MUSCAT, SEPT 16 - Promising headway is being made in preparing the groundwork for the growth of Customs Bonded Warehouses at key locations around the Sultanate — a move that could potentially add RO 100 million annually to the Gross Domestic Product when it is a reality tentatively by the year 2020. The initiative is being spearheaded by Tanfeedh — the National Programme for Enhancing Economic Diversification — with the support of a number of stakeholders, notably the Royal Oman Police Customs, Ministry of Transport and Communications, Ministry of Commerce and Industry, Oman Global Logistics Group (ASYAD), Second and Third Party Logistics firms, and shipping and freight forwarding agencies.
Customs Bonded Warehouses are typically secured areas in which imported dutiable merchandise may be stored without any payment of customs duty (and Value Added Tax when it is eventually introduced) for a period of time (up to five years in the United States, for example) without any payment of duty.
During this period, the goods may be reprocessed, value added, knocked down and reassembled, sorted, blended (where liquids are concerned) or subjected to other forms of value adding initiatives. They can be re-exported in their value-added form without payment of duty, or alternatively sold in the local market upon the payment of customs and other applicable taxes.
The initiative — one of 120-plus project proposals unveiled by Tanfeedh — has important ramifications for the Omani government’s vision to drive logistics-based economic activities in the Sultanate. Besides contributing an estimated RO 100 million to GDP annually, Customs Bonded Warehouses also have the potential to create around 350 direct jobs, says Tanfeedh.
Last week, authorities hailed initial efforts, notably by ROP Customs to pilot documentation necessary to support customs bonded imports via the Bayan system. Success on that front promises to lend strong impetus to the growth of Customs Bonded Warehouses primarily by the private sector, say experts.
At present, the potential for economic activities based on Customs Bonded Storage is constrained by a severe dearth of such bonded warehouses, says Tanfeedh. Additionally, existing bonded capacity is not optimally utilised simply because of the absence of incentives to drive investments in value-add activities.
“There is an urgent need to establish new bonded customs warehouses to meet the growing demand,” said Tanfeedh, adding that its initiative aims to support the construction of customs bonded warehouses for the storage of “manufactured dutiable goods in strategic, high productivity sites such as Suhar, Salalah, and Al Mazyona (on Oman’s border with Yemen).”
Conrad Prabhu
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