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Oman Vision - Diversifying the Economy, Building the Future

Global Arab Network - - Mohamed Tamer

Wednesday, 05 May 2010 13:12

The Sultanate of Oman, the third-largest country in the Arabian Peninsula, is blessed with the widest variety of natural landscapes in the Gulf and overlooks three seas: the Arabian Gulf, the Gulf of Oman, and the Arabian Sea. It borders Saudi Arabia to the west, the UAE to the northeast, and Yemen to the southwest.

With a population of just 3.2 million people, the economy has been quietly expanding and attracting further foreign investment. For the last three years, Oman has consecutively achieved real GDP growth of more than five per cent.

Just like its neighbours, Oman is facing a future of dwindling oil reserves, combined with a growing population of young people. Currently around 15 per cent of Omanis are under 15, and this large labour force will need jobs in the years to come.

To deal with these challenges, Oman launched its Vision 2020 economic development programme in 1995. It outlines how the economy needs to diversify away from its reliance on oil, while simultaneously increasing privatisation and ‘Omanisation’ – the training and employment of Omanis.

Vision 2020 wants to reduce the oil sector’s contribution to nine per cent by 2020, and raise the contribution made by the gas industry from 1.5 per cent in 1995 to 10 per cent. Oman has an estimated 34.6 trillion cubic feet of proven gas reserves, so there is plenty of opportunity here. The government is stimulating gas-related and energy-intensive industries like downstream petrochemicals, fertilisers and aluminium production, which is also helping to grow the manufacturing sector.

The government’s industrial strategy also focuses on developing export-oriented and processing businesses, and projects that will employ a large number of Omanis. It encourages precision engineering industries, as well as capital, technology and knowledge-intensive projects.

Paired with this is a carefully calibrated tourism strategy, aimed at the high net worth market. The government is marketing Oman’s ecological and geographical diversity, and allowing a number of high quality real estate and tourism development projects.

At the heart of these plans is the need to attract foreign investment. The government is particularly keen to welcome companies that can offer technology transfer, and employment and training for Omanis. The Ministry of Commerce opened the Omani Center for Investment Promotion and Export Development (OCIPED) in 1997.

The Sultanate places no restrictions on the flow of capital or the repatriation of profits. All registered companies are taxed at a maximum of 12 per cent of net profit, regardless of their percentage of foreign ownership. Omani branches of foreign companies are treated as foreign entities and taxed at a maximum 30 per cent rate.

Oman joined the World Trade Organization in 2000, but continues to keep its currency, the Omani rial, pegged to the US dollar. The Sultanate recently announced that it will not be joining the planned Gulf Cooperation Council (GCC) monetary union in 2010.

Global Arab Network

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Last Updated on Wednesday, 12 May 2010 15:33

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