The Report: Oman 2015
Although the sultanate’s petroleum wealth has traditionally provided a backbone for growth, efforts are well under way to diversify away from hydrocarbons. Oman Vision 2020 has laid out plans to boost industrialisation within the sultanate and to encourage the private sector to take a more active role in the economy and in the provision of jobs, both of which are billed as key drivers for growth.
The year 2015 marks the 45th anniversary of the accession of His Majesty Sultan Qaboos bin Said al Said and the establishment of the Sultanate of Oman. While less hydrocarbons rich than its GCC neighbours, an increased focus on diversification is driving economic growth in the sultanate. In its eighth five-year plan (2011-15), the government has increased spending on key infrastructure projects, which is enhancing Oman’s status as a logistics hub in the region. Expansion and development of the three major ports at Salalah, Duqm and Sohar are ongoing, and major upgrades to the international airports in Muscat and Salalah are also under way. In addition to this, the planned National Railway Network is set to cover 2244 km and will connect the sultanate’s three port cities with other GCC countries, while, further afield, trade agreements with emerging Asian economies look set to boost opportunities for Omani companies. This chapter contains a viewpoint from Sultan Qaboos bin Said al Said; and interviews with Lim Hng Kiang, Singapore Minister for Trade and Industry; and Roberto Azevêdo, Director-General, World Trade Organisation (WTO).Explore chapter
In 2013 and the first half of 2014 Oman’s economy continued to expand on the back of rising public and private investment, strong oil and gas revenues, and steadily increasing levels of non-oil activity. The sultanate’s GDP rose from $78.3bn in 2012 to $80.57bn in 2013, and while the recent slump in oil prices is a concern, heavy investment in a variety of enhanced oil recovery techniques has boosted output in recent years. Moreover, increasing levels of non-oil activity is high on the agenda with the Oman Vision 2020 long-term development plan aiming to ensure economic and financial stability by boosting private sector participation, diversifying the economy and investing in the Omani workforce. Incoming visitors are increasingly being considered a key source of revenue for Oman with the tourism sector’s contribution to GDP forecast to jump to 8.2% by 2024, from 6.4% in 2013. This chapter contains interviews with Ali bin Masoud Al Sunaidy, Minister of Commerce and Industry; and Tariq Al Farsi, CEO, Al Raffd Fund.Explore chapter
The Omani banking sector once again posted solid growth in 2013 and the first half of 2014 as steadily growing demand for financial services continues to expand the sector. Government initiatives to boost entrepreneurship and the establishment of small and medium-sized enterprises (SMEs) has resulted in a Central Bank drive requiring local banks to increase lending to SMEs to at least 5% of their loan books by 2015. While this presents a challenge to the sector, the outlook remains positive, with deposits and credit issuance rising. Moreover, the emergence of the sharia-compliant segment presents strong growth potential for local banks. With 3.6% of total banking assets in the sultanate being held by sharia-compliant entities at the end of 2013, the sector, which in September 2014 comprised two Islamic banks and five Islamic “windows” operated by conventional banks, is expected to expand rapidly in the coming years. This chapter contains interviews with Hamood Al Zadjali, Executive President, Central Bank of Oman (CBO); and AbdulRazak Ali Issa, CEO, Bank Muscat.Explore chapter
Capital markets in Oman continued to post healthy growth over the course of 2013 and 2014 with strong fundamentals, steadily increasing economic diversification and prudent market regulation and oversight driving expansion. In mid-2013 the Capital Market Authority launched the MSM Sharia Index which tracks sharia-compliant stocks, and in August 2014 insurance sector reforms were introduced aimed at encouraging more corporate listings. Government plans to float $517.9m of sukuk will go ahead in 2015 and have the potential to jumpstart further issuances in the sector. Smaller companies look set to benefit from Oman’s growing capital markets as the regulator moves to attract greater SME participation through a range of incentives including the expected introduction of an SME index and the CMA’s roll-out of a comprehensive SME strategy in 2015. This chapter contains interviews with Sheikh Abdullah bin Al Salmi, Executive President, Capital Market Authority (CMA); and Khalid M Al Zubair, Managing Director, The Zubair Corporation; and Chairman, Ominvest.Explore chapter
