Indian logistics firm plans Free Trade Warehousing Zone in Sohar

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Project aims to launch Oman as gateway for freight into Mideast
MUSCAT -- A leading global supply chain services company is planning to set up a major Free Trade Warehousing Zone (FTWZ) in Sohar -- an initiative that has the potential to launch the Sultanate as a gateway for freight into the Middle East. Arshiya International, an Indian headquartered multinational firm with offices spanning across India, Singapore, Australia, the UAE, Qatar, Oman and the United States, says it wants to establish the FTWZ within the Special Economic Zone (SEZ) currently being developed by Sohar Industrial Port Company (SIPC)Sohar Industrial Port Company (SIPC), which is also the port authority for the nearby industrial port of Sohar.

In an interview to the Observer, top officials of Arshiya International who were in the city last week, said the proposed FTWZ -- the first of its kind in Oman -- will result in significant long-term socio-economic benefits for the Batinah region and the wider national economy, notably in the form of new investment opportunities, employment generation, and lower overall retail costs to consumers. "The Sultanate of Oman -- and Sohar with its new port in particular -- is a perfect gateway into the Middle East because of its strategic location outside of the Straits of Hormuz. We believe in the concept that Oman is a natural hub for the Middle East, especially for products coming from the Indian sub-continent and the Asia-Pacific countries," Ajay S Mittal, Chairman and CEO, Arshiya International Ltd, said.

According to Flemming Jensen, Arshiya's Regional Director -- Middle East, the project will be based on the 'hub-and-spokes concept', with the proposed Sohar FTWZ as the hub eventually connecting all the main freight centres of the Gulf and the Middle East. The initiative, Jensen said, is part of Arshiya's 'Project Emerald', which envisages a FTWZ hub in Sohar with spokes all over the Middle East. 'Project Emerald', he said, fits into Arshiya's wider business strategy, dubbed 'Project Diamond', for developing logistics infrastructure across the India, which includes plans for FTWZs in Mumbai and Noida (near New Delhi).

In later phases, hubs are planned in the east, south and centre of India, with rail and road connectivity linking all the main ports and hinterland of the country. As a first step, Arshiya International has approached SIPC for the allocation of land within the Special Economic Zone for the establishment of the FTWZ. "We are looking at an FTWZ of anywhere from 100 hectares going up to 450 hectares," Mittal says. "We would start off with around 100 hectares, and depending upon the traffic and volumes at Sohar, ramp up to 450 hectares." Investment in the first phase of FTWZ project, covering an area of around 100 hectares, is envisioned at $400 million, says Mittal.

Assuming the land is allocated and other approvals received before the end of this end, the first phase of the project is slated for completion by 2012, although the facility will open for business much earlier, according to the Chairman and CEO. "Typically, we will have a container freight station where containers can be kept as it is, stacked one on top of the other. There will also be warehouses of all kinds -- ambient temperature, temperature controlled, cold storage, and so on. There will also be open yard space," Mittal said. Significantly, the warehousing facilities will have value-adding capabilities for such activities as product packing, labelling, reassembly, and so on.

"Product reassembly, packing, labelling and so on, for eventual distribution in the GCC and the Middle East, will result in significant savings in terms of logistics costs, working capital costs, and labour costs for businesses. These savings in turn will amount to savings to consumers. This is what we are conceptualising to do in Oman. We started off with a partnership with the Mustafa Sultan Group here in providing supply chain management. We are now moving into this hub concept in Sohar." Arshiya is confident that the FTWZ in Sohar will cater to an extensive range of products. "It will appeal to manufacturers of all kinds of electronics, FMCG products, pharmaceuticals, chemicals, and so on.

The oil and gas industry can be impacted in a big way because equipment can be stored in the FTWZ and then deployed all over the Middle East. There is also a strong export potential as well. You can move products in bulk from, say, Saudi Arabia into Sohar, and then freight it into the Indian sub-continent or the Far East. We are seeing manufacturing bases slowly moving into the Middle East, particularly for downstream petrochemicals and specialty petrochemical products. All this will make the economy more robust." The company has commissioned Singapore-based Jurong International to conduct the master-planning, design and engineering for the FTWZ at Sohar.

By Conrad Prabhu

© Oman Daily Observer 2008