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 sits atop significant oil and natural gas reserves like its GCC neighbours. Under the leadership of Sultan Haitham bin Tarik Al Said since January 2020, the country has renewed its diversification efforts to reduce its dependence on the energy trade. Its longterm economic development is guided by Oman Vision 2040, the goals of which include a diversified economy, sustainable cities, privatisation and Omanisation.
Economic Plan
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. The FYP’s five key economic sectors are logistics activities, culture and logistics services; mining and mineral products; manufacturing; agriculture and fisheries; and education, scientific research and innovation.
The plan aims to strengthen the sectors that support the country’s efforts to develop sustainably, improve efficiencies and resource usage while growing the green economy, and facilitate the development of the circular economy and knowledge economy. The FYP targets an annual average growth rate of 3.5% throughout its duration, as well as intends to increase the investment rate to 27% of GDP and create 135,000 job opportunities.
In addition, the 10th FYP plans to play a more important role in driving the sultanate’s economic growth through greater support for the development of small and medium-sized enterprises; developing mechanisms, structures and programmes that contribute to economic growth, and achieving fiscal stability and the balanced development of the country’s governorates. The FYP targets increasing the private sector’s contribution to GDP to 60% and growing non-oil activities by an average of 2.3% per year between 2021 and 2025.
Succession
Sultan Qaboos bin Said Al Said passed away on January 10, 2020 at the age of 79. At the time of his death he was the longest-serving monarch in the Gulf, having sat on the throne since 1970. November 18 is Oman National Day, which coincides with the late sultan’s birthday, while July 23 is celebrated as Renaissance Day, marking the first day of his reign. Upon the death of Sultan Qaboos, his cousin Haitham bin Tarik Al Said, the Oxford-educated former minister of culture, was sworn in as sultan before the ruling family council on January 11, 2020.
Monarchy
Oman is a hereditary monarchy. Sultan Haitham became both head of state and government upon ascending to the throne in January 2020. When his predecessor took over from his own father in 1970, Oman was isolated and underdeveloped, lacking in basic facilities and infrastructure. Sultan Qaboos’ efforts helped transform Oman into a modern state, with one of his first acts being to change the name of the country from Muscat and Oman to the Sultanate of Oman, indicating it was a united country.
The late sultan also appointed a Cabinet of ministers responsible for various government departments and functions – a first for the country. Within 25 years Oman was no longer among the ranks of lower-income nations in need of World Bank credit facilities. The ambitious economic goals laid out by Sultan Qaboos, which included plans for easing the sultanate’s dependence on hydrocarbons by diversifying its economic base, have seen tourism open up and major improvements made to key infrastructure.
Government Structure
The Council of Oman, Majlis Oman, is a bicameral consultative council with advisory powers. The upper chamber of the council is the State Council, Majlis Al Dawla, the members of which are appointed by the sultan. Members of the lower chamber, Majlis Al Shura, are elected by popular vote for four-year terms. The Majlis Al Shura has the authority to draft legislation sanctioned by the sultan. Since 2002 citizens older than 21 have been eligible to vote in elections, the most recent of which took place on October 27, 2019, when the 86 members of the Majlis Al Shura were elected from the sultanate’s 61 constituencies. As of writing, the next elections to the consultative body had not been scheduled, but are expected to be held by October 2023.
Population
The sultanate’s population was roughly 5m as of April 2023, according to the National Centre for Statistics and Information (NCSI). Omani citizens comprised 57.5% of the population, while expatriates accounted for the rest. At the same time, 61.6% of the Muscat Governorate’s population consisted of expatriates. As of 2021, 27% of the country’s population was under the age of 15, while 15- to 29-year-olds constituted 23.6%, putting the productive population – those aged 15 to 64 – at roughly 70.4%. Oman’s population is expected to reach nearly 7.7m by 2040, according to the NCSI’s projections.
The majority of the population lives along the Batinah coastline, an area in the north stretching from the capital, Muscat, to Sohar, the largest city in the Al Batinah North Governorate. The second-most-populous area is the Dhofar Governorate, which is home to Salalah, the country’s second-largest city. Situated in the south near the border with Yemen, Salalah’s population was approximately 333,700 as of 2021.
The government actively applies quotas for hiring Omani nationals, although many positions are also filled by foreign workers, mainly from Asia. The largest foreign communities come from India and the Philippines, representing more than half of Oman’s labour force. Most of the country’s foreign workers tend to live in the Muscat Governorate, which had a foreign community of 908,440 compared to 566,078 Omani nationals as of December 2022. The Al Batinah North Governorate reported the second-largest population of foreigners, with a total of 277,314. Other regions are home to greater numbers of Omanis than expatriates. The Al Wusta and Musandam governorates had the smallest expatriate populations at 32,917 and 17,951, respectively, as of December 2022.
