment or national products, treatment of investments and persons alike.”
PEIE has completed its legislation package, he informed, adding: “PEIE has an integrated legislative guide to act as a base for local and foreign investment, regulate the relationship between PEIE and the investor, as well as regulate the relationship with all parties involved in the investment process. The Royal Decree no. 32/2015 promulgates the system (law) of PEIE. Under it, the investment regulations and regulations on violations and sanctions, which constitute an integrated legislative system, were issued.”
Al Hasani noted that under the new legal frameworks, all prior approvals for the acceptance of investment have been cancelled, and usufruct or leasing rights will be as per requirements related to practicing investment activity. This will allow the approval of investment application and signing of investment contracts to be finalised within ten days maximum.
For the tenth year in a row, PEIE has achieved growth seen through the indicators. The preliminary figures for the year 2017 show that the volume of investments in the various industrial estates has touched RO 6.32 billion, noting a growth rate of 5.5%. The volume of investments increased by around RO 329 million, which makes the total volume of investments around RO 6.32 billion compared to RO 6 billion by the end of 2016.
The number of manpower in the industrial estates pertaining to PEIE has touched 55,000. The number of the manpower has increased by nearly 10% during 2017, as around 4,740 job opportunities were offered in the investment projects in the industrial estates. This increase makes the total number of the manpower around 55,000 compared to 50,000 by the end of 2016, noting that the Omanisation rate has touched 35%.
By the end of 2017, the total number of projects has amounted to 1,873 in various stages of implementation; of which 64% of these projects are existing, 20% have been allotted with spaces, and work is underway to establish 16% of the projects. It should be noted that 62% of these projects are industrial, 27% are commercial and 11% are service projects. The PEIE has also managed to lease more than 695,000 square meters of the lands in the various industrial estates to investors during 2017. By the end of 2017, the total leased area has touched approximately 34 million square meters.
Al Hasani emphasised that through PEIE’s medium and long term plans, it has concentrated in cooperating and partnering effectively with the private sector in such a way to enhance its role and contribute to a comprehensive and sustainable economic and social development of the country. Based on this approach, Al Hasani informed that PEIE has adopted a programme to strengthen partnership with the private sector in the area of constructing, managing and operating the industrial estates and the economic areas pertaining to PEIE. This programme includes three main aspects. The first is to attract major developers to all the new industrial estates and PEIE to not invest directly in the development process. The second aspect is related to opening the way for the private sector to work under the umbrella of PEIE as owners and developers of the economic areas of a variety of investment activities. Finally, the third aspect of the programme is related to the establishment of a holding company owned by PEIE to develop and manage the existing industrial estates.
In implementation of the first part, PEIE will open investment opportunity in the new industrial estates located in a number of wilayats during the years 2018 and 2019 for the local and foreign private sector. In the coming period, PEIE will attract local and international industrial developer to invest in the construction, management and operation of specialised investment areas. PEIE has worked on establishing rules, procedures and legislative frameworks that grant developers with a lineup of incentives and clearly define their rights and duties, which include granting them usufruct contract for up to 99 years.
As for the second part of the programme and in order to increase the expansion of economic areas, work is underway to develop controls to grant approvals for the private sector to establish areas owned by it or it owns the rights to use its lands from the competent authorities and outside the lands of PEIE. Moreover, PEIE aims at benefiting from the international and regional expertise in the fields of construction, management and operation of economic areas. “This will open the way to attract international operators for the estates and public facilities, in addition to have contracts with them through agreements that last for a period up to 25 years. This will eventually increase the competitiveness of the industrial estates in Oman and create an integration of activities within the industrial community through applying the best management practices,” he stated.
He added that the programme of ‘Strengthening Partnership with the Private Sector’ aims at implementing privatisation process in a smooth and effective manner in order to ensure the contribution of the industrial estates to the sustainable and comprehensive economic and social development. As per the time-plan, the role of PEIE by 2022 will be linked to planning, regulating, monitoring and following-up, while the role of Oman Investment and Development Holding Company will be developing, managing and operating, and will act as a main developer in the existing industrial estates. On the other hand, the local and international development companies will act as the main developers of the new industrial estates.
