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The Report: Oman 2023

Due to the hydrocarbons-focused nature of its economy, Oman was not immune to the global shocks of the past decade. The government is therefore pursuing economic diversification, with specific sectors being strategically targeted for development. The authorities have also rolled out a number of new laws in recent years to create a more accommodating legislative environment for investors, and have focused on privatising government-owned enterprises, creating special economic zones and strengthening local representation in the workforce.

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Sections

  • Country Profile
  • Economy
  • Banking
  • Insurance
  • Capital Markets
  • Energy
  • Utilities
  • ICT
  • Construction & Real Estate
  • Industry & Retail
  • Mining
  • Transport
  • Agriculture & Fisheries
  • Tourism
  • Education & Health
  • The Guide

Country Profile

Situated at the confluence of the Gulf and Arabian Sea, Oman occupies a strategically important location for trade and logistics. Although it is not on the Gulf, Oman possesses significant oil and natural gas reserves like its GCC neighbours. Since assuming leadership in January 2020, Sultan Haitham bin Tarik Al Said has renewed the country’s diversification efforts to reduce its reliance on the energy sector. Its long-term economic development is guided by Oman Vision 2040, the goals of which include establishing a diversified economy, creating sustainable cities, and facilitating privatisation and Omanisation. The sultanate’s 10th five-year plan (FYP), which covers 2021-25, is the first FYP launched under Vision 2040. The plan continues the country’s drive towards greater social development, fiscal sustainability, economic diversification and the optimal utilisation of its available natural resources. This chapter contains a viewpoint from Sultan Haitham bin Tarik Al Said; and an interview with Khamis bin Saif Al Jabri, Chairman, Oman Vision 2040 Implementation and Follow-up Unit.

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Economy

Due to the hydrocarbons-focused nature of its economy, the sultanate was not immune to the global economic shocks of the past decade. The government is therefore pursuing broad economic diversification, with specific sectors strategically targeted for development. While this is a familiar narrative across the GCC, motivated in large part by the global transition to clean energy, the need for diversification in Oman is perhaps more pressing due to the limited lifespan of its oil and gas supply – the former is estimated to last until 2030, and the latter up to 10 years longer based on current rates of extraction. The government has rolled out a number of new laws in order to create a more accommodating legislative environment for local and international investors, while current economic development plans seek to harness the country’s strategically advantageous location on the Gulf and proximity to key regional consumer markets. This chapter contains interviews with Abdulsalam bin Mohammed Al Murshidi, President, Oman Investment Authority; Qais Al Yousef, Minister of Commerce, Industry and Investment Promotion; and Faisal bin Abdullah Al Rawas, Chairman, Chamber of Commerce and Industry.

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Banking

As a cornerstone of the economy, Oman’s banking sector experienced significant growth and development between 2012 and 2022. While the disruption caused by the Covid-19 pandemic – and in particular its knock-on effects on global energy markets, supply chains and inflation – has weighed on the pace of expansion, Omani banks’ strong performance and stability in the years preceding the health crisis have allowed the sector to weather the multiple global economic headwinds since 2020. One of the key strengths of the banking sector is its well-regulated environment, which is overseen by the Central Bank of Oman (CBO). The CBO has implemented strict regulations to ensure that banks operate in a safe and sound manner, which has helped to maintain the stability of the wider financial system. It has also implemented measures to promote financial inclusion, such as the introduction of mobile banking and the expansion of branch networks to reach underserved areas. This chapter contains an interviews with Tahir bin Salim Al Amri, Executive President, Central Bank of Oman; and Sheikh Waleed Khamis Al Hashar, CEO, Bank Muscat.

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Insurance

Recent years have been challenging for insurers worldwide as they grappled with the impact of the Covid-19 pandemic, supply chain disruptions, turbulent oil and gas prices, and uncertainties concerning economic growth. Despite these challenges, Oman’s insurance sector has demonstrated robust growth. Looking ahead, recovery in the wider economy, regulatory improvements and signs of market consolidation herald further steps towards expansion. The prospects are further enhanced by significant efforts to improve digitalisation and training, with the government and regulator-backed Tamkeen programme turning out more professional insurance graduates. At the same time, the rollout of the Dhamani electronic platform, Oman’s compulsory national health insurance initiative for the private sector and visitors, reached a key milestone in 2022, with the registration and onboarding of delivery stakeholders.

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Capital Markets

Oman’s capital markets are positioned to play a crucial role in achieving Oman Vision 2040’s objectives, having made great strides in the wake of the Covid-19 pandemic. Oman is currently undergoing a period of wide-ranging reforms and strategic changes designed to accelerate private sector growth and enhance resilience. This has opened up new opportunities in the kingdom’s capital markets, which can be leveraged to finance the development of its economy. Oman has moved swiftly to establish the foundations for rapid capital market development. In recent years it has implemented a series of reforms aimed at facilitating investment, ensuring accountability and aligning local markets with international standards. As recent credit ratings upgrades indicate, investors are poised to build on the robust base in the medium term, furthering the sector’s expansive trend. This chapter contains interviews with Abdulaziz Al Balushi, CEO, OMINVEST; and Abdullah Al Salmi, Executive President, Capital Market Authority.

