Local Content: From corporate commitment to national economic value

Private-sector growth and participation should comprise the backbone of the government's endeavours to realise Oman Vision 2040. To achieve this goal, the private sector must assume a leading role in economic diversification, investment, employment and the development of national capabilities. In this regard, Local Content should not be perceived as a government contractual requirement. Employing Local Content should be seen as a core business strategy.
Local Content incorporates a range of opportunities including employment, the purchase of locally manufactured goods and services, investment in local production, SMEs and the creation of competitive national supply chains.
This strategy should be aligned with Oman Vision 2040 that seeks to develop a private sector that is self-reliant and capable of driving a modern and competitive economy. This Vision encourages greater collaboration between big and small enterprises, localisation, value addition to local resources and development of local capabilities.
Private sector companies should view Local Content as more than a legal requirement. It is an opportunity to enhance the local economy through the development of local industries and strengthen long-lasting relationships with customers and stakeholders.
Large procurement greatly influences the private sector. In the case of Oman, each purchasing decision positively affects the economy. Companies have the opportunity to explore if certain goods and services can be sourced competitively from local manufacturers, SMEs, entrepreneurs, or service providers.
The energy sector is a good example of the positive effects of carefully structured Local Content programmes. Ministry of Energy and Minerals statistics demonstrate that Local Content programmes have greatly impacted opportunities for national companies and SMEs. For the year 2024, the reported Local Content rate reached 31.9 per cent, while SME expenditure as a proportion of total sector procurement reached 17.2 per cent. These statistics show procurement can have an impact on economic development, rather than just being an operational responsibility.
However, procurement is only one aspect of the Local Content equation. The focus should be on local people. Private sector companies should refrain from imposing arbitrary numerical Omanisation quotas. Rather, companies should implement a strategy to develop local Omani talent capable of technical, management, specialist and leadership roles. This can be done through a variety of strategies aimed at developing local talent such as graduate development and apprenticeship programmes, as well as active collaboration with universities and vocational training institutions.
The development of SMEs is also important. Rather than continuing to see SMEs as sub-contractors, large companies should be more committed to the advancement and integration of SMEs in sustainable supply chains. Examples of such impactful corporate pledges could include supplier development programming, technical mentoring, simplified procurement practices, opportunities to secure longer supply contracts, innovation challenges and partnerships with international suppliers.
To implement measurable change, most of the major private companies in Oman should establish a Corporate Local Content Strategy containing targets and KPIs on local procurement, spending on SMEs, Omanisation, talent development, local manufacturing, innovation, technological transfers and the development of suppliers. The strategy should include the measurement of the targets and communication to management on their progress.
The goal then moves from Local Content compliance to Local Content competitiveness. Local Content is the development and cultivation of local talent, local suppliers, local technologies and local products. Companies that achieve this will positively impact national priorities, however, more importantly, they will improve the stability and profitability of their businesses.
The key to understanding Local Content is knowing that for every Rial spent, how much of that value stays in the country.
Should the private sector begin asking this question and integrating Local Content into their business decisions surrounding spending, talent acquisition, sourcing and procurement, Local Content will have the ability to create jobs and stimulate the SME sector and industry through the innovation of local talent and spending, all of which creates sustainable value for the country. In other words, this is the optimum private-sector leadership that Oman needs.