Oman leverages its long coastline to build on its regional and global presence

 

Located in the south-eastern quarter of the Arabian Peninsula, Oman is the only member of the GCC situated outside of the Gulf. By leveraging its strategic location, Oman has invested in infrastructure with the goal of becoming a global logistics centre. While the country is less hydrocarbons-rich than its GCC neighbours, diversification efforts are a driving force behind economic growth. The sultanate’s long-term development strategy, Oman Vision 2020, is coming to a close, and in January 2019 the Vision 2040 conference set the stage for a new long-term development plan. Vision 2040 will continue to emphasise diversification, privatisation and Omanisation with the goal to increase tourism, modernise agriculture, and foster technology, research and development.

Economic Plan

The sultanate’s ninth five-year plan (FYP), which covers the 2016-20 period, was launched at the start of 2016 and is the final FYP of Oman Vision 2020. The plan continues the country’s drive toward greater social development, non-oil diversification and the optimal utilisation of available natural resources. Logistics, tourism, mining, manufacturing and fisheries were identified as the five key focus sectors underneath the FYP 2016-20 as future economic drivers. The national strategy targets an annual growth rate of 3%, with a targeted oil price of $45-60 per barrel. Approximately OR41bn ($106.5bn) of investments are outlined during the five-year period by the government.

In addition, the FYP aims to support the private sector in playing a much more important role in driving economic growth through planned privatisations, increased support for the development of small and medium-sized enterprises, a renewed focus on public-private partnerships and liberalisation of the country’s investment framework. In late 2016 the National Programme for Enhancing Economic Diversification, or Tanfeedh, was launched as a core element of the ninth FYP. According to the programme’s handbook published in 2017, the authorities have aimed to grow non-oil activities by an annual average of 4.3% between 2016 and 2020.

Succession

Sultan Qaboos bin Said Al Said passed away on January 11, 2020 at the age of 79. At the time of his death he was the longest-serving monarch in the Gulf region, having acceded the throne in 1970. As such, 2020 marked the 50th anniversary of his accession as well as the establishment of the Sultanate of Oman, making Oman the longest continually independent Arab country in modern history. Each year, November 18 marks Oman National Day, which also coincides with the late sultan’s birthday. Every July 23 is celebrated as Renaissance Day, marking the first day of his reign. Upon the death of Sultan Qaboos, his cousin and the former minister of culture, Haitham bin Tariq Al Said, was sworn in as sultan before the ruling family council on January 11, 2020.

Monarchy

Oman is a hereditary monarchy. Sultan Haitham bin Tariq Al Said became both head of state and government on acceding the throne. When his predecessor Sultan Qaboos took over the reins of power from his father in 1970, Oman was an isolated and underdeveloped country, lacking in basic facilities and infrastructure. Sultan Qaboos set about making changes that would transform Oman into the modern state it is today. One of his first acts was to change the name of the country from Muscat and Oman to the Sultanate of Oman, indicating that this would be a united country. The late sultan also proceeded to appoint a Cabinet of ministers responsible for various government departments and functions – a first for the country. Just 25 years later, Oman was no longer among the ranks of lower-income nations in need of World Bank credit facilities. The ambitious economic goals that were laid out by Sultan Qaboos, which included plans for easing the sultanate’s dependence on hydrocarbons by diversifying its economic base, have seen tourism open up and major improvements made to key infrastructure.

Basic Law

In 1996 the late sultan decreed the Basic Law of the State, which is considered to be Oman’s constitution. The law established a bicameral legislature, clarified royal succession, provided for a prime minister and proscribed ministers from holding interests in companies doing business with the government. In addition, the Basic Law also guaranteed basic civil liberties, such as freedom of religion and due process, among other legal rights.

