The Report: Oman 2019
Following the global oil price drop in 2014, Oman – like the other GCC states – is pushing ahead with its long-term national development plans that seek to diversify the economy.
Country Profile
Located in the south-eastern quarter of the Arabian Peninsula, Oman is the only member of the GCC situated outside of the Gulf. Leveraging its strategic location, Oman has invested in infrastructure with the goal of becoming a global logistics centre. Diversification efforts are a driving force behind economic growth while infrastructure and transport works are boosting connectivity. The sultanate’s long-term development strategy, Oman Vision 2020, emphasises diversification, privatisation and Omanisation. As the final leg of Oman Vision 2020, the sultanate’s ninth five-year plan continues to drive the country towards social development, the economic diversification of many production sectors and the optimal utilisation of available natural resources. This chapter contains viewpoints from Sultan Qaboos bin Said Al Said and Christine Lagarde, Managing Director, IMF.
Explore chapterEconomy
Like other GCC states, Oman’s economy is largely driven by oil and gas activity. However, with fewer and more complex hydrocarbons reserves than its neighbours, it is under greater pressure to diversify its economic base. The scale of this challenge was highlighted by recent falling oil prices, which led to the largest fiscal deficit in more than a decade. Nevertheless, a combination of government reforms, increased diversification efforts and a recovery in oil prices means that the sultanate’s economy is showing improvements across most major indicators for 2019. The government is therefore well positioned to continue with its most ambitious reform agenda since the original modernisation phase in the 1970s. This chapter contains interviews with Ali bin Masoud Al Sunaidy, Minister of Commerce and Industry; Salaam Said Al Shaksy, Member of the State Council and CEO, Alizz Islamic Bank; Ahmed Al Musalmi, Board Member, Special Economic Zone Authority at Duqm, and CEO, Bank Sohar; and Khalifa Al Barwani, CEO, National Centre for Statistics and Information.
Explore chapterBanking & IFS
Oman’s banking sector has weathered the economic downturn resulting from the 2014-15 hydrocarbons price drop without a significant erosion in asset quality, and returned to its long-term trend of deposit and loan growth. As a result of firmer oil prices and a broadly positive outlook for the sultanate’s economy, the industry is preparing for a new phase of credit expansion. However, challenges remain. Recent years have seen banks struggle to meet previous levels of profitability, and an ongoing process of regulatory reform is placing a strain on the bottom line of some institutions. This chapter contains interviews with Tahir bin Salim Al Amri, Executive President, Central Bank of Oman; and Waleed Al Hashar, CEO, Bank Muscat.
Explore chapterCapital Markets
Muted investor sentiment since 2016 has slowed activity on Oman’s stock market. Downgrades by all three major ratings agencies and constricted spending have taken their toll on trading volumes, nudging the index into a negative trend over 2018. However, some parts of the market are benefitting from this scenario. Bonds and sukuk (Islamic bonds) have become a more inviting prospect for investors, and the two financial instruments have seen an increase in turnover during 2018. Regulations concerning real estate could also boost the popularity of a new financial instrument. Rising oil prices may prompt a return of more traditional market drivers, possibly reinvigorating the capital market over the coming year. This chapter contains an interview with Abdulaziz Mohammed Al Balushi, Group CEO, Ominvest.
Explore chapterInsurance
Despite difficult economic conditions, insurers have succeeded in posting consistent net profits in recent years. With the economy recovering from the decline in global oil prices starting in mid-2014, the industry is well positioned to take advantage of new opportunities. This is especially true as the government moves to implement mandatory health care coverage for both foreign and domestic employees. The sector is not without its challenges, however. Competition remains intense, and in some cases the pursuit of premium has eroded underwriting standards and become a challenge to the long-term sustainability of the sector. Nevertheless, increasing awareness of offerings, a growing population, new compulsory lines and ongoing market reforms are working in tandem to give the industry notable momentum.
