Why China Is Building A New City Out In The Desert Of Oman

BE2C2 Report — Oman intends to build an entirely new, $10.7 billion transit-oriented industrial city on the desertified coast of the Arabian Sea. Locale: the dusty fishing village of Duqm, 550 kilometers south of Oman’s capital Muscat.

A year ago, Oman signed a deal with China and opened the doors for a Chinese consortium to move in and do what they seemingly like to do best: build a new boomtown for itself– this time outside China.

China’s new city in the Oman desert has been pragmatically dubbed the Sino-Oman Industrial City, and the ambition is to turn the remote and underutilized Middle East seaport into a vital nerve center of global trade and manufacturing.

Lately, Chinese firms are moving out along the tendrils of the ambition Belt and Road to construct new cities across Asia, the Middle East, and Africa. Duqm is among the most ambitious of such projects south southwest of Gwadar port on Pakistan’s Balochistan coast– Pakistan purchased Gwadar from Oman several decades back.

The 11-square-kilometer endeavor, which sits within the giant Duqm Special Economic Zone (SEZAD), is expected to have not only a vibrant port but an array of other “mega-ventures,” which include an oil refinery, a multi-billion dollar methanol plant, a giant solar energy equipment manufacturing operation, an automobile assembly factory, an oil and gas equipment production site, and a $100+ million building material distribution enterprise — a crow’s flight from Gwadar which links China’s western restive Muslim-dominated Xinjiang province to the outside world via $62 billion CPEC.

 

In addition to being a cluster of industrial operations, the Sino-Oman Industrial City will also have a more human element as well, providing homes for 25,000 people, complete with schools, medical facilities, office complexes, and entertainment centers — which includes a $200 million 5-star tourism zone.

The Chinese consortium has promised to develop 30% of the project area in just five years, with financing and construction firms coming straight from the mainland.

Oman Wanfang, the Chinese consortium that is putting up the money, know-how, and boots on the ground to carry out this massive endeavor, is made up of six companies, most of which are from the Ningxia Hui Autonomous Region — which is largely populated by Chinese Muslims, demonstrating a cultural link with Oman that may help facilitate such deals.

But unlike many other Chinese investment consortiums that are active along the Belt and Road, all of these firms are private, as opposed to being commercial extensions of the Chinese state, and claim that they are not being provided with direct funding from their government to carry out their individual projects in Duqm.

However, this doesn’t mean that they don’t have the full backing of Beijing, who is reputedly supporting the venture via its National Development and Reform Commission, who has oddly already enthroned the project as a “Top Overseas Industrial Park.”

Laying right on the Arabian Sea between the Gulf of Oman and the Gulf of Aden, the location of the port/SEZ combination at Duqm fits snuggly into the bosom of China’s Maritime Silk Road — Beijing’s vision of three supercharged sea routes between China and Europe and Africa that are serving as a framework for the development of a plethora of Chinese-owned ports and other mega-projects– in Pakistan and Sri Lanka to name two fastest emerging China shipping hotspots.

From an established base camp at Duqm, China will be able to better access and secure their energy and trade supply lines throughout the Middle East and East Africa via new maritime silk route and the CPEC-driven China’s energy corridor.

It is also probably no coincidence that 77.1% (2015) of Oman’s crude oil and condensates exports go to China.

The Sino-Oman Industrial City is just one of a network of new cities that Chinese firms are currently busy at work constructing along the land and sea routes of the Belt and Road — another entry into a portfolio that now includes Colombo Financial City and Hambantota in Sri Lanka, Forest City and Robotic Future City in Malaysia, a massive port and SEZ project in Abu Dhabi, the $10 billion Kyauk Pyu Special Economic Zone in Myanmar, along with large-scale new developments in western Chinese cities like Horgos, Urumqi, Lanzhou, and Xi’an.

Via its Belt and Road Initiative, China has become a prime partner of countries that are going through three kinds of transitions:

— Emerging markets trying to build up their economies and develop a framework of modern transport infrastructure, energy, and technology.

— Stagnant or retracting developed economies, like Greece, Spain, and the Brexit-riddled U.K, who are in dire need of additional sources of economic sustenance.

— Energy resource dependent nations who are trying to diversify their economies to bolster long-term sustainability.
Oman joins countries like Kazakhstan and Azerbaijan right in the midst of the third type of transition.

Currently, Oman’s economy is firmly entrenched in a cycle of hydro-carbon dependency. In Oman, oil and gas accounts for nearly 50% of GDP, 70% of exports, and 71% of total government revenue.

This reliance on oil and gas has been posited as Oman’s biggest risk, and the country has been on an all out mission to develop other sectors of its economy, aiming to cut its share of hydro-carbon derived GDP in half by 2020.

To these ends, the country has earmarked roughly $106 billion to invest in industries like transportation, tourism, and real estate, with projects to create a new railway network, new airports, enhanced seaports, new cities — a la Duqm — currently underway.

The research firm BMI forecasted that the Sino-Oman Industrial City will be a major factor in the rise of Oman’s construction sector, which is predicted to double its growth rate by 2019.

It also has a bigger picture footprint for China which is poised to become the numero uno of global economy in the next few years.

For the economic giant and the world’s most populous nation China, the industrial city provides it a perfect landing to the Arabian peninsula – and a hop-skip-and-jump from Pakistan’s Gwadar which also will host and cater to several SEZs and a free trade zone- they are in the pipeline on fast-track basis and ready to compete as regional hub itself for Central Asia, part of the Middle East and West Asia.

(The original article appeared in the Forbes Middle East)

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