The Report: Oman 2017
Despite ongoing economic pressures associated with the drop in oil prices, Oman’s diversification strategy and efforts to enhance wider revenue streams are beginning to bear fruit, as witnessed by continued growth in the non-oil sector despite dropping incomes and wider regional instability.
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 itself. Leveraging its strategic location, it has invested in infrastructure with the goal of becoming a global logistics centre. While less hydrocarbons-rich than its GCC neighbours, the sultanate’s diversification efforts are a driving force behind its economic growth. Its long-term development strategy, Oman Vision 2020, emphasises industrialisation, privatisation and Omanisation. Logistics, tourism, mining, fisheries and industrial manufacturing have all been identified as potential future economic drivers, and will be the focus of development under Vision 2040. This chapter contains a viewpoint from Sultan Qaboos bin Said Al Said; and an interview with Abdul Latif Al Zayani, Secretary-General of the GCC.
Explore chapterEconomy
Having endured low oil prices for the entire year, countries across the resource-rich GCC saw their balance sheets constrained in 2015, and in Oman’s case lower oil revenues led to a nominal GDP contraction of 13.8% and the largest deficit in more than a decade. Closing the fiscal gap is a government priority, with spending cuts, tax reform and increased private sector activity all expected to play a part in the process. The sultanate’s ambition, however, extends beyond the short-term issue of funding; over the longer term, the ability to restructure its economic base will be central to its future stability. This chapter contains an interview with Khalifa Al Barwani, CEO, National Centre for Statistics and Information.
Explore chapterBanking & IFS
A number of challenges have confronted Oman’s banking sector in recent years: a structural shake-up in the form of a new Islamic segment has increased competition levels; declining oil prices, which have constricted lending opportunities in some segments and compelled the regulator to encourage greater credit extension to others; and uncertainty surrounding the growth of regional economies, which further clouds the sector’s growth prospects in the short term. Nonetheless, the sector has continued to produce robust results, and is well positioned to weather the current economic turbulence. This chapter contains interviews with Hamood Sangour Al Zadjali, Executive President, Central Bank of Oman; and AbdulRazak Ali Issa, CEO, Bank Muscat.
Explore chapterCapital Markets
The securities exchange in Muscat is a vital component of the Omani economy. The bourse serves as a showcase for the sultanate’s large enterprises, but its primary function is to act as an arena in which pooled capital can be distributed to investment sectors. In 2015, for example, the exchange had the capacity to provide OR2.56bn ($6.6bn) in funding. Throughout 2016, however, subdued oil prices and concerns about slow growth in emerging economies have made for a challenging environment, and the task of attracting liquidity to the market has become the key concern facing the authorities and regulator. As of late 2016, procedural and regulatory adjustments were being put into place to address these issues, and were expected to be central to the capital market’s ability to maintain its role in the domestic economy. This chapter contains an interview with Abdulaziz Mohammed Al Balushi, Group CEO, Ominvest.
Explore chapterInsurance
The insurance industry in Oman has grown strongly in recent years and now plays an important role in the domestic economy, rising from 0.9% of GDP in 2008 to 1.6% in 2015. Important regulatory changes made in 2015 and 2016, aimed at strengthening the industry’s capital base, promise to usher in a new era of expansion and to boost the amount of premiums retained within the local market. To grow, however, the nation’s insurers must first adjust to a potentially protracted low-oil-price environment and increasing levels of competition, both of which represent significant challenges.
Explore chapterEnergy
Almost 50 years after it began shipping oil out of the port at Mina Al Fahal, the sultanate’s economy remains closely tied to the fortunes of hydrocarbons, which in 2015 accounted for 33.9% of GDP, 78.7% of state revenues and 59.4% of goods exports. Although 2015 was challenging for the nation’s oil and gas sector, the government is expected to keep crude production near its current level of 1m barrels per day through to at least 2020, and sector activity is thus likely to remain fairly constant despite the downturn. The sultanate’s underexploited offshore areas and attractive business environment meanwhile continue to offer opportunities for international oil and gas firms. This chapter contains an interview with Chris Breeze, Country Chairman, Shell Oman.
