Octal has proved itself as a giant in the Omani market, redefining manufacturing and creating a name not only for itself, but positioning the Sultanate as a hub for the global PET industry
The role of investment, especially foreign direct investment (FDI), in driving economic growth cannot be understated in the global marketplace. The Omani government has affirmed the major economic role played by the FDI sector, stressing its continuing importance for the Sultanate’s economy moving forward. With Oman known for having a more favourable environment towards FDI, and having liberalised its regulatory framework accordingly, one success story demonstrating the ability of the country to facilitate FDI companies is Octal, the world leader in clear rigid integrated packaging solutions.
Under the premise ‘from Oman to the world’ and with an investment of $600mn more than a decade ago, Octal has proved itself as a giant in the Omani market, redefining manufacturing and creating a name not only for itself, but positioning the Sultanate as a hub for the global PET industry. In 2018, the company’s revenues reached $770mn, selling 98 per cent of its high-quality, environmentally friendly PET resin and sheet product overseas. With a total annual capacity of almost one million metric tonnes, Octal is the largest global manufacturer of PET Sheet and Resin on a single site, and the only company in the world with a fully integrated food packaging system from raw material to finished product.
Octal currently has a number of important new packaging solutions under development in its state-of-the-art research facility in Salalah. Amongst its industry firsts were the introduction of modified PET to replace high impact packaging and also a ‘form-fill-seal’ easy to recycle application using DPET™. Octal is also aiming to integrate its US and Saudi Arabia facilities to produce packaging material in addition to their previous functions. With this, these facilities will be able to produce everything required throughout the manufacturing phase from raw materials to the final product at a significantly lower cost. This will provide Octal with greater market reach and will take its capacity to new heights.
Octal is not only a success story for attracting FDI to Oman, but is also providing investment for research and development (R&D) which will support the Sultanate to accelerate its transformation from a hydrocarbons-based economy to a diversified one. The successful model and growth of Octal over the years serves as a reference point showing that value chains can be created, nurtured feeding into the growth of the manufacturing industry in Oman and from Oman to the world. With a robust R&D culture, Octal is actively developing and trailing next generation PET and DPET in the packaging industry, while also diversifying its product portfolio beyond clear sheet and standard resin. The company continues to push boundaries in R&D to deliver the highly established quality attributes in the market, while meeting the future environmental demands for circularity and re-consumption of post-consumer waste.
“Oman should focus on attracting high-quality FDI to choose investors to benefit the economy and deeply integrate into the local as well as the global value chain,” said CEO, Nicholas Barakat. “From inception, Octal has maintained an unwavering focus on investment in capacity, proprietary technology and innovation. This has enabled us not only to accomplish sales growth year-after-year but also to become the recognized world leader in PET sheet and the industry reference point for superior product performance and environmental standards.”
Barakat added, “Oman’s non-oil sectors are expected to continue growing moving forward, gaining momentum in their ability to compete on a global scale. We are seeing a number of key initiatives being implemented like greater access to finance, the continued support and eventual completion of major infrastructural projects, as well as the rise of new logistical hubs and free zones that should have a significant and positive impact on businesses’ growth and attracting FDI.”
In order to support its growth capital needs and improve operational cash flow as its revenues continue to grow, Octal has recently secured $625mn of banking facilities. In a strong vote of confidence in its future, the facility was oversubscribed by almost 250 per cent and will continue to set Octal for stronger and rapid growth. The company’s strategy as the leading manufacturer of PET materials is to further expand its patented PET Sheet business specifically in recycling technology, process technology, specialised industry segments such as poultry, dairy and food service packaging, with further geographical expansion into Latin America and Asia. Following the secured facility, the company was recently recognised at the annual Alam Al-Iktisaad Wal A’mal Business Awards in Muscat with the ‘financing deal of the year award’.
The global PET packaging market was valued at $56.64bn in 2018 and is expected to grow to $68.71bnby 2023. The growth is primarily because of the rising demand for bottled water and other beverages. The growth is also attributed to the rising need for easy-to-use packaging in the retail sector. This growth coupled with rising popularity of lightweight packaging globally, means Octal is creating global hub for superior PET production right out of the Sultanate into international markets spanning from North America to Latin America and Europe. In 2018, the company recorded revenues of $834mn, thanks in part to robust efficiency drives, increasing year-on-year productivity and targeting $1bn in revenues in 2020.
With a conducive business environment, a strategic location coupled with state-of-the art infrastructure, an open current and capital accounts, and a fixed exchange rate makes Oman an attractive destination for FDI. Furthermore, the new foreign investment law under active consideration is expected to further infuse confidence in foreign investors for bringing their investment into the Sultanate. With a global network that has allowed it to access over 140 markets with ease, Octal is well on its way towards cementing its role as a trusted partner of choice, industrial provider, and responsible manufacturer. We can’t wait to see that Octal ‘phenomenon’ repeat itself.