Al Hasani also announced during the press conference that development operation procedures have been completed for a number of projects, which include the commercial area in Rusayl Industrial Estate, facility building and residential village in Sohar Industrial Estate, sixth and seventh buildings in Knowledge Oasis Muscat, and facility building in Sumail Industrial Estate. “Work is underway to announce a number of investment opportunities in the various industrial estates in 2018,” he noted, adding: “Although the company will operate on a commercial basis; however, the economic and social development of the Sultanate will be the policy of PEIE, which represents one of the main government bodies in the development process. It aims at implementing its national strategy and the policies adopted, which comprise 13 policies and five strategic objectives linked to the national objectives that the Sultanate’s government is seeking to implement.”
He also informed that PEIE has completed the masterplan for Sur Industrial Estate, Sohar Industrial Estate and the Knowledge Oasis Muscat during the last period. “Through the implementation of these masterplans, PEIE has been able to attract major investments to the three areas and especially Sur Industrial Estate. By the end of this year, the development of Sumail Industrial Estate will be fully completed, and the development of the seventh phase in Sohar Industrial Estate will be completed. Additionally, the project of developing the second phase in Al Mazunah Free Zone will commence, and the expansion of Raysut Industrial Estate will be launched. A tender will be announced for the development of a phase in Nizwa and Sur Industrial Estates.
In terms of simplifying the procedures, PEIE announced that under the new investment regulations, the managements of the industrial estates in the various governorates have been granted with the authority to approve investment applications up to 100,000 square meters of industrial lands without referring to the management of PEIE. The regulation sets a period of ten days maximum to give a response back to the investor. In order to ascertain the seriousness of the investor, a period of thirty days has been set from the date of the application’s approval until the signing of contracts and completion of investment procedures
“The investment policy has been modified, beginning from the prior approvals from competent authorities to the requirements for practicing investment activities. Moreover, the practice of investment activities in the estates has been linked to a practice license that is renewed annually, and shall be granted and renewed only to investors who meet the requirements. Among these requirements is meeting the Omanisation rates in the job opportunities,” he said, adding: “The new regulations clearly define the rights of investors and their obligations. The regulations also indicate the obligations of PEIE towards the investors. In order to ensure the PEIE is committed to the development process using the best management practices, the regulations include specific time limits for the granting of approvals and licenses. In case the response has not been submitted during the indicated timespan, the investor gets it as an approval, noting that the lease agreements for investment last for 30 years and can be renewed for the same period.”
Restrictions and Regulations
Moreover, Al Hasani pointed out that restrictions have been placed on sublease and non-licensees are not allowed to engage in any activity within the estates in order to provide protection for the entrepreneurs and SMEs, limit shadow investment and not to undertake any activities that are in contrary to the Sultanate’s obligations.
“The investment regulations also took into consideration the status of the buildings and facilities set up by investors and developers at the end of the contracts, in a way that ensures their rights and rights of others. Additionally, the investors and developers have been allowed to sell buildings and facilities on leased lands in the case that their projects have stalled and there is no possibility of continuing operation under exceptional circumstances. They are also allowed to enter into contracts in accordance to specific procedures provided that the sale is to investors who are authorised to carry out the same activities according to the use of lands and facilities,” he said.
He added, “PEIE has also included controls that regulate the work of contractors and suppliers within the estates and control their relationship with the investors in such a way that guarantees their rights and the rights of investors. The regulations also specified clear restrictions and conditions for the building and construction in the estates, and determine the response period by the concerned parties within specified time periods.”
Working Environment and Insurance
In order to create an apt working environment for the investors in future and grant them more guarantees, specific controls were put in place to deal with the issue of buildings, equipment and goods remaining on the land at the end of the contracts for any reason. The entry of persons and means of transportation to the estates have also been organised. Therefore, the unauthorised will not be allowed to enter the estates soon. However, visit permissions will be granted for those interested and the clients in a smooth and fast method. Moreover, restrictions and conditions for housing of the workforce have been put in place to ensure the provision of humanitarian requirements in accordance with the best standards and related requirements.
In addition, “Strict restrictions have been placed on the insurance of facilities, buildings, properties and public facilities in order to achieve the highest degree of preservation of property. Regulations of violations have also been developed,” Al Hasani stated.
Al Hasani also informed that PEIE, as the operating body of Al Mazunah Free Zone, that the free zone has launched its electronic system this year, which comes in line with PEIE’s strategy of electronic transformation in all its transactions. The free zone, therefore, has stopped receiving hard copy documents of all transactions related to the movement of goods.