The agreement between Dubai's global ports operator DP World and Oman to develop and operate the Al Rawdah Special Economic Zone shows the Gulf economies' intent to strengthen their position at the centre of new global supply chains.
The deal for the site in Mahadha, in Oman’s Al Buraimi governorate, was signed during the visit of a high-level UAE delegation to Oman, led by Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, Deputy Prime Minister and Minister of Defence.
The agreement was signed by Sultan bin Sulayem, group chairman and chief executive of DP World, and Ahmed bin Hassan, deputy chairman of Oman’s Public Authority for Special Economic Zones and Free Zones.
The first phase of the economic zone will initially target activities such as automotive-related manufacturing, textiles and apparel, steel fabrication, logistics and trading, according to DP World.
A group of UAE-based companies have signed letters of intent to explore investment opportunities in the new economic zone, the company said. The companies represent sectors including logistics, manufacturing, steel fabrication and packaging, and include Spinneys, Apparel Group, Conares and Al Bayader, DP World said.
The UAE's experience in the development, efficient and profitable management and sound governance of special economic zones and free zones over the past 40 years can provide a valuable framework for Oman's initiatives, said Nasser Saidi, president of Nasser Saidi and Associates, former Lebanon economy minister and vice-governor of the Central Bank of Lebanon.
The new SEZ will also offer opportunities for well-established businesses in the UAE to transfer knowledge and skills, best practices in governance, infrastructure development and investor services can be shared. Oman's SEZs can learn from the UAE about smart ports, blockchain in customs clearance and the use of artificial intelligence in logistics, he added.
“This agreement is very significant since it is an illustration that many GCC economies are showing a firm intention to position themselves at the centre of global supply chains,” said Nicolas Michelon, managing partner of Alagan Partners, a Dubai corporate geopolitics consultancy.
“The trade wars launched by US President Donald Trump are triggering a massive change in global supply chains as companies redraw their supplier network to circumvent tariffs on specific markets. The increase in intensity of trade wars is creating more thirst for free trade agreements.”
In April, President Sheikh Mohamed announced that the UAE and the EU had agreed to begin talks towards a trade deal. Talks will focus on trade in goods, services, investment and deepening co-operation in strategic sectors, including renewable energy, green hydrogen and critical raw materials, the EU said.
The plan to deepen trade ties comes as Mr Trump pushes for tariffs on some of his country's biggest trading partners. Washington has paused some of those duties and he has postponed the imposition of 50 per cent tariffs on EU imports to July 9.
The GCC and Malaysia also started negotiations for a free trade agreement on Monday. Several major global economies are also pursuing trade deals with the Gulf region. The UK is in talks with the GCC, with indications that an agreement could be signed soon.
Mahadha Development Company, a UAE-Omani joint venture in which DP World is the majority partner, will develop the Al Rawdah Special Economic Zone, according to the statement.
Phase one of the project will cover 14 square kilometres, with expansion plans to reach 25 square kilometres in phase two.
managing partner, Alagan Partners
Mr bin Sulayem said the new zone would strengthen bilateral trade ties, after non-oil trade between the UAE and Oman hit a record Dh56 billion ($15.2 billion) in 2024, a 9.8 per cent increase from the previous year.
The zone will benefit from direct connectivity to Jebel Ali Port in Dubai and Sohar Port in Oman.
“This is expected to enhance logistics efficiency, lower costs and improve market access across Gulf, Asian and African trade routes,” Mr bin Hassan said.
The new zone will also help create jobs, attract advanced knowledge and modern technologies, he added.
By developing specialised zones and infrastructure, Oman can enhance connectivity and economic co-operation across the region, integrate itself into regional value chains and position itself as a key player in regional trade and economic networks, Mr Saidi said.
This would complement the UAE's established role in global logistics and trade and enhance the region’s resilience against global supply chain disruptions, he added.
The GCC economies, in particular the UAE, Qatar, Oman and Saudi Arabia, are aware that their geographic positions make them extremely important in this “redrawing of supply chains”, especially between Asia, Europe and Africa, because they are at the nexus, Mr Michelon said.
However, that window of opportunity may close very soon, he warned.
Individual GCC economies may not be able to take up the new trade flows resulting from the new supply chains, but if they connect with each other, they can dramatically increase their capacity in terms of logistics flow and manufacturing, he said.
“The new economic zone is equidistant from the Port of Sohar in Oman and Jebel Ali port in the UAE. It positions this manufacturing centre in a perfect place, benefiting from existing connectivity,” Mr Michelon said.
The Al Rawdah project will use its location to strengthen supply chains, re-export activity and logistics connectivity between Oman, the UAE and international markets, the Dubai Media Office statement said. It also aims to attract foreign direct investment, increase industrial output and create “thousands of jobs” as the zone expands over the coming decades.
Although the Al Rawdah Special Economic Zone does not sit on the current Etihad Rail route, “it will be interesting to watch how these transportation projects will adapt and propose some extensions to increase connectivity, ease of access and speed of delivery through the existing ports infrastructure”, Mr Michelon said.
