Oman eyes Chinese billions to build desert boomtown

The Chinese have become key to Oman's effort to transform the fishing village of Duqm into an industrial centre that will help the country diversify its economy beyond oil and gas exports.

DUQM, OMAN (REUTERS) - It is just a tiny port on the Arabian Sea.

But, Duqm is now the focus of the most ambitious economic project in Oman's history.

2,000 square kilometres of this arid landscape is to become an industrial free zone.

Officials hope that one day it will rival Jeddah and Dubai.

The company behind the ambitious plans is Oman Wanfang - a group of six Chinese firms that is developing the site and selling the idea to investors back home.

Mr Ali Shah, chief executive officer of Oman Wanfang LLC, says: "Duqm isn't like Jeddah or like Dubai. It's still new, it needs time to develop. But we at Wanfang are thinking the future for Duqm will be better than those cities inside the Gulf."

Location is key to Duqm's plans.

It lies outside the Strait of Hormuz - which is vulnerable to naval conflicts - and it offers direct access to East Africa and South Asia.

Says Mr Shah: "A lot of Chinese [companies] are thinking of going outside the country. They want to find first the raw materials for their industries, and the markets for their products."

The Omani government also has a lot riding on the scheme.

Compared with its wealthier Gulf neighbours, Oman does not have huge reserves of oil and gas, and its budget deficit widened in the first five months of the year, to US$5.2 billion (S$7.03 billion).

Mr Lee Chee Khian, chief executive officer of the Special Economic Zone Authority of Duqm, says: "Of course, we need to build very fast. The most important thing is to bring in the key anchor customers to come in. Once that is done, everything will fall into place."

The Chinese project is the largest being developed in Duqm at the moment.

Officials in the Gulf country - which exports about 70 per cent of its crude oil to China - are determined to strengthen links to the world's second largest economy.

And as Beijing looks to expand its trading empire, this patch of land on the Arabian Sea could become a pivotal stop along its new Silk Road.