Overcoming industrial challenges in Oman

Over the past few years, Oman’s industrial sector has succeeded in attracting substantial investments while maintaining a steady growth trajectory. Foreign direct investment (FDI) in the sector has reached approximately RO 31 billion (around $80 billion), highlighting a significant transformation in the industry's ability to attract capital and support the country's sustainable economic diversification agenda. This was recently emphasised by Ibtisam al Farooji, Under-Secretary of Investment Promotion at the Ministry of Commerce, Industry and Investment Promotion.
Today, the industrial sector stands at the forefront of Oman’s economic diversification efforts. Its contribution to total investment has increased from 6% to 9.5%, making it one of the key pillars supporting the national economy's resilience against global economic shocks.
Despite the remarkable achievements of the Omani industrial sector in supporting the national economy and boosting non-oil exports, industrialists and investors continue to highlight a number of challenges that affect the sector’s growth pace and competitiveness.
Among the most significant challenges is the rising cost of energy and utilities. Heavy industries such as cement, metals, and petrochemicals remain highly dependent on energy consumption. With fluctuations in global fuel and electricity prices, production costs increase, reducing the competitiveness of some manufacturing facilities.
Another challenge relates to the relatively limited size of the domestic market compared to larger regional economies. This necessitates a stronger focus on exports to achieve economies of scale and increase production volumes. At the same time, Omani products face intense competition from imported goods originating from countries with larger markets, lower production costs, or greater government support.
Also, there is a growing need to open new markets, expand trade agreements, and facilitate export procedures through several seaports located outside the Strait of Hormuz. In addition, the industrial sector requires stronger technical and specialised skills and smart technologies, and is a need to strengthen the workforce with highly qualified engineers and technicians.
Access to financing is another major concern since industrial projects often require substantial capital investments and long payback periods. Investors therefore call for more concessional financial incentives, and supportive funding mechanisms for new industrial ventures. Such support would enable companies to accelerate technological transformation, foster innovation, modernise production lines, and embrace Industry technologies.
Today, global supply chains continue to face disruptions due to rising shipping, insurance, and logistics costs. These challenges affect the availability and pricing of raw materials, particularly for factories that rely heavily on imported inputs.
To overcome these challenges, Oman’s industrial sector should continue strengthening export-oriented industries, especially those where the Sultanate enjoys competitive advantages, including petrochemicals, fertilisers, metals, food industries, and emerging green hydrogen-related industries.
It is equally important to expand education, training, and workforce development programmes, particularly for graduates seeking careers in industrial engineering, automation, robotics, artificial intelligence, and quality management. Continued support for industrial innovation remains essential, alongside improving financing mechanisms through a stronger role for commercial banks and government investment funds in supporting promising industrial projects.
Furthermore, the continued development of industrial zones, promotion of local content policies, and greater reliance by government entities and major corporations on nationally produced goods will contribute significantly to industrial growth.
By addressing these challenges through strategic planning, investment in human capital, technological advancement, and expanded market access, Oman can further strengthen its industrial sector and enhance its role as a key driver of sustainable economic growth and diversification.