And it's the automotive spare parts business that is of interest to Oman and the Public Authority for Investment Promotion and Export Development 'PAIPED'.
"We commissioned Atkins to carry out a study to identify and assess the commercial and investment opportunities offered by the automotive sector. In this regard, we're hosting a seminar on Monday 17 September at Muscat's Crowne Plaza Hotel to discuss the study and the related commercial and investment opportunities. We'll also be launching an e-Automotive investment brochure," remarked PAIPED's Faris Al Farsi, Director General, Investment Directorate.
Al Farsi added, "The study focused on the sector's potential for the manufacture of automotive parts rather than the full assembly of motor vehicles. Through a thorough assessment of the value of trade activity at a domestic, Gulf Co-operation Council (GCC) - Oman, Saudi Arabia, Qatar, Bahrain, Kuwait and the United Arab Emirates - and global level the study identified both potential products and product groups that could be manufactured in the Sultanate."
Research suggests that the international auto industry has become more standardized resulting in higher levels of competition with the production base of most major manufacturers moving from developed to developing countries in order to take advantage of lower production costs.
"The auto industry's supply chain has also changed. Major global original equipment manufacturers are increasingly focusing on basic design, assembly operations as well as servicing the after-sales market. Moreover, they prefer to trade with a smaller number of large suppliers. As a result, rationalization is taking place in the sector with fewer firms but more subsidiaries to major players emerging," says PAIPED's Investment Director General.
The demand for and supply of auto parts is clearly linked to global vehicle production levels. Prior to the global economic downturn in 2008/2009 there was a steady rise in vehicle production.
While the recent economic downturn resulted in a significant reduction in the number of manufactured vehicles, this trend is now reversing.
"With the increasing importance of emerging economies it's no surprise these countries are rapidly becoming dominant in the automotive sector. The Middle East in general, and the GCC in particular, are fast growing markets for the automotive industry and the region has a high ratio of car ownership per household," suggested Al Farsi.
Given their GDP levels, GCC countries are high consumption vehicle markets that present significant opportunities for the manufacture of vehicles and associated components.
The combination of high living standards, a fast growing population and favourable oil prices are helping drive growth in the region's auto sector with demand for automotive products in the GCC increasing at a significant rate.
Between 2006 and 2008 demand grew on average by 34%. Rates in China, India and Brazil for the same period were 12%, 9% and 14% respectively and in most European countries and the US demand contracted.
Oman's auto market is expanding rapidly and registrations are expected to increase by approximately 7.5% per annum indicating the number of cars in the Sultanate will reach 1.67 million by 2020.
"This will lead to a significant increase in demand for automotive parts and therefore there is the opportunity for local manufacturers to capture this market," commented PAIPED's Investment Director General.
PAIPED's study identified 11 automotive components with market potential. The three stage process for identifying these components was based on assessment of the demand for and supply of automotive parts in relation to: the value of domestic imports and exports; regional imports to the GCC; value of global trade; global FDI; results of a domestic automotive suppliers and automotive manufacturers survey; and an international trade partner survey.
The process also included: analysis of import and export data at domestic, GCC and global levels. The most important analysis was to understand which products have significant levels of trade domestically and regionally.
Buoyant trading for products at these levels provides the opportunity for Omani producers to establish a strong domestic and regional market.
The next stage was compiling a short list of 15 potential products in consultation with domestic automotive parts suppliers and manufacturers as well as assessment of global FDI and trade activity.
The final product selection was based on a range of criteria including market potential; production factors; financial and economic viability and investment potential.
This product group includes a range of cast iron 'or other metal' parts including pistons, piston rings, cylinders, cylinder blocks, cylinder heads, fuel inlet valves and pipes, valves, carburetors and nozzles.
It is likely that a company setting up as a manufacturer of one of these products will also manufacture other products from within this group.
The existing market for diesel and semi-diesel engine parts in Oman is significant at around 1.9 million units. This presents a good opportunity to establish a manufacturer on the grounds of meeting local demand based on the scale estimated for this profile.
"There's outstanding potential in the region," says PAIPED's Investment Director General, "As the number of imported parts into the GCC under this code in 2007 was approximately 7 million. In order to develop the market potential for Oman there will need to be a partnership with a FDI to overcome perceptional issues relating to quality and help establish the product and market at a regional level. In brief, there are exciting opportunities in the automotive sector, opportunities we intend to explore at the seminar scheduled for Monday 17 September at Muscat's Crowne Plaza Hotel," concluded Al Farsi.
Source: http://www.ameinfo.com/paiped-holds-omani-automotive-seminar-311105
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