Explore chapterEnergy
The oil and gas sector is responsible for much of Oman’s economic growth and government revenue; thus, changes in the industry tend to reflect greatly on the sultanate’s overall development. Although recent years have seen a strategic shift towards economic diversification, activity in the hydrocarbons sector still attracts a large share of domestic and foreign investment, with this pattern likely to continue for some time. While the recent prolonged downturn in global oil and gas prices, coupled with the steady depletion of domestic resources, has given Oman some cause for concern, there are signs that the industry has turned a corner. This chapter contains an interview with Ahmed Saleh Al Jahdhami, CEO, Oman Oil Refineries and Petroleum Industries Company.
Explore chapterUtilities
With the utilities sector continuing its long-term shift towards privatisation, these are changing times for power, water and waste in the sultanate. The year ahead will see further private sector participation in the country’s electricity transmission and distribution networks, while new desalination projects will also come on-line. Oman is keen to secure greater international involvement in all sector plans, with the promotion of foreign direct investment a key part of the sultanate’s overall development strategy. The main goal is diversification away from oil and gas, and utilities are playing an important role as companies turn to renewable energy and even coal. This chapter contains an interview with Yaqoob bin Saif Al Kiyumi, CEO, Oman Power and Water Procurement Company.
Explore chapterConstruction
As the second-largest driver of non-hydrocarbons growth and the sector that employs the greatest number of people, construction plays a key role in the development of Oman’s economy. While 2017 proved to be a difficult year for the industry, forecasts suggest a return to growth in 2018 and 2019 on the back of higher oil prices and a government-supported diversification plan. For domestic contractors, high Omanisation requirements and stiff competition from international peer companies remain long-term concerns, though clear land legislation and efforts to streamline the permitting process are supporting the overall business environment.
Explore chapterReal Estate
As Oman’s economy starts to feel the effect of resurgent oil prices, its gradually recovering property market is creating brand new opportunities for both tenants and property buyers. Although a growing number of departing expatriates, rising Omani unemployment rates and limited salary increases have limited the property market’s potential since the decline in oil prices starting in 2014, the sultanate’s young population and carefully managed economy ensure that it continues to possess the fundamentals necessary for long-term investment value. This chapter contains an interview with Sheikh Salim bin Ahmed Al Ghazali, Chairman, Golden Group of Companies.
Explore chapterIndustry
Oman’s industrial sector is a key pillar of its long-term development strategy, as well as a major employer and a steadily growing source of wealth. It covers a wide range of fields, including mining, petrochemicals, aluminium and organic beverages. The recent economic slowdown in both the country and the wider region still poses challenges. With much economic activity driven by government expenditure and investment, the sustained lows in oil and gas prices have strained margins in the private sector. Additionally, government policies related to employment and in-country value have sparked some debate. Nonetheless, Oman continues to offer a strong value proposition for businesses, and rising oil prices in the first half of 2018 bodes well for the future. This chapter contains an interview with Bader Al Nadabi, Vice-chairman and Co-founder, Al Sarh Group.
Explore chapterMining
Mining in Oman is poised for growth in line with economic diversification plans, and the sector has distinct advantages over other developing markets. The country has some of the richest and most diverse mineral deposits in the world, ranging from gold and copper to potash, gypsum, chromite and limestone. Despite this, Oman’s mineral wealth remains largely uncovered. The sultanate holds a strategic location along global trade routes, and operates three ports in the north, centre and south of its territory. With planned infrastructure upgrades such as cross-country rail links and ongoing government reforms to facilitate investment, it is becoming clear that Oman is on the cusp of unlocking its mineral export potential.
Explore chapterTransport
Almost three years into its ninth five-year plan for 2016-20, Oman is beginning to reap the rewards of efforts to restructure and expand its transport and logistics sector. The Central Bank of Oman’s latest annual report notes that transport, storage and communications is one of the economy’s best performing categories, with the growth rate reaching 9.6% in 2017. The sector’s expansion is being driven by private investment, with the government having steadily decreased its current and development expenditure every year since 2014. This chapter contains an interview with Abdulaziz Saud Al Raisi, CEO, Oman Air.