Explore chapterUtilities
Driven by rapid industrialisation, a growing population base and state-funded investments in major infrastructure projects, demand for electricity and water has surged in Oman over the past decade. Peak power demand on Oman’s Main Integrated System has more than doubled since 2006, and water demand has almost tripled. Growth forecasts for each range from 6% to 10% over the coming years. The need to increase power and potable water capacity should insulate planned projects from austerity cuts, and ambitious government-driven procurement strategies will provide a host of opportunities for private sector investors seeking solid returns from a single-buyer system. With detailed strategies in place, strong demand growth and a robust regulatory framework supporting private investment in power and water, Oman’s utilities industry is poised to see continued growth.
Explore chapterConstruction
With a multi-billion-dollar pipeline of public sector contracts and significant private sector developments planned for the remainder of the decade, the construction sector remains a highly significant and growing sector of the Omani economy. In the face of substantial headwinds driven by lower oil prices since the middle of 2014, the government is steering towards a diversified economy, even as it trims expenditures in the short term and delays some schemes created in the years when GCC states were enjoying windfalls from higher hydrocarbons revenues. Private sector home-builders, shopping mall developers and building materials suppliers see room for optimism in a country that experienced one of the fastest average population growth rates of any nation between 2011 and 2015, at 8.5% per year. This chapter contains an interview with Simon Buttery, CEO, Carillion MENA
Explore chapterReal Estate
Sentiment in Oman’s real estate sector remains cautiously upbeat in the face of a downturn in the global price of oil and the consequent impact on government spending plans in the sultanate. Residential rental prices have softened in some areas, with landlords preferring to trim prices to avoid untenanted periods in their properties, but in new fashionable developments lettings and sales have been holding firm. This is particularly true in the planned communities known as Integrated Tourism Complexes, which have been popular with Omanis as well as international buyers. In the retail and hospitality sectors several ambitious projects are either in the planning stages or under way, driven by optimism among larger corporate investors about the medium-term prospects of a country with a rapidly growing population and a long track record of peace and stability. This chapter contains an interview with Nasser Al Sheibani, CEO, Al Mouj Muscat.
Explore chapterIndustry & Retail
The sultanate’s ninth five-year plan, covering 2016-20, is the final component of the government’s long-term Vision 2020 development strategy, and is focused on reducing reliance on the energy sector’s contribution to GDP, while boosting non-petroleum industrial activities such as mining and quarrying, manufacturing, and building and construction. These together accounted for OR5.33bn ($13.8bn), or 19.8% of GDP, in 2015, a share expected to grow to 29% by the end of the decade, even though the sector faces rising pressure from reduced state spending and the ongoing economic downturn in 2015-16. This chapter contains an interview with Hilal bin Hamad Al Hasani, CEO, Public Establishment for Industrial Estates.
Explore chapterMining
Announced in January 2016, Oman’s ninth five-year plan is the final component of is long-term blueprint Vision 2020 and includes mining as one of five pillars of economic diversification being fast-tracked by the sultanate. With the government targeting 6% annual growth in the sector, and major regulatory initiatives attracting increased investor interest, mining is poised to surge in 2017-18. In 2015 the contribution of mining and quarrying activities to GDP reached $368m. The building materials segment continued to dominate the mining and quarrying sector in 2015, with production rising by 12% to reach 72m tonnes.
Explore chapterTransport
Strategically situated at the head of the Indian Ocean and bordering Saudi Arabia and the UAE, Oman is a gateway to the GCC region – a re-distribution point and transit hub for shipments to and from Asia, the Indian subcontinent, and East and Central Africa. Transport and logistics has emerged in recent years as a pillar of the sultanate’s development and a critical driver of its economy, benefitting all sectors. Seeking to develop Oman as a leading logistics centre in the region and reduce its dependence on hydrocarbons, the government continues to generously fund logistics infrastructure programmes. This chapter contains an interview with Paul Gregorowitsch, CEO, Oman Air; and a roundtable discussion with Mark Geilenkirchen, CEO, Port of Sohar; David Gledhill, CEO, Port of Salalah; and Reggy Vermeulen, CEO, Port of Duqm.