Oman’s insurance sector has continued to expand and was the second fastest-growing insurance market among GCC countries from 2007 to 2013. Gross written premiums reached $942.5m by year-end 2013, a 10.44% increase year-on-year from 2012, with the motor segment accounting for 41% of this total in both years. In August 2014 the Capital Market Authority (CMA), the industry regulator, introduced a number of amendments to Oman’s insurance law, requiring underwriters to raise their minimum paid-up capital to $25.9m – up from $12.9m previously – and to list a certain percentage of their shares on the Muscat Securities Market (MSM). Legislation passed by the Central Bank of Oman in recent years has paved the way for an increase in sharia-compliant products in the insurance market. This chapter contains an interview with Abduladheem Al Lawati, Chairman, Oman Insurance Association.Explore chapter
Oil and gas remain key economic contributors in Oman, with hydrocarbons accounting for 85.7% of government revenues in 2013. New partnerships with the private sector have led to some of the most advanced enhanced oil recovery (EOR) projects in the world with the use of solar-fired EOR technologies playing an increasingly important role in the sector. The sultanate is expected to substantially increase its domestic supply of natural gas in the coming years via production at the Khazzan tight gas reserves. Downstream, new refinery and petrochemical developments at Duqm and Sohar will see Oman capitalise on its geographic location. Although falling world oil prices have created a stormier forecast for hydrocarbons export revenues, rising domestic demand, along with targeted economic diversification policies that aim to reduce oil’s share of GDP to 9% by 2020, should ensure that the country avoids the worst of global market shocks over the longer term. This chapter contains interviews with Salim Nasser Said Al Aufi, Undersecretary, Ministry of Oil and Gas; and Harib Al Kitani, CEO, Oman LNG.Explore chapter
As rapid industrialisation continues in the sultanate, the utilities sector looks set to be a growth driver in terms of both construction contracts and private investment. In 2013 the Authority for Electricity Regulation reported that operators approved 276 projects worth $357.34m, and the numerous water and power plant projects in the pipeline bode well for future investors. Of particular interest is the renewable segment where progressive policies are in place to drive future growth and reduce dependence on hydrocarbons. The sultanate is capitalising on its high solar densities with solar energy currently being used in enhanced oil recovery schemes, while a funding grant from the Oman Research Council has enabled research into the use of concentrated solar power in desalination plants, with plans in place to develop an operational system by the end of 2015. This chapter contains interviews with Hassan Ali AbdulHussein, CEO, Haya Water; and Omar Al Wahaibi, CEO, Electricity Holding Company.Explore chapter
The construction sector is witnessing rapid expansion in Oman on the back of government investment in major infrastructure projects. The government has budgeted an estimated $77.68bn for development projects as part of the 2011-15 five-year plan, up 113% over the previous five-year plan, with the Oman National Railway Project comprising 45% of the total value of all current transportation construction projects. Meanwhile, new upstream and downstream investments in the oil and gas sector are presenting lucrative new opportunities for private contractors, while the building of the $1bn Oman Convention and Exhibition Centre (OCEC) in Muscat will boost the sultanate’s offering in the MICE segment. This chapter contains an interview with Sheikh Salim bin Ahmed Al Ghazali, Chairman, Golden Group of Companies.Explore chapter
Oman’s real estate market has shown resilience following the global financial turmoil and is poised for future expansion as economic growth in the sultanate drives local demand. In 2013 the sector grew 6.1% over 2012 and forecasts indicate this trend will continue. Increasing numbers of integrated tourism complexes are attracting foreign investment into the sector, particularly the high-end market, while in a bid to support affordable housing ownership, the government is supporting programmes that provide interest-free loans to qualifying citizens and removing age restrictions for access to financing.
