Strengthening the Omani economy through local content development

The Sultanate of Oman is using local content more often as it strives towards the goals outlined in Oman Vision 2040. While local content discussions mainly revolve around manufacturing and buying local goods, a significant opportunity involves improving local services.
Local services include, but are not limited to, engineering, maintenance, logistics, transportation, information technology, consulting, training, facility management, professional services and tourism, as well as construction support, among many others. Developing such local services offers Oman the opportunity to retain a larger portion of its expenditure rather than having it flow out of the country.
This broader approach is reflected in the National Local Content Policy, which strives to retain the highest level of economic value from expenditure by supporting local suppliers, developing Omani capabilities, strengthening supply chains and creating quality jobs.
From Local Purchases to Local Capabilities
Local content should not just be about local purchases. The more important question should be, to what extent is sustainable capability created in Oman?
One example would be if an international service was purchased from a local company. Most of the technical work may still be done out of Oman. While the business may have been transacted locally, the actual economic value retained in the country may still be low.
To develop a more robust local content policy, the service delivery location, the service provider, the employee location, the participation of Omani professionals, the extent of the knowledge transferred and the integration of local small and medium enterprises should be taken into consideration.
This repositions local content from a procurement obligation to a mandated economic development activity.
Creating Opportunities for Omani SMEs
Local services present perhaps the easiest opportunity for SMEs to engage with major projects. Not every SME will be in the position to establish a factory requiring a major capital investment. However, several SMEs could provide specialised services in areas like technical maintenance, digital solutions, logistics, training, inspections, engineering support and business services.
Clear signs are visible that this policy is working. According to the Oman Vision 2040 report, the value of government contracts awarded to SMEs rose from RO 53.5 million in 2023 to RO 84.5 million in 2024. In addition, the number of government tenders and procurement awards to SMEs climbed from 1,783 to 3,431 during this period.
This clearly shows that procurement can be useful in advancing the goals of enterprise development beyond the mere procurement of goods and services.
Developing Omani Professional Capabilities
The professional requirements stimulated by the localisation of services create an important opportunity to build the appropriate high-level professional capabilities Oman needs.
It is therefore important to ensure that large contracts identify services that can be progressively performed by Omani professionals and/or companies. Where local capability is lacking, contractors would need to prepare and pursue a formal plan of capability development encompassing training, mentoring, certification, partnering with local companies and a plan for the transfer of required technology.
Oman's local content regulations focus on national human-resource development, employment creation, local sourcing and Small and Medium Enterprises (SME) development within related government contracts (PTLC).
This focus over time will help Oman graduate from localising basic services to engaging in more complex activities of engineering design, digital technologies, research and development, advanced consulting and other technical and specialised services.
Measuring Local Value
This next level approach is about measuring the real value of local services. Indicators could be set such as expenditures with local service providers, SMEs, Omani employment with the provision of opportunities for professional development, delivery of local services with opportunities for knowledge transfer and the development of new capacities.
Digitisation helps this approach. The local content requirement as part of the Isnad e-Tendering system is allowing Oman to capture more detail on its spending and contractual commitments in terms of local content.
Eventually, local content must be able to answer the following question: what is the long-term value of each dirham spent in Oman?
Local services offer Oman a significant opportunity to build long term productive capacity from each dirham spent. Working to develop Small and Medium Enterprises (SMEs) through procurement will help develop local talent, create a local technology base and increase the nation’s capacity.
Local content will soon not only mean Manufactured in Oman. It should start to incorporate Designed in Oman, Delivered in Oman and Powered by Omani Capability.
Developing local capacity will support the growth of local businesses and the creation of more highly skilled jobs in Oman. This, in turn, will support Oman Vision 2040.