Government Structure

The Council of Oman, Majlis Oman, is a bicameral consultative council with advisory powers only. The upper chamber of the council is called the Majlis Al Dawla, or State Council, the members of which are appointed by the sultan. Members of the lower chamber, the Majlis Al Shura, are elected by popular vote for four-year terms. The Majlis Al Shura is authorised to draft legislation sanctioned by the sultan. Since 2002 citizens over the age of 21 have been eligible to vote in elections. The most recent elections took place on October 27, 2019, when 86 members of the Consultative Assembly were elected from 61 constituencies, 25 with two seats and 36 with one. Voter turnout reached 49.02%, and the process was widely hailed as a success.

Population

The population stood at 4.63m as of August 2019, according to the National Centre for Statistics and Information (NCSI), growing by 1% on 2018 figures. Omanis comprise 57.5% of the national population, while expatriates account for 42.5%. As of April 2019, 61.9% of Muscat’s population were expatriates. Children under the age of 15 make up 22.5% of the population, while 15- to 29-year-olds constitute 27.5%. This puts the productive population – those aged 15 to 64 – at 73.9% of the total. The population is expected to exceed 8m by 2040, according to NCSI estimates. The majority of people live along the Batinah coastline, an area in the north stretching from the capital, Muscat, to the city of Sohar. The second-most-populous area is the Dhofar Governorate, home to the second-biggest city, Salalah. Situated in the south near the Yemeni border, Salalah’s population stands at around 368,000.

The government has a policy of actively applying quotas for hiring Omani nationals, although many positions are also filled by foreign workers, mainly from South Asian countries. The largest foreign communities come from India and the Philippines, and represent more than half of Oman’s labour force. Foreign workers tend to live in the sultanate’s larger cities. Muscat, for example, had a foreign community of 906,742 and a population of 557,905 Omani nationals as of April 2019, while Al Batinah North Governorate reported the second-highest population of foreigners, with a total of 272,881.

Other regions are home to greater numbers of Omanis than expatriates. Al Wusta and Musandam are the least-populated governorates, with each reporting total expat populations of 24,742 and 15,823 people, respectively, as of April 2019.

Diplomatic Ties

Since 1970 Oman has worked to expand its diplomatic relations according to a moderate foreign policy. With a non-confrontational and pragmatic approach to foreign relations, the country has been transformed itself into a regional power. Oman is affiliated with more than 105 regional and international organisations, including the UN, the World Trade Organisation, the IMF, the World Bank, the GCC and the Greater Arab Free Trade Area. However, Oman is not a member of the Organisation of the Petroleum Exporting Countries. The sultanate has a free trade agreement (FTA) with the US, while the GCC has FTAs in place with Singapore and the European Free Trade Association.

Governorates

The sultanate is sectioned into 11 governorates: Muscat, Musandam, Al Dakhiliyah, Al Buraimi, Al Batinah North, Al Batinah South, Al Sharqiyah North, Al Sharqiyah South, Al Dhahirah, Al Wusta and Dhofar. The governorates are further subdivided into a total of 61 wilayat (provinces). Each wilaya is presided over by a wali (governor), who is responsible for overseeing local administration and acting as a link between the government, its institutions and the public.

Over a series of FYPs, Oman has been able to ensure that development efforts take place in a balanced and integrated manner across all its regions. Major projects and industrial estates have been set up nationwide within the framework of a scheme that seeks to equally balance the priorities and needs of each distinct region. The Governorate of Muscat is Oman’s political, economic and administrative centre, the location of the capital city, Muscat, as well as the seat of government and the heart of the sultanate’s administrative apparatus. The governorate has also become a vibrant centre of local and international economic, commercial and tourist activity.

The Governorate of Dhofar has played a pivotal role in Oman’s history. In ancient times the area was known as the Arabian Peninsula’s Land of Frankincense – the gateway to the Indian Ocean and the crossroads of southern Arabia’s caravan routes. Salalah, the governorate’s main city, was the birthplace of Oman’s modern development strategy, developed by Sultan Qaboos. Today, it remains an important portal to the country’s prosperity.

