Interview: Lujaina Mohsin Darwish
What role can the private sector play in engaging with the international investment community?
LUJAINA MOHSIN DARWISH: Oman’s private sector has undergone a significant transformation in recent years, moving from mostly trading to a more contemporary attitude towards manufacturing and services. A new confidence and resilience is seen among business owners, providing impetus to form partnerships with global entities.
Public-private partnerships shift risks to the private sector, albeit with specific guarantees. Around 80% of funding for Tanfeedh projects is from private investment, with the remaining 20% coming from the government. Initiatives like these, along with foreign direct investment, are expected to enable the private sector to increase its involvement in the economy.
A competitive economy led by the private sector can leverage Oman’s political and economic stability. Its long-term commitments to strategic relationships and its location in the GCC offer a platform to expand international trade partnerships. The government is promoting sectors identified for diversification – including mining, tourism, manufacturing, food security and logistics – to attract local and foreign investment.
How can greater regional collaboration and integration help Oman overcome supply chain issues?
DARWISH: Oman’s location on trade routes between Asia and Africa, and onwards to Europe and the Atlantic highlights its competitiveness as a nexus for consolidation and trans-shipment. This is aided by its proximity to some of the world’s busiest shipping lanes.
The sultanate has built a nationwide network of motorways and expressways, created new carriageways to expand access and reduce transit times to other GCC countries, and simplified procedures at land, air and sea border crossings to create a regional network that can move goods rapidly across the Arabian Peninsula.
In addition, the three major ports of Sohar, Salalah and Duqm can cater to container traffic in the GCC, the wider Middle East and Africa, reducing the time needed to access other ports in the region and lowering costs.
The Oman-UAE rail project, a joint venture between Oman Rail and Etihad Rail, aims to make the movement of goods and passengers between the two countries more efficient and cost effective, showing how regional collaboration can mitigate disruptions in supply chains. At 303 km, the railway is expected to transform various sectors, as well as enhance commercial movement and social cohesion by linking economic, industrial, commercial and residential centres. The project will ultimately be integrated with the planned GCC rail network.
In what ways are growth opportunities in e-commerce influencing investment strategies?
DARWISH: E-commerce saw a surge in sales during the Covid-19 pandemic, with consumers increasingly turning to online shopping. Indeed, Oman’s e-commerce market is expected to reach $6.5bn by 2026.
Oman has one of the world’s highest internet penetration rates at 96.4% as of January 2023, with the number of internet users at more than 4.4m. Thanks to Oman’s digital transformation – including the rollout of 5G services and rapid adoption of digital payment options – online marketplaces are expected to grow rapidly. Several e-commerce projects are in the works, with major investment to be rolled out through to 2025.
The primary beneficiary of the growth in e-commerce is set to be retail. Consumers enjoy the benefits of armchair shopping, as it saves them time, effort and fuel. The sector is also expected to bring significant opportunities for companies focused on supply-chain management, logistics and warehousing services, as well as marketing and value-added services. It will also create better entrepreneurial opportunities in niche sectors for SMEs that find it difficult to penetrate traditional retail channels. Another positive spin-off of the growth is likely to be an expansion in areas such as data analytics, artificial intelligence and digital marketing.
Read More from OBG
