The Report: Oman 2014
The sultanate’s economy continues to enjoy the benefits of petroleum wealth, which has provided budget surpluses in most years and served as a backbone for growth. However, planning is well under way for an era in which oil will not be the main economic driver, with the twin goals of diversification and creating an increased number of private sector jobs at the top of the government’s current agenda.
Country Profile
An ancient maritime power, Oman is open to the world while at the same time preserving a strong sense of tradition and culture. Its numerous land borders and extensive coastline have given leaders a knack for negotiation and pragmatism in foreign policy. The government is making efforts are to respond to the increasing need for employment caused by a rapidly growing population, many which are directed at diversifying the economy and reducing dependence on petroleum resources. This chapter contains viewpoints from Sultan Qaboos bin Said Al Said; Recep Tayyip Erdoğan, Turkish Prime Minister; and Boris Johnson, Mayor of London
Explore chapterEconomy
The sultanate’s economy continues to enjoy the benefits of petroleum wealth, which has provided budget surpluses in most years and served as a backbone for growth. However, planning is well under way for an era in which oil will not be the main economic driver, with the twin goals of diversification and creating an increased number of private sector jobs at the top of the government’s current agenda. This chapter contains an interview with Sayyid Faisal Al Said, Director-General of Marketing & Media, Public Authority for Investment Promotion and Export Development.
Explore chapterBanking
High capital adequacy and profitability define the banking sector in Oman. Aggregate net profits from local banks and foreign branches rose 15.6% in 2012 to $786.1m, up from $683.8m in 2011 with local banks accounting for 96.1% of the total. Consumer spending is driving lending markets as the wealth of the population increases, and banks are looking to meet this demand. New support for SMEs, an important part of the drive to diversify the economy away from hydrocarbons, should help change banks’ portfolios. Demand for Islamic services has led to the creation of a new segment, with the two newest entrants into the banking sector being Islamic institutions, whose licences were granted after the 2011 decision to allow sharia-compliant financial institutions to operate in the sultanate. This chapter contains an interview with Hamood Al Zadjali, Executive President, Central Bank of Oman.
Explore chapterCapital Markets
Despite being a stable and growing bourse for a number of years, authorities see a broader, deeper market as a strategic goal to help create economic opportunity. Sustained dedication to that cause has paid off in recent years, chiefly in the form of an increased flow of initial public offerings. The inclusion of sharia-compliant instruments looks set to take off, meaning diversification of the market should continue. This chapter contains an interview with Sheikh Abdullah Al Salmi, Executive President, Capital Markets Authority; and a viewpoint from Shaheen Al Balushi, CEO, Oman Orix.
Explore chapterInsurance
With a steady stream of new entrants in the past decade and growth from a small base, Oman’s insurance market is a competitive one. Several factors are boosting the industry, with sharia-compliant lines of insurance looking set to enhance the sector’s potential and automobile coverage boosted by record vehicle sales. Further to this, the sultanate’s infrastructure spending is combining with job growth to present an opportunity significant enough to attract multiple new entrants the market, further adding to competition. However, as the government considers mandating health coverage, there is still potential in the market. This chapter contains an interview with Lloyd East, CEO, Al Ahlia Insurance and Board Member, Oman Insurance
Explore chapterEnergy
Oil and gas still take centre stage in Oman, accounting for more than half of GDP and 85% of government revenues. After a slump in 2000-07 as fields depleted, oil production is once again increasing, boosted by discoveries of new reserves and improved extraction techniques that glean more from old fields. Meanwhile, the government is looking to improve in-country value and the Omanisation of its workforce. This chapter contains interviews with Nabil Al Ghassani, CEO, Takamul Investment Company; and Mulham Al Jarf, Deputy CEO, Oman Oil Company.
Explore chapterUtilities
The country’s water and power sectors have undergone a steady liberalisation process since legislation outlining privatisation was passed in 2004, and this has generally been considered as a success. As one of the most open in the region to foreign investment and private ownership of assets, Oman’s utilities sector is expanding strongly to meet growing demand for power and water. There are some major schemes in the pipeline at various stages of planning and construction. Opportunities for generation continue, and more may also open up in the downstream power sector if the government pushes ahead with liberalisation.
Explore chapterConstruction
Upgrades to the transportation infrastructure continue to drive sector expansion. Between 2011 and 2015, the government plans to invest some $10.7bn on infrastructure projects alone, with state spending on affordable housing also set to provide opportunities for contractors. Sector growth was expected to reach 5.5% in 2013, bringing total industry value to $4.3bn. This chapter contains an interview with Salim bin Nasser Al Aufi, CEO, Public Authority for Civil Aviation.
Explore chapterReal Estate
The market saw a rapid slowdown after 2008, as investors backed away from the Gulf and economic growth tapered. However, from 2012, development has picked up to meet resurgent demand, and major projects are being rolled out in all sectors. Economic expansion, a growing population and increasing interest from foreign investors are driving a strong recovery in Oman’s real estate market. Expansion of retail real estate is rising in line with increasing purchasing power of the population, aided by a hike in the minimum wage that took effect in July 2013. This chapter contains an interview with Ziyad M Al Zubair, Director, The Zubair Corporation.
Explore chapterIndustry & Mining
As oil reserves continue to draw down, the government is focusing on downstream processing and developing a complementary port infrastructure and transport net- work. By 2020, the government aims for industry to contribute 30% of GDP and to reduce oil’s share of GDP from 50% to 19%. The discovery of mineral resources presents further opportunity in mining growth. This chapter contains interviews with Gert Hoefman, CEO, Oman Cables; and Said Al Masoudi, Acting CEO, Sohar Aluminium.
