Economy
From The Report: Oman 2019
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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.
Articles from this Chapter
Rounded progress: Economic conditions are looking favourable for 2019 thanks to improving oil prices and successful diversification efforts
Protective measures: Ali bin Masoud Al Sunaidy, Minister of Commerce and Industry, on supporting businesses and safeguarding fiscal sustainabilityOBGplus
Interview :Ali bin Masoud Al Sunaidy How can the government maintain a prudent fiscal policy while supporting local businesses? ALI BIN MASOUD AL SUNAIDY: In light of low oil prices, the government started rationalising its subsidy policy. In January 2016 we decided to deregulate the prices for refined petroleum products, revising them on a monthly basis. The price for regular petrol, however, was capped until a compensation mechanism was established. In 2017 the Council of Ministers decided…
Empowering citizens: Continuing to develop the local workforce through incentives, training and regulatory policiesOBGplus
The issue of Omanisation – which refers to the initiative to increase the percentage of nationals in Oman’s workforce – has a considerable pedigree. The concept was first introduced in 1988 as a means to reduce the nation’s reliance on expatriates in key areas of economic activity, such as the oil and gas sector. Over time, most private sector companies were compelled to publish their own Omanisation plans. In 1998 a green card system was introduced, which enables companies to demonstrate…
Striking a balance: Salaam Said Al Shaksy, Member of the State Council; and CEO, Alizz Islamic Bank, on attracting foreign investmentOBGplus
Interview :Salaam Said Al Shaksy How could fiscal reforms such as the increase in the corporate tax rate and the proposed value-added tax affect Oman’s appeal to foreign investors? SALAAM SAID AL SHAKSY: Oman is currently in a situation where GDP growth is being tested due to decreased oil revenues, a growing population and a gap in employment opportunities. The government has a vast payroll base to cover every year for which it seeks solutions. The usual solutions include increasing taxes…
Expanding prospects: Ahmed Al Musalmi, Board Member, Special Economic Zone Authority at Duqm; and CEO, Bank Sohar, on pursuing the diversification agenda with infrastructure and financingOBGplus
Interview :Ahmed Al Musalmi How have recent sovereign downgrades affected the economy, particularly in terms of the cost of funds on international markets? AHMED AL MUSALMI: The economy in general has shown a great deal of resilience, despite low oil prices. Empirically, sovereign ratings have multifaceted implications on the financial system, corporate earnings and investor sentiment. Downgrades would adversely impact the borrowing cost from international markets, which we have seen since…
Developmental catalyst: The short-term successes of Tanfeedh suggest a lasting legacy for the sultanate’s diversification driveOBGplus
A Malaysian influence has been detectable in the GCC economic arena for many years, particularly in the Islamic finance industry, which has benefitted from the models trialled first by the Malaysian financial regulator. Kuala Lumpur has emerged as a generator of sharia-compliant standards to complement the GCC’s own Accounting and Auditing Organisation for Islamic Financial Institutions, based in Bahrain. In a wider sense, Malaysia’s status as an emerging economy with diversified sources of revenue…
A fuller picture: Khalifa Al Barwani, CEO, National Centre for Statistics and Information (NCSI), on harnessing the potential of big dataOBGplus
Interview :Khalifa Al Barwani How can open data make doing business easier? KHALIFA AL BARWANI: The dissemination and exchange of open government data is of enormous benefit to the economy and is one of our main goals as we seek to integrate government services, improve decision-making and increase transparency. This will lead to job opportunities, increase access to foreign investment, promote innovation and entrepreneurship, create value-added services, and increase the quality of services…
Improved framework: Legislative changes to boost foreign investment and encourage partnerships with the private sectorOBGplus
The question of how to shift the economy to be more focused on the private sector is a central government concern. In early 2018 the Ministry of Finance published its annual statement on Oman’s general budget for 2018, setting out the strategic objectives that public spending is driving towards. Among the many budgetary goals referred to in the 2018 statement was a welcome reiteration of the government’s plans to significantly enhance the legislative framework applied to investment. The decision…
Tax liabilities: Impacts of the trend towards lower corporate tax rates on developed and developing economiesOBGplus
Recent decades have seen a downward trend in corporate taxation, with headline corporate tax rates falling by 20 percentage points since the early 1980s. The average for advanced economies dipped to 22% in 2015, and investment incentives have further reduced effective rates for transnational corporations. After the 2007-08 global financial crisis, many countries had to slash spending and raise revenue to rein in deficits, but lower corporate taxes persisted. In the face of post-crisis austerity, however, public tolerance of corporate tax avoidance has dissipated, thus increasing political momentum to improve transparency and limit loopholes. The…
Tax liabilities: Impacts of the trend towards lower corporate tax rates on developed and developing economiesOBGplus
Recent decades have seen a downward trend in corporate taxation, with headline corporate tax rates falling by 20 percentage points since the early 1980s. The average for advanced economies dipped to 22% in 2015, and investment incentives have further reduced effective rates for transnational corporations. After the 2007-08 global financial crisis, many countries had to slash spending and raise revenue to rein in deficits, but lower corporate taxes persisted. In the face of post-crisis austerity, however, public tolerance of corporate tax avoidance has dissipated, thus increasing political momentum to improve transparency and limit loopholes. The…
Global village: Medium-term prospects suggest globalisation is set to continue for the foreseeable futureOBGplus
Decades of growth in trade and foreign investment have seen economies around the world become more interconnected than ever before. The production of goods and, increasingly, the provision of services have become fractured across borders as corporations create and integrate into regional and global value chains. These trends have been reinforced by the steady liberalisation of international trade and investment regimes, at the bilateral, plurilateral and multilateral levels. National economic specialisation in areas of comparative advantage, and regional economic and political integration, have proceeded in a single direction, broadly speaking,…
Global village: Medium-term prospects suggest globalisation is set to continue for the foreseeable futureOBGplus
Decades of growth in trade and foreign investment have seen economies around the world become more interconnected than ever before. The production of goods and, increasingly, the provision of services have become fractured across borders as corporations create and integrate into regional and global value chains. These trends have been reinforced by the steady liberalisation of international trade and investment regimes, at the bilateral, plurilateral and multilateral levels. National economic specialisation in areas of comparative advantage, and regional economic and political integration, have proceeded in a single direction, broadly speaking,…
