GRM 2010 GRM 2011

Abstract Details

Family Name:
Al Balushi
First Name:
Title of Paper:
Cities as an engine of growth in the Gulf: The case of Duqm in Oman
Paper Proposal Text :
This paper seeks to provide opportunity to exchange views on variety of issues considered to be important for positioning some of the gulf cities as an engine of growth in Gulf region, taking Duqm as case study in Oman. To do so, the paper will highlight some of the critical issues related to this city in particular. These include their strategy, structure, targets, identity, autonomy, policies, integration and coordination, politics and marketing.
Overall, Oman has been performing quite well in the last 45 years. However, a number of challenges seem to lie ahead in the imminent future, including: creation of adequate employment opportunities for Omanis, sustaining a high growth-rate and funding for future development projects. Duqm can significantly contribute to meeting and addressing these challenges, primarily through promotion of investment – including FDI - and trade. These can accelerate the pace of economic diversification while increasing Omani export and enhancing the economy – particularly the private sector. They can subsequently add value to long-term development.
Duqm has great geographic advantages over other neighboring developments in both Oman itself, and the broader GCC region. In general, investors look for following primary conditions when considering investing in businesses in any region: government and political stability, infrastructure, communication, ownership, natural resources, transportation, skilled labor, tourist attractions and residential benefits. The Duqm area currently lacks ‘attractions’ necessary to draw people and populate the region. This can, therefore, be a primary reason for driving development, converting Duqm into a massively attractive destination for both investors and residents. The Duqm Special Economic Zone Authority (DSEZA) needs to ensure it can offer the right environment which strikes a balance between the aspirations and needs of its habitants, as well as those of businesses. DSEZA needs to create a ‘game plan’ to make trade and life in the area ‘fun’, aspirational and productive.
Globalization and communication has literally revolutionized the development wherever it touches in the world. With proper integration of globalization and communication, the growth that Duqm can experience will be truly exponential.
As the world becomes more open to each other and with tighter integration, sustained growth becomes more feasible and countries can benefit in two ways. First, import of ideas, technology and the knowhow from the rest of the world. Second, exploited global demand, which provides a deep elastic market for the goods. Economic liberalization should ensure fair and open competition in the market, thus creating opportunities for a more efficient allocation of resources and support for the private sector investments and growth. In fact, globalization has been pushed mainly by the business, specifically Foreign Direct Investment (FDI) and MNCs activities; all countries are competing with each other to attract maximum FDI. FDI has grown substantially worldwide over the last three decades, with the help of globalization making it the engine of growth and development. In order to benefit from new economic trends Duqam must pay special attention to the transfer of technology using FDI as its main channel. FDI can also be of much help especially in the awareness of foreign production techniques, overseas markets and international supply chains. Foreign education is of the utmost importance for a stronger foundation. Duqam authority needs to be more effective, not as just policy makers, but also service providers, investors, arbitrators, and employers. Choice of policies matter a great deal as well as their implementation. Well-trained public servant officials are very important.
To ensure building a strong private sector and to accelerate the pace of economic diversification DSEZA has to have well design Business linkages program to ensure the spillover from MNCs operating in duqm to domestic firms. In fact, Spillovers can occur via the interactions between multinational and local firms particularly SMEs. As MNCs can help the host economy through the backward and forward linkages they generate through market transactions. Linkages Duqm context are defined as linking FDI companies not only with domestic ones but also with research institutes, academic and other institutes of mutual benefit.
In this respect, two types of linkages exist; First, Backward linkages, MNCs can have positive influences on the productivity of their suppliers in different conducts. These linkages could benefit Duqm if foreign affiliates switch towards local suppliers. MNCs may have incentives to provide technical assistance to or share knowledge with their local suppliers in order to improve and ensure the quality of the goods purchased. Additionally, they could be motivated to provide training and help domestic firms with regards to management and organizational practices, in order to enhance their suppliers’ efficiency. Additionally, multinational firms could impact the productivity of their suppliers via the increased demand for their products, perhaps allowing them to realize economies of scales and become more efficient. Finally, the venue of a foreign-firm might create competition among the potential suppliers in order to be chosen by the multinationals. If this competition results in innovation from the part of the suppliers, one could view this as a positive effect from foreign direct investment. Second, Forward linkages; arise from the interactions between the MNCs and their local customers. Such interactions can improve the productivity of local firms if, for example, the MNCs supply goods of higher quality/lower price to domestic producers. Nevertheless, it seems obvious that for such spillovers to arise, it is required that the motive of foreign investors is to sell in the host markets and not only to take advantage of efficiency gains and re-export to their home country.
Marketing is critical for DSEZA, economic zoon in the regions is well ahead and they already have well-established network all over the world. However, It is not always not about what we sell but how we sale. The DSEZA marketing team must use untraditional way and techniques to attract right investors. In fact, Duqm need a strong investment promotion program draws on the experiences gained and lessons learned from developing industrial zoon in the similar circumstances, it needs to provides practical advice of best policy practice for attracting and benefiting from foreign direct investment (FDI), in line with Duqm development strategies. The team must recognize that investors have his own strategies. So, DSEZA must be able to convince the investors that Duqm will satisfy their needs and will add real value to their business.
In marketing Brands are like people, the value you assign to someone is based largely on how the individual makes you feel. The marketing team needs to study yearly World Investment Report issued by UNCTAD very well, to enable to understand the structure of the global investment, hunt for investors and opportunity from all over the world and understand FDI trend what motivate foreign investor and what best ownership structure for Duqm.
The success of Duqm will be depending largely on capability of the marketing team to shift from competitive mindset to a creative mindset. Technique need to be used to deliver marketing messages to the target group of potential investors, the promotion team at Duqm must get to understand the investment process and set guidelines for enquiry handling and do company research before meeting with potential investors. Also, identify target firms and focus their efforts on them, strong coordination with other stakeholders. In addition, they need to build trust and keep confidentiality of client information stay in touch with established investors and evaluate DSEZA promotional activities
A lot has been done to move Duqm forward, but much still remains. This paper will aim to highlight some of the critical issues considered to be important for the future development of Duqm, positioning it as an engine of growth and prosperity for Oman.