Diplomatic Ties
Oman has worked to expand its diplomatic relations based on a moderate foreign policy. By maintaining a non-confrontational and pragmatic approach to foreign relations, the country has transformed itself into a regional power.
Oman is affiliated with more than 100 regional and international organisations, including the UN, the World Trade Organisation, the IMF, the World Bank, the GCC and the Greater Arab Free Trade Area. However, Oman is not a member of the Organisation of the Petroleum Exporting Countries. The sultanate has a free trade agreement (FTA) with the US, and, as a member of the GCC, is party to the bloc’s FTAs with Singapore and the European Free Trade Association.
Governorates
The sultanate is divided into 11 governorates: Muscat, Musandam, Al Dakhiliyah, Al Buraimi, Al Batinah North, Al Batinah South, Al Sharqiyah North, Al Sharqiyah South, Al Dhahirah, Al Wusta and Dhofar. The governorates are further subdivided into a total of 61 wilayat (provinces), each of which is presided over by a wali (governor) responsible for overseeing local administration and acting as a link between the government, its institutions and the public. Oman has ensured that development efforts are balanced and integrated across all its regions through its FYPs. Major projects and industrial areas have been set up nationwide as part of efforts to balance the priorities and needs of each region.
The Muscat Governorate is Oman’s political, economic and administrative centre; the location of the capital, Muscat; and the heart of the sultanate’s government and administrative bodies. The governorate has become a vibrant centre of local and international economic, commercial and tourist activity.
The Dhofar Governorate has been pivotal in Oman’s history. In ancient times the area was known as the Land of Frankincense, the gateway to the Indian Ocean and a crossroads for southern Arabia’s caravan routes. Salalah was the birthplace of Sultan Qaboos’ modern development strategy, and it remains an important part of the country’s prosperity. As part of its regional development, major investment has gone into the Port of Salalah, which is located near the major shipping lanes of the northern Indian Ocean, and its surrounding infrastructure. The port’s general cargo terminal handled 18.4m tonnes of cargo in 2022, up from 16.9m tonnes in 2021. The port’s container terminal also processed 4.5m twenty-foot equivalent units in 2022, according to port data.
Similarly, the Musandam Governorate is of strategic importance due to its position overlooking the Strait of Hormuz, a crucial international shipping lane for hydrocarbons exports and trade between the Gulf and the rest of the world. For example, nearly 90% of the region’s oil exports transit through the strait.
The Al Wusta Governorate, which is located in the centre of Oman to the south of the Al Dakhiliyah and Al Dhahirah governorates, enjoys a temperate climate throughout the year. Bordering the Arabian Sea to the east, the Empty Quarter desert to the west and the Dhofar Governorate to the south, it is home to a large number of oil and gas fields. The Al Wusta Governorate has four wilayat, three of which are located along the Arabian Sea, while the fourth (Haima) is situated further inland.
Developments around Duqm – situated outside the Strait of Hormuz – are a major part of Vision 2040 and the National Programme for Enhancing Economic Diversification, and they are expected to generate logistics, warehousing, distribution and re-export opportunities. With the country having broader plans to become a trade centre for heavy, medium and light industries, the need to attract investors is integral to both the success of the Duqm special economic zone and the sustainable development of the governorate.
Roads
Efforts to enhance transport and logistics capabilities have been a major economic driver in recent years. Oman’s seaports, airports and roads are constantly being expanded and improved. Its road infrastructure ranked 10th out of 141 countries in the World Economic Forum’s “Global Competitiveness Report 2019”. The Ministry of Transport, Communications and IT (MTCIT) reported that Oman had about 16,022 km of asphalt roads and 17,069 km of gravel roads at the end of 2021, with future projects including a 15-km carriageway with three lanes in each direction to ease traffic in the Muscat Governorate.
The road network covers most of the country and its paved roads are generally of high quality. The sultanate’s modern road network has helped facilitate trade with neighbouring countries and improved overall safety. In December 2021 the 725-km Empty Quarter Road linking Oman and Saudi Arabia opened. The new artery is expected to boost trade and tourism flows between the two countries, as well as allow for Saudi exports to reach the Sea of Oman and Arabian Sea directly, and for Omani exports to reach the Red Sea through Saudi ports.