Explore chapterRetail
Regular rises in the minimum wage, the most recent of which took place in July 2013, have increased overall purchasing power in the sultanate. Other factors, such as a rising number of expatriates and tourists, the growing appeal and awareness of international trends, low market saturation, political stability and high oil prices have attracted major investments by international retailers that see strong potential for the Omani marketplace. The ongoing influx of hypermarkets and supermarkets is likely to see retailers, both domestic and foreign, continuing to penetrate the country’s interior as the coastal population centres become saturated. These dynamics are likely to shape the retail sector – and the investment opportunities available – in the short to medium term. This chapter contains interviews with Pankaj Khimji, Partner-Director, Khimji Ramdas; and Said Al Ka’abi, Chairman, Public Authority for Consumer Protection.
Explore chapterAgriculture & Fisheries
Given rapid growth in other sectors of the economy, fishing and farming’s relative contribution has decreased in recent years, falling from 2.8% of GDP in 1995 to 1.1% in 2012, however the government is aiming to spur sector growth and boost this to 5.1% of GDP by 2020. Steady increases in crop and livestock yields have raised self-sufficiency levels; as of early 2013, Oman produced 75% of its fruit and vegetables needs. Levels for poultry are lower, at around 40%, meaning there is plenty of room for local firms to boost production. Water management aided by dams & desalination plants, combined with significant potential for growing crops in the Dhofar region further aids the potential for expansion in this sector.
Explore chapterTelecoms & IT
The sultanate boasts high mobile penetration, widening 4G LTE coverage in key urban areas and a growing fixed-line market. Auctions are under way for spectrum to support service expansion, and the regulator is considering a new framework for competition. Meanwhile, private investments should help expand network coverage and provide more secure services. This chapter contains a roundtable with Greg Young, CEO, Nawras; Gürkan Öztürk, CEO, Samatel; Talal Said Marhoo, CFO, Omantel; and Martin Glud, CEO, FRiENDi Oman.
Explore chapterTransport
Expansion of the highway network is set to boost sea-to-air connectivity and raise the sultanate’s profile as a logistics and trans-shipment destination. Development of aviation and port facilities has attracted significant foreign investment, with joint-venture opportunities in free zones and industrial zones, among others, progressing alongside the GCC rail project. This chapter contains interviews with Wayne Pearce, CEO, Oman Air; Melanie Schulz van Haegen, Dutch Minister of Infrastructure and the Environment; and Abdulrahman Al Hatmi, Director, Oman Rail Project.
Explore chapterHealth
The health care sector was allocated 4% of the total 2013 budget, or some $1.3bn, which represented a 32% increase on 2012. The occurrence of non-communicable diseases has grown significantly in recent years, and the government has responded with plans for various large-scale projects, hospitals, health centres and prevention programmes, illustrating its commitment to addressing these challenges. At the same time, the government has complemented its health push with the recognition that the private sector must play a greater role. The trend toward private care is growing each year and the new medical cities and other facilities present opportunities for private players to break into the market.
Explore chapterEducation
Major investments in schools and universities have highlighted Oman’s commitment to revamping its education system according to the needs of a diversified, knowledge-based economy. The government has spearheaded initiatives targeting higher education, vocational programmes and research facilities. Efforts are under way to better align graduates’ skills with the demands of the job market. While challenges remain with respect to improving educational standards, research opportunities and English-language training, the sector has demonstrated tenacity in accommodating the country’s growing youth population and enhancing the quality of its education system at all levels.
Explore chapterTourism
Though the global financial crisis and delays in hotel construction and infrastructure upgrades have hampered growth, the government and private sector are ramping up promotional activities, hospitality projects and other investments within the industry to meet new demand. Macroeconomic indicators show that the sultanate is on track for continuous, sustainable growth in both its business and leisure segments. With revenues from international visitors exceeding $1bn for the first time – the fourth highest in the MENA region – the sultanate has seen annual tourist numbers grow beyond the 2m mark. Investment in transportation infrastructure and the hotel segment offers long-term growth potential and a variety of opportunities for investors.
Explore chapterRegions
Industrial zones, port developments, railways and fisheries projects are but a few examples of how public and private investments are transforming Oman’s regions. Some 87m sq metres of land has been allocated for industrial estates in Sohar, Salalah and Duqm, at a total investment of $9.4bn. The range of new industrial projects shows a clear development strategy aimed at regional economic diversification, which will continue to support the growth of the Omani economy and provide opportunities for local, regional and global investors. This chapter contains a dialogue with Andre Toet and Jamal Aziz, Group CEO and Sohar Freezone CEO, Sohar Port and Freezone; and interviews with Yahya bin Said bin Abdullah Al Jabri, Chairman, Special Economic Zone Authority at Duqm; and Ahmed Akaak, Acting CEO, Port of Salalah.
Explore chapterTax
OBG’s partner, PwC provides information relating to tax in Oman, including coverage of income tax laws, exemptions and administration. This chapter contains a viewpoint from Kenneth MacFarlane, Country Senior Partner, PwC.
Explore chapterLegal Framework
OBG’s partner Curtis, Mallet-Prevost, provides a detailed review of the rules and regulations that are applicable to foreign entities doing business in Oman, covering current trends and possible legislative changes. This chapter contains a viewpoint from Bruce Palmer, Managing Partner, Curtis, Mallet-Prevost in Oman.
Explore chapterThe Guide
The Guide contains listings of hotels in the capital and other key cities, contacts for government bodies and foreign missions, and other handy tips for first-time business and leisure travellers, relating to currency, etiquette, visas and more.
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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