The US$200mn joint venture is held 60 per cent by Oman (represented by the Oman Investment Fund), 20 per cent by Iran’s Khodro car company and the remaining 20 per cent by an Omani company.
Officials said the project will expand Oman’s manufacturing industry and create local jobs.
The company plans to manufacture in Duqm, allowing ease of export to markets such as Africa.
Khodro, under the brand IKCO, is Iran’s dominant domestic car manufacturer. It produces 500,000 cars a year, mainly economy models, officials said.
Khalid al Yahmadi, OIF’s investment director, said he expects an assembly line to be built by Q4 of 2016 and have a full factory in “three to five years”.
He said the factory will be accompanied by growth in local manufacturing such as tyres, batteries and glass.
“We are hoping these industries will be developed, either through the private sector in Oman, or any other government entity,” he said. “Let’s say at the end of five to six years, we’ll have all the other ancillaries where we could have our full production facility.”
Yahmadi said the assembly line itself will create “200-300” direct jobs, which could increase in the future.
The company is expected to manufacture 20,000 cars per year, 80 per cent of which will be exported to markets including Africa and the GCC, while 20 per cent will be sold in Oman.
The company will be officially launched after a three-month market study, Yahmadi said. A preliminary study preceded the MoU.
“We are planning to compete with Korean, Chinese and Japanese companies in the Omani market,” said Mojtaba Hadavand, IKCO director of export planning and media research.