How would you describe the current state of logistics infrastructure here in Oman? What investments is the government making in order to improve the country’s overall internal and regional connectivity?
AL-KHARUSI: Logistics plays a critical role in facilitating the growth of any country. For instance, logistics plays a critical role in Oman to ensure that the oil and gas sector runs efficiently and effectively. Logistics is very important for the overall development of economies. Oman has stressed a strategic importance with regards to logistics. This strategic importance is now being rebuilt and the ports are growing phenomenally. Road infrastructure is being built, which is extremely important for the transport of materials into the interior regions. At this moment in time, the roads are still congested so there is a lot of development going on. These developments are going to help a lot in terms of increasing Oman’s GDP. The rail project will also drastically help increase connectivity. For example, the iron industry in Oman will start moving into farther areas such as Salalah. It must also be noted that we need to improve our global connectivity. As a result, the aviation sector is rapidly growing. There are major airports being built in Muscat, Salalah, and other various regions. The passage of movements is key to any country’s growth.
How competitive is the logistics sector throughout the GCC? What are Oman’s competitive advantages as a logistics hub vis-à-vis other countries throughout the region such as the UAE and Saudi Arabia?
AL-KHARUSI: I believe that it is very competitive. Each and every GCC country looks at logistics as an important facilitator in terms of their own country’s growth. For instance, Dubai has grown from sand to one of the major cities in the world. One of the reasons for this is that they improved their global connectivity. Their vision is to create a hub that will connect you to anywhere in the world. As a result, you can see that logistics makes a big difference. Competitiveness in logistics will continue throughout the region, but I think because of Oman’s strategic location, it will actually surpass quite a number of other countries. Having said that, most of the countries throughout the GCC have had a head start. Oman is growing at a steady rate. The country is starting to further develop its ports. The diversification of the port of entry into Oman is growing. The next largest contributor to Oman’s GDP after oil and gas is logistics. Logistics powers all of the other sectors.
What are the major bottlenecks that the logistics industry is currently facing in Oman? What actions are being taken in order to ensure that these bottlenecks are being eased or avoided?
AL-KHARUSI: The bottlenecks are always there. One of the major bottlenecks is the connectivity of the roads. This situation is currently being addressed. The road network is being developed throughout the country. The lack of rail is another bottleneck that we need to overcome in order to efficiently spread goods around. The workforce is also an issue at the moment. The logistics industry has a very low Omanization rate. However, the logistics industry has a chance to be a big job creator. These bottlenecks are being addressed and they will probably move forward in times to come. The other thing that people do not really look at is technology. We need innovation in terms of new business models that will enable Omanization. It is important to have a skilled workforce. If you do not have it immediately then you may have to create new business models to facilitate it. Once the movement of getting a skilled workforce is in play, then they can actually take over and proceed forward. Innovation in terms of new business models is required in order for the logistics industry to become more effective and efficient.
Many companies throughout the industry rely heavily on foreign labour. What impact has Omanization had on the overall logistics sector? What actions are being taken in order to help supply chain management and logistic companies meet these requirements and to ensure that the skill set of local workers is on par with what is being demanded from industry players?
AL-KHARUSI: I believe Omanization is a good initiative. This is not new for the oil and gas industry. For instance, companies like Petroleum Development Oman (PDO) have gone through this for the last 40 years. They have very high Omanization rates. They have taken a very effective approach to the situation. If we do have Omanization, you need a skilled, efficient, and professional workforce. PDO initially looked at it from this angle and they have achieved a very high Omanization rate of over 90%. The banking industry is another good example. They addressed it and now most banks are in the 90%-95% range. If you do it right, you are going to have a very effective Omanization policy and that is good for Oman because it helps keep the wealth within the country rather than exporting it. It is important to have effective Omanization. Job creation is a major initiative that Oman is currently undertaking. I believe the logistics sector will play a big role in creating more job opportunities. However, it needs to be done well. The Ministry of Transport and Communication has recently set up a strategic committee for Omanization and aims to achieve a higher Omanization rate throughout the industry by the year 2020. Also, the Oman Logistics and Supply Chain Association (OLSCA) will enable professionalism to grow throughout the industry. We are implementing supply chain solutions and standards for road safety. A major initiative for OLSCA was to establish a strategic alliance with the Chartered Institute of Logistics and Transport (CILT) from the UK. OSCLA was instrumental in making that happen. This is the first CILT branch set up outside of the UK in the past 10 years. CILT will help bring a sense of professionalism to the logistics industry. They have ready-made programs ranging from the driver all the way to supply chain management. Having this strategic alliance will enable the industry to develop its professionalism at a faster rate. We will help bring the skill levels to the industry, which at this moment is lacking.
There are very interesting times to come and by 2020 Oman’s logistics industry will grow into the double digits. At this moment in time, logistics contributes roughly 3%-4% of the country’s overall GDP. I believe that this will increase to 10%-15% by 2020.
Given the current nature of the market, industry insiders have stated that the majority of work within the logistics sector is driven by Oman’s exports of oil and gas. As the country continues to diversify its economy and experiences an increase in non-oil exports, where do you see the best opportunities for growth and development within the industry? How do you see this progressing over the next 2-5 years?
AL-KHARUSI: There is no doubt that the oil and gas industry will continue to grow. There are more concessions that have been given to Oman. The oil and gas sector will play a major role for the next 20-50 years. It needs enhanced oil recovery techniques, which means a lot of goods will have to be moved around. Again, logistics will still be playing a big role there. The next big industry is tourism. Tourism requires heavy logistics. You have to bring people from other countries into Oman. We must transport them within the country and that is where logistics comes into play. Industry also requires heavy logistics with regards to moving heavy metals from one place to the next. Iron ore comes into the country by way of large vessels. Oman has developed large vessels to transport its LNG. The country has created a shipping company solely for this purpose. I believe that we are going back to the old times when Oman used to be of strategic importance. Oman will grow tremendously in terms of being a marine and aviation hub. There are very interesting times to come and by 2020 Oman’s logistics industry will grow into the double digits. At this moment in time, logistics contributes roughly 3%-4% of the country’s overall GDP. I believe that this will increase to 10%-15% by 2020. We are focusing on developing our workforce and I am sure that it will create a big industry in Oman.