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Energy

As Russia’s invasion of Ukraine and climate change continue to disrupt market dynamics, the transition to cleaner sources of energy has never been in sharper focus. Oman’s policy response is guided by Oman Vision 2040, which aims to put the economy on a more diversified and sustainable footing, while protecting the environment and improving livelihoods. Other notable initiatives include the country’s goal of becoming a net-zero economy by 2050, and an international leader in the export and production of hydrogen. This includes adding 25 GW of captive solar and wind capacity to serve green hydrogen projects. Oman has also pledged to reduce its greenhouse gas emissions by 7% compared to the business-as-usual scenario by 2030. Oman’s reserves of natural gas are set to play a leading role in fuelling industrial growth in the coming years, as processes that currently use fossil fuels switch to green hydrogen, allowing Oman to step up exports of its surplus gas as liquefied natural gas. This chapter contains interviews with Talal Al Awfi, CEO, OQ; Hamed Al Naamany, CEO, Oman LNG; Mazin Al Lamki, CEO, Energy Development Oman; and Steve Phimister, Managing Director, Petroleum Development Oman.

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Utilities

Oman Vision 2040, the national plan to diversify the sultanate’s economy and put it on a more sustainable footing, is the most important driver of change in the utilities sector. In March 2019 the Oman Power and Water Procurement Company forecast the share of renewables in the energy mix would reach 30% by 2030, compared to Vision 2040’s initial projection of 20%. Following the country’s announcement in October 2022 of its goal of reaching net-zero emissions by 2050, the sultanate plans to invest $190bn in climate and energy-transition projects by 2050, including energy efficiency measures and renewable power projects. Oman has been increasingly centralising control of its overall energy policy, including the public provision of power. The Ministry of Energy and Minerals; and the Ministry of Agriculture, Fisheries and Water Resources are responsible for policy decisions regarding power and water, respectively. This chapter contains interviews with Abdullah Al Hashimi, CEO, Marafiq; and Omar Al Wahaibi, Group CEO, Nama Holding.

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ICT

Broad digital transformation is at the heart of Oman Vision 2040, the government’s long-term economic development blueprint. In the years leading to the Covid-19 pandemic the sector’s governance structures were overhauled to improve efficiency, while private investment in ICT activities had already been growing. To support this, the authorities have prioritised deepening the local tech talent pool, and enhancing the sultanate’s ecosystem of start-ups and small and medium-sized enterprises. The swift shift to online education, work and commerce during the pandemic necessitated further development of local digital skill and service bases. To this end, government entities have been teaming up with local and international players to enhance such capacities. Meanwhile, in order to keep abreast of an increasingly complex global digital landscape, the country has introduced new laws and regulations to address issues such as cybersecurity and data protection, while also enhancing national capabilities in related areas. This chapter contains interviews with Talal Al Mamari, CEO, Omantel; Said Abdullah Al Mandhari, CEO, ITHCA Group; Ali Al Shidhani, Undersecretary for Communications and IT; and Bader Al Zaidi, CEO, Vodafone Oman.

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Construction & Real Estate

Construction activity will be key to realising the objectives of Oman Vision 2040, which prioritises diversifying the economy away from a reliance on hydrocarbons revenue. Public-private partnerships present an opportunity to accelerate progress towards strategic goals such as affordable housing while also preserving public finances. Matching real estate supply with the precise demands of the residential and commercial segments will remain important as economic activity recovers from the Covid-19 pandemic. Meanwhile, the opportunity for non-Omanis to obtain residency visas through property investment is expected to raise the sultanate’s appeal to international investors in 2023 and beyond. Construction remains one of Oman’s largest non-hydrocarbons sectors and is therefore an important driver of economic diversification. The sector contracted by 16.9% in real terms in 2020, based on the latest available data from the Central Bank of Oman and the National Centre for Statistics and Information.

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Industry & Retail

Manufacturing activity has undergone a significant expansion in Oman since the turn of the century, with further growth targeted in a number of strategically identified segments to boost self-sufficiency and aid the economic diversification agenda. The Covid-19 pandemic demonstrated the importance of self-sufficiency, particularly in relation to food and medical supplies. Industrial, free and special economic zones are facilitating private investment in manufacturing segments, particularly metals and petrochemicals. Incentives and concessions for entities operating within those areas – alongside new laws – are contributing to an increasingly attractive business environment. The retail sector has experienced growth in recent years thanks to a growing population, higher levels of disposable income, tourist arrivals and the emergence of segments such as e-commerce. This chapter contains interviews with Ali bin Masoud Al Sunaidy, Chairman, Public Authority for Special Economic Zones and Free Zones; Lujaina Mohsin Darwish, Chairperson of the Infrastructure, Technology, Industrial & Consumer Solutions Cluster, Mohsin Haider Darwish; and Sayyid Azzan bin Kais Tarik Al Said, co-founder and CEO, AZD Technologies.