Gateways
With a long seafaring history, it is no surprise that ports play an important role in Oman. The largest seaports – Salalah, Sohar and Duqm – are integral to the economy, driving growth and contributing to diversification. Each port is in a different region of Oman and serves a specific function. In the aviation sector, significant upgrades to Muscat International Airport saw a new 580,000-sq-metre terminal open in March 2018, while a new terminal at Duqm International Airport opened in September 2018 with a total capacity of 500,000 passengers per year, with additional plans to expand capacity to 2m passengers annually. The MTCIT launched the National Aviation Strategy 2030 in February 2020 to support the sector’s growth. It announced in January 2023 that it was seeking bids from interested parties to develop the National Aviation Strategy 2040 to further the goals of the initial framework.
Communication
In terms of communications, Oman is connected by fibre-optic cables to the UAE, Yemen and Pakistan. The National Broadband Strategy is expected to increase the scope and connectivity of broadband across the country. The plan was ratified in October 2013 by the Cabinet and has received a great deal of support from the government. In December 2022 Oman Broadband Company signed a series of agreements with a number of local banks for OR171m ($444.4m) in long-term financing to expand the coverage of the country’s broadband network. The Oman Broadband Company is also carrying out a project launched in 2017 with the Asian Infrastructure Investment Bank to provide fibre-optic broadband cable to over 700,000 homes and buildings, and cover close to 80% of the country’s urban areas.
History
The area comprising modern Oman has long benefitted from its location. Merchants and traders made contact with Persia to the north, India to the east and Africa to the south. The rule of the Parthians and Sassanids from the 3rd century BCE to the 7th century ended when Islam arrived in the region. From 751 onwards imams were chosen to rule the region as spiritual leaders. This lasted for four centuries until the accession of Banu Nabhan in 1154, establishing a dynasty of hereditary kings.
The early 16th century brought the arrival of the Portuguese, who were opening their trade route to India. Between 1507 and 1650 they occupied Muscat and various local garrisons, including a captured island in the Strait of Hormuz. After a turbulent period of fighting with the Ottomans, Sultan Ahmad bin Said, whose descendants rule Oman to this day, took control of the territory in 1749 and expanded it to parts of Iran and the coast of East Africa. Zanzibar, the former capital of Oman, fell out of Omani control in 1861, although the two still enjoy close ties. The Omani Empire’s African lands steadily came under British influence and were subject to the Franco-British rivalry of that period. Through gradual economic and political encroachment on its overseas holdings, Omanis were forced to retreat to the Arabian Peninsula. Sultan Said bin Taymur ruled Muscat and Oman until Sultan Qaboos took the throne in July 1970. The country declared independence and renamed itself the Sultanate of Oman, after which the new sultan embarked on a programme of modernisation and liberalisation that expanded social services and infrastructure. With Sultan Qaboos as ruler, Oman worked to achieve closer political and economic integration with its regional neighbours. These efforts culminated in May 1981 with the founding of the GCC.
Tradition
The dhow, a type of sailing boat with a long history in the region, is a symbol of Oman’s relationship with the sea and its extensive knowledge of seamanship. Evidence exists of an Omani dhow reaching China as early as in the 8th century, and they can still be seen along the coast as vehicles for trade, fishing and tourism.
Life tends to be more tribal and traditional in the country’s interior, with many families tending livestock and growing crops. This cultural and geographic split had important historical consequences, with people in the interior choosing to be ruled by imams and the coastal peoples by sultans. Northern Oman is also separated from the southern region of Dhofar by hundreds of miles of desert, which has resulted in many Dhofaris maintaining cultural and historical ties with neighbouring Yemen.
Most Omani men wear the traditional dishdasha, a collarless, tasselled, ankle-length white robe. Men tend to wear ceremonial dress for special occasions, including the elaborately carved Omani khanjar knife with its curved dagger. Most Omani women wear the hijab and abaya; while some women cover their faces and hands, most do not. For celebrations Omani women dress in brightly coloured traditional clothing consisting of a long tunic worn over trousers.
Religion
Oman does not publish statistics on the percentages of people adhering to a particular faith. However, a 2015 study by the Dubai-based Al Mesbar Centre estimated that 50% of the sultanate’s citizens were Sunni and 45% Ibadi, a branch of Islam practiced almost entirely in Oman and Zanzibar. Shia Muslims constitute less than 5% of the country’s citizen population, while the majority of non-Muslims are South Asian migrant workers practising Buddhism, Sikhism, Christianity, Hinduism and other faiths.
Religious organisations in Oman are required to register with the Ministry of Endowments and Religious Affairs. Freedom of religion is guaranteed in the country by the constitution, and the sultanate reaffirmed this right by issuing a legal circular in 2006 that decreed that all people in Oman can practise their religion and beliefs without any interference from the government. However, this legal right also included an important condition that religious services had to take place in government-sanctioned buildings.
Read More from OBG
