Oman strikes nearer to a put up-oil economy

Muscat, Oman – The long term of Oman, positioned along a wide stretch of shoreline reaching the strategic Strait of Hormuz, is linked to the sea – and the country’s potential to leverage this connection will be key to its financial pattern in the years forward.

2018 marks the guts of a 5-year diversification approach that builds on Oman’s long-length of time vision to shift from an oil-based fully fully economy in direction of assorted serious sectors, including manufacturing, logistics, tourism, fisheries and mining.

In an generation of low oil costs, Oman – which has the bottom GDP per capita among the many Gulf Cooperation Council (GCC) international locations and an unemployment price surpassing 17 % – wishes to refashion itself as a hub for transport and industry. Companies reminiscent of the special financial zone at Duqm, established in 2011 with a contrivance of turning actual into a commercial powerhouse, will play a indispensable position in this transition.

But how realistic is Oman’s diversification opinion, and what obstacles would maybe well seemingly the Gulf nation face in the years forward?

« We are mindful that we live in a actually serious space of the Center East … [Oman] is indulge in an island in a sea with a form of challenges going down, » Talal Sulaiman al-Rahbi, the deputy secretary-classic of Oman’s Supreme Council for Planning and the architect of the country’s financial diversification opinion, advised Al Jazeera.

« We are making an are trying first into cutting back the dependence on oil for the nationwide funds, and moreover to diversify the economy and begin assorted clusters of industries … as effectively as, increasing job opportunities in the inner most sector, faraway from authorities jobs. [These] are being checked out as key things to pause. »

‘Irregular competitive advantage’

According to the Tanfeedh (« Implementation ») handbook for Oman’s Nationwide Program for Bettering Financial Diversification, printed earlier this year, non-oil actions are forecast to grow at four.three % once a year between 2016 and 2020, while oil-related actions at fixed costs will delay at correct zero.2 % once a year.

« Financial diversification is believed of as a strategic contrivance which is willing to result in financial enhance in gentle of the global financial prerequisites … The diversity of its pure resources items the Sultanate a undeniable competitive advantage in regional and global markets, as effectively as an different to pause its financial diversification targets, » the handbook notes.

An emphasis on the known non-oil sectors, reminiscent of tourism and fisheries, will cease in a decline in the contribution of oil to Oman’s GDP from 44 % in 2011-2015 to 30 % by 2020, officers project. 

According to Oman’s financial diversification opinion, the fisheries sector is anticipated to pause a enhance price of 6.5 % once a year by 2020 [Wojtek Arciszewski/Al Jazeera]

At the the same time, the bellow objectives to delay the contributions of manufacturing, tourism and logistics to its GDP from four.9 billion Omani riyals ($12.7bn) in 2015 to six.6 billion by the cease of 2020, while creating as a minimal 30,000 fresh job opportunities for Omanis.

This entails a various array of initiatives – the total thing from building an ammonium plant, to manufacturing scaffolding in the community, to planting a million date palm bushes, to privatising the management of nature and heritage net sites, to strengthening academic and legit coaching programmes to originate certain Omanis are better equipped for the personnel.

Training is a serious section of this equation, as many voters lack the map of technical data wished to kick-delivery certain industries, noted Marcus Chenevix, a MENA analyst with the London-based fully fully economics consultancy TS Lombard.

« Oman has a mountainous deal of doubtless to diversify, doubtlessly in many strategies bigger than its neighbours, in particular by map of tourism and by map of the pure resources that Oman has on the market – things indulge in entry to a broad fishery, » he advised Al Jazeera. 

Nonetheless, the focus on areas reminiscent of manufacturing would maybe be problematic, as the country « has no staunch institutional memory of having that form of industry and it be very laborious to originate that from scratch », Chenevix stated.

Job creation

Oman has experienced broad enhance since Sultan Qaboos bin Acknowledged Al Acknowledged got here to vitality nearly 1/2 a century previously. His predecessor left the country stunted, nonetheless in the decades that followed, Qaboos venerable oil revenues to develop faculties, roads, hospitals and assorted a must-hang infrastructure.

As of late, protracted low oil costs are weighing on Oman’s economy, as deficits stay mountainous and staunch GDP enhance has slowed to an estimated 2.2 % in 2016 from 5.7 % in 2015, based fully fully on the World Financial institution. « Nonetheless, enhance is anticipated to take up in 2018 as Oman pins hopes for its financial diversification opinion on the fisheries and tourism sectors, » noted the organisation’s April financial outlook for the GCC.

The anticipated enhance in gasoline production at the Khazzan discipline subsequent year will moreover support uplift the economy.

« The tell isn’t any longer about the creation of jobs – it be straightforward strategies to map jobs which would maybe be factual for the locals, and moreover straightforward strategies to develop outcomes of the education gadget that fit the job market, » Rahbi stated, citing efforts « to shut the gap between the provision of graduates and the seek data from of the native market … [including] getting inner most sector jobs and moreover beginning their possess agencies ».

Salalah businessman Salim Acknowledged Bahid al-Mashikhi, who has pursuits in the construction, vitality and restaurant industries, says that despite the fiscal challenges facing Oman, he’s optimistic about the country’s future.

« The economy in Oman, in classic, is affected due to the the low mark of oil, nonetheless the authorities has tried its easiest to contend with this tell … [An increasing number of] foreigners and guests need to reach to Oman and employ money and invest, » Mashikhi advised Al Jazeera, highlighting the mark of diversification.

« It’s terribly principal for the country to catch a mediate at to accumulate yet every other profits, no longer to rely most titillating on oil and gasoline, » he stated. « What’s going down from the crisis of low oil costs must be a warning to head for assorted solutions. »

Salim Aday al-Mamari, Oman’s director-classic of tourism promotion, believes that the bellow’s push to map fresh guests will be a actually principal aspect of this. Oman objectives to entice 2.7 million guests once a year by 2020, up from 1.9 million in 2015, and there are a wealth of heritage and nature net sites that can even moreover be leveraged to support originate that occur.

« Oman has a entire lot comely locations that can even moreover be visited and can also moreover be launched to global tourists, » Mamari advised Al Jazeera. « This sector can play a actually principal position in the economy of the nation by contributing jobs and by introducing Oman to global markets. »

Follow Megan O’Toole on Twitter: @megan_otoole

‘Financial diversification is believed of as a strategic contrivance which is willing to result in financial enhance in gentle of the global financial prerequisites’ [Wojtek Arciszewski/Al Jazeera]