06 June 2005
MUSCAT: Oman unveiled plans over the weekend to build Al-Madina al-Zarqa (The Blue City), a $15 billion tourism development, reflecting the government's determination to diversify its oil oriented economy. The project, the largest of its kind in the Middle East, is expected to put Oman on the tourism map. The project will be entirely financed by the Swiss-based Oppenheimer of North America, one of the largest financial houses in the world, along with other consortia partners.
Jerald Alan Belofsky, CEO of Oppenheimer, said the company will issue bonds against the total value of the project.
"This project is fascinating. This is probably one of the largest projects we have financed in this region," Belofsky said.
But he declined to give further details on the nature of the bonds that will be issued by his company or the average yield on them.
Oman also plans to float shares of Al-Madina al-Zarqa on Muscat's stock exchange.
The Bahrain based AAJ Holdings and the local Cyclone LLC Company are the major shareholders of Al-Sawadi Company, which is developing the multi-billion-dollar project.
To underline the importance of the project, organizers and officials invited more than 35 Arab and foreign correspondents from different newspapers and magazines to cover the announcement of the project.
Located on the seafront site of approximately 35 square kilometers, Al-Madina al-Zarqa will be built over a 15 year period and the total cost may even exceed $15 billion, according to developers and financers of the massive project.
"It is expected that, upon completion, Blue City will be home to more than 200,000 permanent residents and become a tourism and business destination of national, regional and international relevance," said Mohsin bin Khais al-Baloshi, Oman's Tourism Ministry undersecretary.
He added that the first phase of the project, which will begin at the end of 2005, will be completed in four to five years.
"The project is expected to create 7,000 direct job opportunities and 25,000 indirect jobs in the first phase of the project," Baloshi said.
"The private sector is expected to play a significant role in achieving the government's objectives and materializing its strategic visions which focus on attracting more foreign direct investments and providing more job opportunities for nationals" the official said.
Al-Madina al-Zaraqa will feature a port, several five-star hotels, an aquarium city, two international standard golf courses, swimming pools, tennis courts, apartments, schools, hospitals and a theater.
The first phase of the project will include the construction of hotels and apartments.
Foreigners will be allowed to own apartments in the new city and Omani officials stressed that five-year visas will be issued to apartment owners.
With a GDP of $21 billion, Oman has been striving to boost its economy through a series of incentives to investors.
But tourism in Oman represents 1 percent of the country's GDP and officials here admit that Dubai and other Gulf states have attracted more visitors in the past few years.
"With rugged mountains that are rarely seen in the Gulf region, Oman has the potential to attract millions of tourists each year," one of the foreign residents told The Daily Star.
He added that Oman's 1,930 kilometer coastline has an abundance of marine life, including turtles.
Oman, which pumps nearly 750,000 barrel of oil a day, realizes that it cannot count on oil revenues forever, especially as the country has a relatively young population.
Officials say that 70 percent of the GDP comes from oil while the rest comes from revenues collected from custom duties.
Baloshi said it's wrong to compare Oman to Dubai or any other country in the Gulf region.
"We received 1.1 million tourists in 2003, but we hope to get more visitors in the future once the project is completed."
He added that once the project is completed, Oman's GDP will increase significantly.
