By Vinod Nair — MUSCAT: Dec. 31: Many of Oman’s risks will be outweighed by opportunities and advantages over its regional partners in 2017, says the Operational Risk Report released by BMI Research, a Fitch Group Company. The report says Oman is an attractive prospect for investors for its low taxation and crime levels, high-quality infrastructure, reliable and accessible utility provision and smooth bureaucratic mechanisms. “The major risks to investors stem from labour pool limitations, and decreasing utility subsidies. In particular, pressure from the recent slump in global oil prices are impacting the Omani investment environment negatively in the short term, but may galvanise further diversification away from hydrocarbon production in the future.
Oman consequently secures 43th position out of 201 countries globally in the BMI Operational Risk Index with a score of 62.4 out of 100. This makes it the fourth most attractive country out of 18 nations in the MENA region,” says the report. Risks to investors and businesses in Oman stem from the education system, policy of Omanisation and the small population size, which limit the accessibility of employers to high quality personnel. Conversely, through high urbanisation, life expectancy and strong migration rates, Oman performs well in terms of the composition of its labour pools. Despite smooth and efficient bureaucracy and a globally competitive taxation system, Oman performs poorly in terms of investment opportunities, largely owing to the lack of diversity in its economic offerings.
With a heavy reliance on hydrocarbon exports, the Sultanate is striving, like most in the region, to develop alternative strings to its economic bow, with limited success to date. This is further compounded by limited accessibility to foreign investors to the lucrative upstream oil sector. Nevertheless, Oman offers reasonable trade openness with a diverse spread of trading partners mitigating risks of changes in demand.
With a complete lack of rail capability and low road density across the country’s relatively sparse geography, Oman’s major airports and seaports are insufficient to make the Sultanate an outperformer for this indicator. Nonetheless, Oman boasts a stronger performance on its utilities network and trade process, offering some of the cheapest utilities and fuel rates in the world.
“Oman has also made significant efforts in reducing red tape for importers and exporters, resulting in lower costs of trading. Over the coming years, we will see room for improvement as the government continues to invest in the infrastructure network, which will reduce risks of supply chain disruptions,” the report said.
Crime and security: Despite increasing turbulence in its neighbourhood, Oman benefits from an extremely strong and secure operating environment, mitigating the costs of crime and insecurity to businesses, investors, and employers. With a well-trained and equipped police force, counter-terrorism capability, and military, Oman is relatively well-secured from crime and armed threat. Similarly, increasing capabilities in the cybersecurity and financial security fields are decreasing Oman’s susceptibility to sophisticated crimes.
Internet: The report predicts migration to 3G/4G mobile subscriptions rise from 3.73 million to 5.07 million by 2020 and fibre connections will facilitate uptake of high-value converged services. Subscriptions will rise to 2.90 million in 2020.
Retail: Household retail spending is expected to increase from $16,961 per household in 2016 to $21,208 in 2020. Regional retail players will continue to expand to Oman as their domestic markets, with UAE and Qatar becoming increasingly saturated.