Diversification is the key

January 24, 2018

A strong manufacturing industry is fundamental to Oman’s continued prosperity and vital to boosting the Sultanate’s non-oil exports, says Nicholas P Barakat, CEO of OCTAL

Can you share your thoughts on the macro-economic situation and what in your opinion will be the big trends of 2018 in Oman and globally?

2017 was a positive year on the domestic front, with Oman’s non-oil industries maintaining their growth and developing their ability to compete on a global scale. This was a direct result of the Sultanate’s intensifying economic diversification efforts, which paved the way for entrepreneurs in multiple industries to serve as engines of domestic job creation, announcing a number of key projects, and continuing major investments in infrastructure. The ongoing development of tourism as well as the inauguration of the Khazzan gas project are two examples that showcase how the aforementioned trends are having a positive knock-on effect on all sectors of the economy. With the upcoming completion of the Muscat International Airport’s new terminal and the continued implementation of its logistical strategy, Oman is well positioned to build on the achievements of 2017 and continue its move away from crude oil. Real GDP growth, exports and trade balance figures should all perform better than initially anticipated for the upcoming year.

Globally, things have been more uncertain as rising protectionism and major changes in the labor market continue to affect companies all over the world. Forecasts for the upcoming year outline the global market’s continued slowdown despite a likely rise in global income. On the other hand, innovation and growing liquidity have presented a number of unique opportunities to help mitigate those factors and drive expansion. Growth in the volume of world trade is expected to rebound this year from its tepid performance over the past several years. In 2018, the World Trade Organisation (WTO) is forecasting trade growth between 2.1 per cent and 4 per cent.
What is OCTAL’s outlook for 2018?
As the world’s largest producer of PET resin and one of the Sultanate’s principal exporters, we are looking forward to propelling the performance of our four plant operation, securing our expansion into new markets and consolidating our role as a prime destination for local talent. The past year saw us successfully transform our operations in the US and we are ready to ramp up capacity at our plant in Cincinnati by 50 per cent to meet massive demand from our 60 major customers in North America. With the addition to our plant in KSA, both are now fully capable to produce everything required throughout the manufacturing phase from raw materials to the final product, expanding our reach and capacity. Additionally, our exports to Latin America currently total 60,000 tons and we are aiming to drive the development of our supply chain there in the upcoming years. All in all, 2018 will be a year to sustainably consolidate our growth extending our reach and introducing new products.
How Oman’s manufacturing sector going to shape up in 2018?
A strong manufacturing industry is fundamental to Oman’s continued prosperity and vital to boosting the Sultanate’s non-oil exports. For that potential to truly be tapped, companies within the sector need to focus more on local production as opposed to importing materials from abroad. The Sultanate’s on-going infrastructural development, free zones, as well as its safety and stability are proof points that the foundation is already there. Our success has shown entrepreneurs and companies that the Sultanate has all the ingredients required to sustainably thrive.
Please share a few highlights of the year 2017 for OCTAL? What were the major challenges? And what were the factors that helped the company do well?
Despite facing a tough economic climate, we were able to cement our role as the world’s leader in clear rigid packaging. As a result, we were able to rapidly expand our market share across a wide range of global markets, exporting our PET solutions to over 80 markets worldwide.
A major highlight of the past 12 months is when we were selected to participate in The National Program for Enhancing Economic Diversification’s (Tanfeedh) Petrochemical Lab to action two of its five projects in support of the 9th Five Year Development Plan. Our inclusion offered us the unique opportunity to share our technical insight and further showcase our support for Oman’s economic diversification by helping shape the Sultanate’s future economic strategy. The plans we are outlining as part of Tanfeedh focuses on supporting promising economic sectors where the Sultanate possesses the potential to create a competitive advantage, tackling obstacles to non-oil sector growth, and realising Vision 2040’s ambitions of creating a highly efficient national workforce.
What are the new initiatives/ areas that OCTAL plans to foray into in 2018?
As I previously mentioned, we are aiming to consolidate our position in new markets and begin preparing our future expansion plans with an eye on both Eastern and European markets. We are also developing new applications for our products, including new and innovative new solutions for the yoghurt industry. To that end, we will be conducting detailed market analysis to ensure our new products are perfectly tailored to the markets they enter. Additionally, we will be looking to improve recycling across all our operations.