This chapter contains an interview with Hawazen Esber, CEO, The Wave, Muscat.Explore chapter
Vision 2020’s economic diversification mandate has seen Oman’s industrial segment expand rapidly in recent years, with the non-oil sector expanding by 7.6% in 2013. The strong growth being witnessed in the petrochemicals, aluminium, steel and mining segments is expected to continue with government investment in the industrial sector projected to reach $517.88m between 2014 and 2020. Sohar, with its host of new infrastructure and raw production projects completed in recent years, is set to become Oman’s dominant industrial hub. The petrochemicals segment is also poised for strong development with total investment reaching $16.59bn in 2013. Efforts to revitalise the mining segment hold great potential, as the introduction of new legislation aimed at increasing value-added and reducing raw exports is expected to provide a major boost to the sector. This chapter contains an interview with Hilal bin Hamad Al Hasani, CEO, Public Establishment for Industrial Estates (PEIE).Explore chapter
The sultanate of Oman is divided into 11 governorates, and as the country pushes ahead with economic diversification goals various regions are being rapidly developed. Duqm Port’s handling capabilities are to be expanded, with plans for an additional 10 km of commercial berths, while at Salalah International Airport a new terminal capable of handling 1m passengers per year is now coming on stream with plans for expansion to 6m passengers per year in the future. Four free trade zones, including ones at Salalah and Duqm in Al Wusta, are currently up and running in the sultanate, and these have had a big impact on Oman’s regions with Duqm’s population, for example, expected to reach 100,000 by 2025, up from 5100 in 2008.
This chapter contains interviews with Saeed Khamis Al Zadjali, Acting CEO, Oman Airports Management Company; and Said bin Hamdoon Al Harthy, Undersecretary for Ports and Maritime Affairs, Ministry of Transport and Communications.Explore chapter
Transport & Logistics
Oman continues to capitalise on its geographical position, increasingly establishing itself as a major trans-shipment centre for traffic between Europe, Africa and Asia with ongoing development and expansion plans at various ports in the sultanate, particularly at Duqm where a new port and dry-dock are being developed. Coordinating this maritime-based growth with land and air-side growth is also under way, with the 2011-15 five-year development plan earmarking $15.5bn for the national rail project; $6.2bn for airport expansion; and $3.1bn for road network development. Plans to connect the national railway project with the GCC-wide rail network will boost integration in the region, while airport and road expansions will solidify Oman’s growing reputation as a logistics hub and encourage the sultanate’s growing tourism sector. This chapter contains interviews with Ahmed bin Mohammed bin Salim al Futaisi, Minister for Transport & Communications; and Paul Gregorowitsch, CEO, Oman Air.Explore chapter
The Omani retail sector has grown by 7% since 2011 and continues to expand, as large construction projects, predominantly malls and hypermarkets, look set to add more retail space to the sector. The rise in the number of shopping malls, currently numbering 16 in Muscat alone, has coincided with a shift in spending patterns as the population becomes wealthier, while an increasing number of high-net-worth individuals has led to the growth of luxury and fashion brands and the emergence of niche market concepts, such as smaller-scale, high-end retail centres. Although spending patterns have been shifting as lifestyles change, the Omani consumer price index shows that a large portion of household spending still goes towards food and related products, a trend reflected in the steady growth of hypermarkets, which now account for 70% of grocery sales. This chapter contains an interview with Dominic Myers, CEO, Enhance Operating Companies.Explore chapter
Agriculture and Fisheries
Achieving self-sufficiency in agriculture and fisheries sector is driving expansion in Oman as the government finances a number of initiatives and invests in key infrastructure that will strengthen the sector moving forward. Adding value through processing is a key goal with the Oman Sugar refinery company’s 2013 announcement of a $200m sugar processing plant in Sohar a key point in this regard. Meanwhile, the Ministry of Agriculture and Fisheries is working to double the output of the fishing sector to 480,000 tonnes by 2020. Doing so would create 20,000 additional jobs, and the integrated fishing industrial zone at Duqm is set to be the largest such facility in the Middle East. This chapter contains an interview with Fuad bin Jaafar bin Mohammed Al Sajwani, Minister of Agriculture Fisheries Wealth.Explore chapter