Explore chapterAgriculture & Fisheries
Bold plans to improve food security and production in Oman are being driven by investment in agriculture, horticulture, aquaculture and sea fishing as the country looks for sustainable solutions that will enable it to support a growing population. The sultanate’s long coastline and diverse landscapes support a rich variety of fish, livestock, crops, fruit and vegetables. However, the country’s farmers have historically faced significant challenges in managing a limited, though replenishable, supply of water in a predominantly hot desert climate. As Oman increases food production targets, new technologies and farming systems look set to play a crucial role in complementing traditional production techniques. At a time of lower oil prices, the government has identified agriculture and fisheries as sectors that can expand to account for a greater share of GDP.
Explore chapterICT
Driven by growth in consumer demand for data and improved connectivity, combined revenues from fixed-line telephony and mobile services in Oman reached OR906.19m ($2.4bn) in 2015, a 12.8% increase on the previous year. Infrastructure providers face considerable challenges in rolling out high-speed services to all areas of the country, while increased competition in the mobile market is creating a renewed focus on customer service and offerings tailored to specific niches in Omani society. While many trends in the country’s telecoms sector reflect developments in the industry region-wide, distinct characteristics in the sultanate’s own market include strict prohibition of voice-over-internet-protocol services such as Skype and Facetime, which limits the cannibalisation of call revenues seen in other countries. This chapter contains an interview with Said Abdullah Mandhari, CEO, Oman Broadband Company.
Explore chapterTourism
Having welcomed record numbers of tourists in 2015, Oman’s government looked to build on this momentum a year later by unveiling plans to double international arrivals by 2040 and develop strategic tourism clusters across the country. The sultanate is eager to shed its reputation as a luxury destination and boost the performance of other segments in the coming years. The Oman Convention and Exhibition Centre is one development that can help broaden the sector’s reach, by firmly establishing the country as a major destination for meetings, incentives, conferences and exhibitions. Meanwhile, the ecotourism and adventure travel subsectors are seen as ripe for development and promotion by the government. With a significant increase in hotel rooms in recent years and flagship development projects under construction across the country, Oman may soon emerge as a major destination, not just for regional tourists, but also for travellers from further afield. This chapter contains an interview with James Wilson, CEO, Oman Tourism Development Company
Explore chapterEducation & Training
Evolving rapidly over a short period, education and training play a key role in Oman’s long-term development plans. From three schools in the country prior to 1970, the sultanate’s general education sector has expanded to include 1647 public, special education, private and international schools, with a total of 724,395 pupils, including kindergarteners and preschoolers. Enrolment is compulsory for 10 years of basic education and free for all Omani citizens. Progress has been reflected in significant improvements in the adult literacy rate, which reached 94.8% in 2015, up from 81% a decade earlier, and in 2013/14 the higher education segment was served by 18 public colleges, 20 private colleges, one state university and seven private universities. This chapter contains an interview with Pankaj Khimji, Director, Khimji Ramdas; and Director, Muscat University
Explore chapterHealth
Oman boasts a universal health care system, which offers free primary health care to Omanis and subsidised care to foreign residents. Over the past four decades greater access to medical facilities and doctors has greatly improved the lifespan of Omani citizens, who have seen their life expectancies increase from 49.3 years in 1970 to roughly 76 years in 2016. However, the cost of the public health care sector in Oman is increasing steadily, and future public investment will need to continue rising in order to meet this demand. This could prove challenging in the years to come, and may see the private sector take on an increasingly prominent role in supplying medical treatment and care.
Explore chapterTax
This chapter contains an overview of the tax framework in which local and foreign investors operate, including a rundown of the expected changes to corporate tax rates, a look at the incentives on offer in the special economic zones and a glance ahead at plans for the proposed GCC-wide value-added tax. This chapter contains an interview with Omar Al Sharif, Country Senior Partner Oman, PwC
Explore chapterLegal Framework
This chapter contains an overview of the legal framework in which local and foreign investors operate in the country, including a breakdown of the distinctions between conventional and Islamic banks, an outline of the employment regulations for both Omanis and foreigners, and a look at commercial and personal bankruptcy laws.
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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