As part of the sultanate’s regional development plans, major investment has gone into the Port of Salalah, which is located near the main shipping lanes of the northern Indian Ocean and its surrounding infrastructure. The port’s general cargo terminal handled 16.2m tonnes of cargo in 2018, up from 13.58m tonnes in 2017. The port’s container terminal also processed 3.39m twenty-foot equivalent units in 2018, according to port data.

Similarly, the Governorate of Musandam is of immense strategic importance to the country because of its position overlooking the Strait of Hormuz, which is a crucial international shipping lane for hydrocarbons exports and trade between the Gulf region and the outside world. Approximately 90% of the Gulf’s oil exports pass through the strait, which also forms the eastern gateway for shipping to and from the Gulf littoral states.

The Governorate of Al Wusta lies to the south of the Al Dakhiliyah and Al Dhahirah governorates and enjoys a temperate climate throughout the year. Bordering the Arabian Sea to the east, the Empty Quarter desert to the west and the Governorate of Dhofar to the south, it has a large number of oil and gas fields. Al Wusta comprises four wilayas. Three of these (Mahawt, Duqm and Al Jazer) are on the Arabian Sea, while the fourth (Haima) is further inland. Developments around Duqm – situated outside the Strait of Hormuz – constitute a major pillar of Vision 2040 and Tanfeedh, and are expected to generate logistical, warehousing, distribution and re-export opportunities. With the country’s broader plans to become a trade centre for heavy, medium and light industries, the need to attract investors is integral to both the success of the Duqm Special Economic Zone and sustainable development in the governorate.

Infrastructure

Efforts to enhance the sultanate’s transport and logistics capabilities have been a major economic driver in recent years. Oman’s seaports, airports and road network are constantly being expanded and improved. The quality of the road infrastructure was ranked 10th out of 141 countries by the World Economic Forum’s “Global Competitiveness Report 2019”. Figures from the Ministry of Transport and Communications indicate that Oman had about 15,000 km of asphalt roads at end-2018, with a further 300 km expected to be completed via 10 new road projects in the pipeline. The road network covers most parts of the country, and paved roads are generally of high quality. The sultanate’s modern road network has helped facilitate trade with neighbouring nations and improve safety conditions for drivers.

In May 2019 it was reported that the historic highway directly linking Oman and Saudi Arabia had opened. The 680-km highway, in which the sultanate invested OR200m ($519.4m), is expected to boost trade and tourism flows between the two GCC countries. Previously, the fastest route between the two countries was 1638 km long.

Gateways

With a long seafaring history, it is no surprise that seaports play an important role in Oman. The largest seaports – the Port of Salalah, the Port of Sohar and the Port of Duqm – are an integral part of the economy, and are poised to drive growth and contribute to diversification. Each port is located in a different part of Oman and serves a tailored function. In the aviation sector, major upgrades to Muscat International Airport saw a new 580,000-sq-metre terminal opening in mid-2018, while a new terminal at Duqm International Airport opened in September 2018 and plans are under way to expand its capacity by 500,000 annual passengers. Back on land, given the deferment of plans for a GCC-wide railway, the sultanate is now set on developing a rail network. The so-called Mineral Line is being built to support the burgeoning mining sector. However, work on the line has been put on hold pending mining developments and given local and global economic circumstances.

Communication

Regarding communications, Oman is connected by fibre-optic cables to the UAE, Yemen and Pakistan. The National Broadband Strategy (NBS) is expected to increase the scope and connectivity of broadband across the country. The scheme was approved in August 2016 and has received a great deal of support from the government. In September 2018 Oman Broadband Company signed an OR93m ($241.5m) agreement with Asian Infrastructure Investment Bank to finance capital projects related to the NBS.

History

The territory that comprises modern-day Oman has long benefitted from its strategic geographic location. From there, merchants and traders – without needing to sail far from land – made easy contact with ancient Persia to the north, India to the east and Africa to the south.

