How multinationals raise Omani productivity

From the legacy of Port Sultan Qaboos in Muscat, once the beating heart of Oman’s maritime trade, to the emergence of SOHAR Port and Freezone, Al Duqm’s energy and hydrogen ambitions and Salalah’s logistics gateway, Oman’s economic geography has steadily evolved — always open to the world, always learning and always adapting.
This openness has been central to Oman’s story: not just in attracting capital, but in translating global partnerships into local advantage.
In this spirit, Oman’s recent surge in high-quality foreign direct investment (FDI) — with inflows jumping from $4.7 billion in 2023 to $8.7 billion in 2024 — marks more than just balance sheet growth. It represents a strategic shift in capability-building, where investment brings with it know-how, standards and access to global markets. These benefits often unfold quietly — not in GDP charts, but in upgraded workshops, better supplier routines and the CVs of skilled Omani engineers.
International research is conclusive: the most effective channel for raising local firm productivity is through “backward linkages” — when multinational firms procure inputs or services from local suppliers. This interaction forces upgrades. To win and retain MNC contracts, Omani firms must meet global benchmarks in quality, cost and delivery; and in doing so, they grow more competitive and climb higher in the value chain.
Oman already has the building blocks. In energy, the country’s In‑Country Value (ICV) programmes have deliberately pushed deeper local sourcing, skills and SME participation.
Petroleum Development Oman reports that in 2023 it retained roughly $2.5 billion in‑country (around 40% of its supply‑chain spend), including close to $900 million channelled to SMEs — practical proof that structured local linkages can scale. The national ICV approach, set out by PDO, is explicit: maximise local procurement, develop Omani suppliers; and upgrade people and firms for long‑term competitiveness.
Linkages are not abstract. Consider Vale Oman in Suhar: beyond large‑scale investment and exports, the company emphasises long‑term relationships with local suppliers in engineering, HR, maintenance and services — steady channels for process, quality and HSE standards to diffuse into the domestic ecosystem. And at the ecosystem level, SOHAR Port and Freezone’s “green alliance” brings OQ, Vale, Sohar Aluminium, Jindal Shadeed and others under shared sustainability and efficiency commitments — a living laboratory where Omani firms can see global practices up close and adapt them.
A second engine of productivity is labour mobility — people trained inside multinationals who move on to local firms or launch new ventures. Workers exposed to multinational standards transfer those skills when they switch employers or start firms, multiplying the initial investment’s impact. Oman’s Omanisation and skills policies can turn this into a flywheel: as more Omanis train inside foreign ventures, the domestic talent base deepens and circulates across sectors. The key is to make mobility easy and valuable — through professional certification pathways, recognition of prior learning and incentives for SMEs to hire MNC‑trained staff.
The third channel is demonstration (and competition) effects — learning by observing. When a multinational introduces stricter quality protocols, digitised maintenance, or end‑to‑end traceability, nearby firms see the bar rise and follow suit. Demonstration effects routinely expose local companies to new management techniques and export opportunities, nudging imitation and upgrade without a formal contract. This is especially potent in Oman’s industrial zones and free zones where co‑location compresses learning cycles.
Policy architecture matters. Oman’s Foreign Capital Investment Law (Royal Decree 50/2019) modernised the regime, enabling (with limited exceptions) 100% foreign ownership, clearer procedures and faster entry — important reasons the pipeline has strengthened. But the law is the start, not the finish. The quality of projects now arriving — particularly in renewables and green molecules — creates unusually rich spillover potential if we organise around it. Take green hydrogen.
Through Hydrom’s structured land auctions, Oman has awarded blocks to integrated wind/solar‑to‑hydrogen/ammonia developers and is preparing further rounds — an intentional way to anchor global technology and offtake relationships in Al Duqm and Dhofar. Recent outreach has highlighted opportunities for leading Korean and other international firms to participate in Round 3 — opening supplier and talent pathways that local firms can plug into. The point is not just megawatts or export cargoes; it is the codified standards, training modules and vendor requirements that, if localised, lift dozens of Omani SMEs.
What should we do next to convert FDI into measurable productivity gains?
1. Institutionalise supplier development where FDI lands. Make supplier‑readiness a standard clause in large approvals: shared audit tools, vendor bootcamps and co‑funded upgrades (QA/QC labs, ISO certification, digitised planning). Supplier linkages are the most direct route to spillovers; Oman can hard‑wire that into project MOUs.
2. Turn labour mobility into an asset. Create an “MNC Skills Passport” that documents competencies gained inside foreign ventures (maintenance, process control, EHS, lean).
Offer hiring incentives for SMEs that recruit passport holders; carve fast‑track visas for short expert secondments that mentor Omani teams on site.
3. Use ICV as a precision tool, not a quota. Keep rewarding real local value — tooling, design‑for‑manufacture, after‑sales engineering — rather than mere headcount. PDO’s results show what is possible when ICV focuses on capability as much as content.
4. Publish demonstration playbooks. Each strategic FDI (hydrogen, metals, logistics tech) should yield an open “standards pack” for local firms: required certifications, inspection routines, data templates and case studies of process improvements that met a multinational’s bar. This makes the demonstration effect visible and repeatable.
If Oman pursues these firm‑level levers with the same steadiness that has guided its diversification to date, the payoff will be cumulative: denser supply chains, better jobs for nationals and Omani SMEs that sell confidently into export markets.