Economic Update

Published 15 Jun 2011

Despite being established by royal decree quite recently, the Public Authority for Investment Promotion and Export Development (PAIPED) has already taken a number of steps to promote Omani products abroad and boost investment from foreign firms and governments alike, by both sending and hosting major international delegations. Moreover, that PAIPED, which replaces the Omani Centre for Investment Promotion and Export Development, (OCIPED), was set up as a public authority is indicative of the growing importance placed on investment promotion in the Sultanate.

Omani-Russian relations were in the spotlight in late May when a Russian business delegation paid a visit to PAIPED to discuss enhancing trade ties between the countries. The delegation consisted of Russian executives representing a number of sectors, and was led by Sergey Tishkin and Mikhail Arzhakov, respectively the chairman and CEO of the Oman-Russian Business Council. Nisreen Ahmed Jaffer, the director-general of investment promotions at PAIPED, told local press that Russia plays a large part in Oman’s investment strategy, particularly with regard to the metal and plastics industries.

PAIPED also attended the Korean Overseas Investment Fair, which took place May 19-20 in Seoul. The fair allowed PAIPED officials to establish contact with more than 200 Korean companies interested in investing overseas, according to local press reports. The fair hosted around 1500 attendees, with some 700 companies and 29 exhibiting countries present. Other participants included China, France, Germany, India, Mexico and the UAE.

In a statement to local press before the fair, Jaffer explained that Oman provides many advantages as an investment destination, placing particular emphasis on the quality of employees the Sultanate has to offer. “10 to 15 years ago the relocation decision was driven by the price of property. Now we’re seeing a much more sophisticated approach to the business plan,” she told the Oman Observer on May 18. “Cheap locations might look good on a company’s spreadsheet, but if the domestic skill-set is lacking, recruitment costs can be very high.”

Building ties closer to home is also an important aim for the authority. In late April, Faris bin Nasser Al Farsi, the acting director-general of PAIPED, represented Oman at the first meeting of the GCC Permanent Coordination Committee for Exports Development in Riyadh. The main goals of the newly formed committee are to create a strategy that will reduce GCC countries’ reliance on oil exports and establish greater coordination between the member states’ exports development organisations, according to local press reports.

PAIPED has been keen to raise non-oil exports as part of the Omani government’s broader efforts to diversify domestic production and attract more interest from potential partners. India has been identified as a particularly promising target market. Oman’s exports to India have risen dramatically over the past six years – from OR70m ($181.8m) in 2005 to OR232.4m ($603.7m) in 2010, according to PAIPED. While urea has been the dominant non-oil export to India, potential markets also include flexible packaging films, plastic pipes, polypropylene, food oils and marble, according to market studies carried out by PAIPED.

Economic ties with India run both ways, however, and Indian investment in the Sultanate is expected to increase going forward, with food processing just one area of interest. “Food processing is at the frontier of new areas of expansion for Indian investments in Oman,” Anil Wadhwa, the Indian ambassador to Oman, told OBG.

The fishing industry has also been targeted for expansion and the Sultanate has been increasingly promoting its seafood products abroad. Under the country’s long-term plan for economic development, Vision 2020, fishing is targeted to contribute 5% of GDP by 2020, up from around 1% when the plan was released in 1995. In 2009 the segment was worth OR104m ($269.37m), with fish output totalling some 158,000 tonnes. There remains plenty of scope for greater local value addition, however, as at present much of the Sultanate’s production is exported unprocessed.

At a seminar on the development of seafood industries, held by the Ministry of Commerce and Industry in Muscat in early March, organisers called for greater attention to be paid to potential new products – including lantern fish and seaweed. Event coordinators pushed for greater private sector investment in the industry, which they say can be directed to supporting environmentally sustainable fish-farming practices. The seminar also explored the importance of establishing an identifiable Omani seafood brand, while implementing stricter environmental classifications to increase the competitiveness of the sector on the global market.

In mid-May PAIPED, in conjunction with the Directorate-General of Fisheries Resources, the Ministry of Agriculture and Fisheries, and the Oman DevelopmenBank, participated in the European Seafood Exposition in Brussels. The exposition is the world’s largest seafood fair, hosting more than 1600 exhibitors and welcoming more than 24,000 visitors. Four Omani firms – the Oman Fisheries Company, Al Marsa Fisheries, Al Bahihi Fisheries and Sea Pride – were also represented at the show.

According to local press reports, Oman was the only Arab country participating in the show and garnered significant interest in the produce it showcased, including tuna, lobster, shrimp and sea bream. Aiman Ambusaidi, the director of export development at PAIPED, told the Times of Oman on May 16th that the Omani companies had already booked orders for around $2.4m worth of seafood products. “This was the perfect opportunity to showcase our competitiveness to global seafood markets,” Ambusaidi said.