Between the 3rd and 7th centuries BCE Oman was controlled by two other dynasties, the Parthians and the Sassanids. Their rule ended upon the arrival of Islam in the 7th century, during which time Muscat and Oman were under the control of either the Persian Empire or rulers from neighbouring Yemen. From 751 BCE onward, imams were chosen to rule the region as spiritual leaders.

This elective theocracy lasted throughout four centuries until the succession of Banu Nabhan in 1154, when a dynasty of hereditary kings was established. The early 16th century brought the entry of the Portuguese, who were opening up their trade route to India. Between 1507 and 1650 they occupied Muscat and various local garrisons, including a captured island located in the Strait of Hormuz.

After a turbulent period of fighting with the Ottoman Turks, Sultan Ahmad bin Said regained control of the country in 1741 and expanded its territory to parts of Iran and around the coast of East Africa. The descendants of Sultan Ahmad rule Oman today. Zanzibar, the former capital of Oman, fell out of Omani control in 1861; to this day, Oman and Zanzibar enjoy close ties. The Omani Empire’s African lands, known as Muscat and Oman in the 19th century, steadily came under British influence and were the subject of Franco-British rivalry during that period.

Through gradual economic and political encroachment on its overseas holdings, Omanis were forced to retreat to their homeland. Said bin Taymur ruled Muscat and Oman until Sultan Qaboos came to the throne in 1970. The country declared independence the following year and renamed itself the Sultanate of Oman. The new sultan embarked on a modernisation and liberalisation programme that helped to expand social services and infrastructure. With Sultan Qaboos as ruler, Oman also worked to achieve closer political and economic integration with its regional neighbours. These efforts culminated in 1981 with the founding of the GCC.

Tradition

The dhow, an ancient sailing boat, is a lasting symbol of Oman’s relationship with the sea and extensive knowledge of seamanship. Evidence exists of an Omani dhow reaching China in the 8th century, and they are still seen today along Oman’s coastline as vehicles for trade, fishing and tourism.

In the desert interior regions, meanwhile, life takes on a more tribal and traditional bent, with many families tending livestock and growing crops. This cultural and geographic split had important historical consequences, with the people living in the interior choosing to be ruled by imams and the coastal peoples by sultans. Sultan Qaboos unified these areas when he ascended to power.

In addition to the historical interior-coastal divide, northern Oman is separated from the southern region of Dhofar by hundreds of miles of desert. This topographical detail has resulted in some cultural differences, as many Dhofaris maintain cultural and historical ties with neighbouring Yemen.

Most Omani men wear the traditional clothing of their ancestors, the dishdasha: a collarless, tasselled, ankle-long white robe. Traditionally, the tassel was scented with a drop of one of Oman’s famous perfumes. During special occasions men wear ceremonial dress, including the elaborately carved Omani khanjar knife with its curved dagger.

Most Omani women wear the hijab and abaya, and while some women cover their faces and hands, most do not. On celebrated days Omani women dress in brightly coloured traditional clothing consisting of a long tunic worn over trousers.

Religion

Ibadism, a branch of Islam, is the dominant religion in Oman and Zanzibar, though Ibadis are also found in parts of North and East Africa, including Algeria, Tunisia and Libya. The Ibadi movement is said to have been founded 20 years after the death of the Prophet Muhammad, and as such it pre-dates both the Sunni and Shia denominations.

The remaining population mostly comprises a mixture of Sunni and Shia Muslims. While Shia Muslims constitute slightly less than 5% of Oman’s population, they are well integrated into society. The majority of non-Muslims are South Asian migrant workers who practise a variety of faiths, including Buddhism, Sikhism, Christianity and Hinduism.

It is required that all religious organisations in Oman register with the Ministry of Endowments and Religious Affairs. Freedom of religion is guaranteed in the country by the constitution, and the sultanate reaffirmed this right by issuing a legal circular in 2006 that decreed that all people in Oman can practise their religion and beliefs without any interference from the government. However, this legal right was on the condition that religious services are to take place in government-sanctioned buildings.

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The Report: Oman 2020

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