Explore chapterAgriculture & Fisheries
A combination of food security concerns and a focus on economic diversification have made agriculture and fisheries an area of priority government investment in recent years. Agricultural self-sufficiency continues to grow in the sultanate. Despite the irrigation challenges presented by limited rainfall and decreasing ground reserves, 2019 will see food production receive a significant boost with the launch of new facilities for dairy, red meat and poultry. Fisheries, a priority sector under the ninth five-year development plan (2016-20) of the Oman Vision 2020 strategy, is also poised for take-off. This chapter contains an interview with Saleh Mohammed Al Shanfari, CEO, Oman Food Investment Holding Company.
Explore chapterICT
On both a local and national level, Oman’s ICT sector continues to expand while also preparing for new technologies and the benefits and challenges that they may bring. New innovations in cloud services, e-commerce and e-government have enabled both private and public organisations to cut costs, and strategic thinking by the sultanate’s authorities has also brought rewards for the sector. This has helped lay the groundwork for a successful industry for many years now, encouraging tech start-ups and establishing a clear ICT roadmap, as well as building on the country’s global connectivity and its reputation for stability and security.
Explore chapterTourism
Encompassing some of the most spectacular sites in Arabia, a fascinating ancient culture and a worldwide reputation for hospitality, Oman has advantages as a leisure destination. At the same time, the country is an important regional economy with a thriving business sector, which has strengthened its position as a centre for meetings, incentives, conferences and exhibitions. Oman is also regarded as a place of stability and impartiality in MENA, making it an ideal gathering ground. Unsurprisingly, then, the tourism sector continues to flourish. Despite the general economic downturn in the region, robust growth has been logged over the last few years and more is promised. This chapter contains an interview with Peter Walichnowski, CEO, Oman Tourism Development Company.
Explore chapterEducation & Training
The education sector has been expanding fast, growing from only 10 schools in 1970 to over 1800 in 2018. This is thanks to robust population growth, economic development and the policy of Omanisation, which seeks to reduce the country’s dependence on foreign workers, technicians and managers. Despite a temporary slowdown caused by the oil price slump of 2014-16, education is set for further expansion, which will create new opportunities for private sector investment.
Explore chapterHealth
In recent decades there has been a major improvement in the quality of health care in Oman. Rising living standards have greatly reduced the impact of contagious diseases, though the high rates of non-communicable diseases – common among many GCC countries – continue to climb. Despite feeling the impact of the fiscal austerity caused by low oil prices, the country’s health sector is poised to resume growth, aided by the expected introduction of mandatory health insurance for expatriates.
Explore chapterLegal Framework & Tax
Prior to 1971 the sharia courts had jurisdiction over all civil and criminal matters, as well as personal status affairs in the sultanate of Oman. However, following the succession of Sultan Qaboos bin Said Al Said, the judicial system was reformed and Sharia Courts now only govern matters related to family disputes and inheritance. The 1996 Basic Statute of the State reshaped and codified the legal system in Oman, creating separate structures for the executive bodies, the judiciary, and the rights and obligations of individuals. This chapter contains a viewpoint from Ben Ewing, Partner, CMS.
Explore chapterThe Guide
The guide contains listings of some of the leading hotels and resorts in Oman, and contacts for important government offices and services. It also contains useful tips and information for first-time or regular and business and leisure visitors alike.
Explore chapterTable of Contents
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Khamis bin Saif Al Jabri, Chairman, Oman Vision 2040 Implementation and Follow-up Unit
Tahir bin Salim Al Amri, Executive President, Central Bank of Oman (CBO)
Abdulsalam bin Mohammed Al Murshidi, President, Oman Investment Authority (OIA)
Ali bin Masoud Al Sunaidy, Chairman, Public Authority for Special Economic Zones and Free Zones (OPAZ)
Nasser Al Maqbali, CEO, Minerals Development Oman (MDO)
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