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Mining

With mineral mining a major focal point of the government’s plans to diversify Oman’s economy, the sector has seen revitalised interest in recent years from both domestic and foreign investors. The newly adopted strategy to develop the sector through comprehensive, large-scale concession agreements is opening up more territory and streamlining the business side. New geological surveys are being conducted, while additional financing arrangements are easing market entry. With the sultanate’s economy anticipating a major injection of new investment in 2023 and beyond – and as oil and gas revenue rises, and the impact of the Covid-19 pandemic fades – growth across the economy should also boost demand for minerals. Indeed, with the sector capable of providing everything from building aggregates to gold and copper, mining in Oman looks set to see a significant increase in activity in the years to come. This chapter contains interviews with Nasser Al Maqbali, CEO, Minerals Development Oman; and Farrokh Masani, Executive Director, Mining and Quarrying, Al Tasnim Group.

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Transport

Oman’s geographical location and cordial regional diplomatic relations offer multiple strategic opportunities that, if skillfully harnessed by the government, could see the sultanate become a regional and global transportation and logistics centre. Indeed, strengthening transport capacities and capabilities is central to Oman Vision 2040, the government’s overarching socioeconomic development plan. Significant infrastructure expansion works have taken place across the transport sector, with roads, maritime ports and airports receiving sizeable investment, while plans to build a national railway that would connect with a broader GCC-wide network appear to be advancing following years of uncertainty. The sultanate’s recently improved public-private partnerships law is expected to help attract additional private finance into upcoming projects. This chapter contains an interview with Sheikh Aimen Al Hosni, CEO, Oman Airports.

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Agriculture & Fisheries

With 3200 km of coastline and swathes of cultivated land, agriculture and fisheries are key economic activities across the sultanate, providing employment opportunities, and supporting the country’s economic diversification and food security efforts. These were vital industries prior to the discovery of hydrocarbons, particularly for coastal communities. The climate allows for year-round fishing, and Oman is the only net exporter of fish in the GCC, accounting for over 31% of the region’s fisheries production. Increased government support under Fisheries and Aquaculture Vision 2040, a long-term plan for the sector announced in December 2015, seeks to turn it into a profitable, sustainable industry. To complement its food procurement policies, Oman has increased its investment and partnerships with private players to boost local food production, increase productivity and encourage the adoption of new technologies. This chapter contains interviews with Mohammed Al Harthy, CEO, Oman Food Investment Holding; and Nabil bin Salim Al Bimani, Group CEO, Fisheries Development Oman.

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Tourism

The tourism sector has long been the focus of Oman’s efforts to diversify the economy away from a reliance on hydrocarbons. After slow but steady growth throughout the 2010s, the tourism sector’s contribution to GDP reached a high of 2.9% in 2019. However, restrictions imposed due to the Covid-19 pandemic weighed on the sector’s performance for much of 2020. As part of its long-term economic diversification strategy, Oman Vision 2040, the Ministry of Heritage and Tourism and the Oman Tourism Development Company, Omran, are pursuing sector expansion with renewed vigour. Tourism has been earmarked for 21% of the OR11bn ($28.6bn) in investment opportunities promoted under the National Programme for Investment and Export Development for the 2021-25 period. The sector rebounded strongly in terms of visitors and expenditure in 2022, and government investment in hotel capacity and niche markets such as integrated tourism is helping the country make progress towards its 2040 goals. This chapter contains an interview with Hashil Al Mahrouqi, CEO, Omran.

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Education & Health

Education, health and other social services are central to Oman Vision 2040, the country’s long-term development framework that aims to create a knowledge-driven, diversified and competitive economy. Indeed, the authorities are working to shift a portion of the local workforce to the private sector, as well as enhance the role of private entities in the provision of both heath care and insurance – factors that will be key in transferring some of the government’s current cost burdens to the private sector. In terms of education, the government has prioritised equipping Omani nationals with the skills and knowledge to compete in a changing employment market, whether that means adopting technology in the classroom or expanding the reach of technical and vocational education and training programmes and institutions. This chapter contains an interview with Rahma bint Ibrahim Al Mahrooqi, Minister for Higher Education, Research and Innovation.

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The Guide

The Guide contains a selection of hotel and accommodation options throughout Oman for both business and leisure travellers. Helpful information is provided on visa regulations, safety and health considerations, business etiquette, and public and private transport options.

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