Telecoms & IT
Major investment in the telecoms and IT sector from both the public and private sectors has expanded coverage in Oman, with the number of pre-paid mobile subscribers reaching 5.37m in the first half of 2014. The government has recognised the potential of a vibrant IT sector and in line with its objective to diversify the economy away from hydrocarbons has marked the development of the sector as a key part of the Vision 2020 strategy. In an effort to transition many of its services online as part of its e-government initiative, the government had, as of September 2014, trained 90,000 employees in IT skills and awareness. Meanwhile, the Information Technology Authority (ITA) has adopted an incubation approach with efforts to encourage funding of IT start-ups from banks, venture capital funds and others while government guarantees regarding protection of IP rights in the sultanate are expected to attract further investment from international companies. This chapter contains an interview with Salim Sultan Al Razaiqi, CEO, Information Technology Authority.Explore chapter
Arrivals at Muscat International Airport grew from 7.56m in 2012 to reach 8.31m in 2013, and this rising trend looks set to continue as the sultanate rolls out infrastructure development plans and increases its offerings for visitors. Across the country smaller airports are undergoing expansion that will allow larger planes to land, while rail development in the sultanate will see 2244 km of rail laid in the coming years, boosting connectivity with neighbouring countries. Oman is also looking to establish a presence in the international MICE segment, with the recently opened Oman Conference and Exhibition Centre leading the drive to attract more events to the sultanate. Luxury enclaves along the coast have boosted high-end offerings, and the sultanate is also keen to promote itself as a golf and sailing destination. This chapter contains an interview with Ahmed bin Nasser bin Hamad Al Mehrizi, Minister of Tourism.Explore chapter
Education & Training
Oman has witnessed a dramatic improvement in enrolment and the duration spent in full-time education thanks in large part to reforms introduced in 1995 and 1998, which required 10 years of basic education and extended the number of school days from 160 to 180. In 1996 the government launched a programme to promote the development of private higher education institutions in the country, providing subsidies in the form of low-interest loans, land, and tax breaks. By 2012 there were 19 private colleges of higher education and seven private universities in the country. Meanwhile, a national research council was established in 2005 as part of the sultanate’s aim to move towards a knowledge-based economy with the target for research and development spending set at 2% of GDP by 2020. Moving forward, higher learning institutes and industry leaders are cooperating more closely to match training and technical skills with future industry needs. This chapter contains interviews with Rawiyah bint Saud Al Busaidiyah, Minister of Higher Education; and Sayyid Shihab bin Tariq Al Said, Chairman, The Research Council.Explore chapter
The government is increasingly focused on preventative care as Oman’s health care budget almost doubled for 2014, reaching $3.34bn. Rising rates of obesity and diabetes are among the chief challenges facing the sector as lifestyle changes bring rates for obesity in line with developed Western countries. While government spending accounts for about 78.7% of total health expenditure in the country, the private sector is expected to play an increasingly prominent role moving forward. The number of private hospitals in the sultanate has quadrupled in the last decade, going from three in 2004 to 12 in 2013, and as rapid population growth and cases of bed shortages continue, numerous investment opportunities are being presented in the private health care segment.Explore chapter
This chapter contains an overview of the tax framework in which local and foreign investors operate. It also contains an interview with Kenneth Macfarlane, Country Senior Partner, PwC.Explore chapter
This chapter contains an outline of the legal framework in which local and foreign investors operate in Oman. This chapter includes an interview with Paul Sheridan, Partner, Dentons.Explore chapter
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 visitors.Explore chapter
Table of Contents
There are no articles in this chapter. To view the table of contents for this report, click the 'View in Online Reader' link above.