The impact of local content on Oman’s economic development

Local content is much broader than purchasing a greater share of goods and services from the local market. It has the potential to develop different segments of the economy, including the labor market, industry, investment, research and innovation, and the national supply chain.
Local content focuses on maximising the value added in the national economy from government expenditures, large projects and investments. It is about employing, contracting and procuring from Omanis, SMEs, and the local industry. It is also about promoting and developing other functions such as research and training in the national industry.
CREATING EMPLOYMENT AND TALENT DEVELOPMENT
Of all the different aspects of local content, employment is the easiest to measure. The focus, however, should be on the quality and value added by employment.
One way to incentivise employment during the implementation of mega projects is for project companies to include training and capacity development in their contracts with subcontracting companies and service providers. Other employment-related targets should also be pursued, such as the establishment of graduate training programs and other structured talent development programmes.
Beyond employment and talent development, the success of local content should be assessed based on the value added by employees to the national economy.
Local content can assist companies to develop capabilities to compete for awards beyond a particular project. Local content policies can facilitate the development of firms to participate in the supply chain and become better positioned to compete for awards. Contract awards alone are not sufficient to develop local content. A combination of finance, technology and mentoring should be part of local content policies. Local content policies enhance supply chain capabilities.
Also, the focus on local manufacturing raises the potential for forward and backward integration in the supply chain. With product demand, local manufacture of products currently imported is economically viable. Local manufacture of imported products strengthens the country’s economic base and lessens the economy’s reliance on imported products.
Local content policies strengthen the economy by attracting investment to establish local manufacturing. Investment policies also play a key role in facilitating the economic development that local content policies aim to achieve. The aim of integration of policies should be to create strategic economic sectors and strengthen the economy through various means. This includes developing new sectors such as green energy and advanced manufacturing.
FROM EXPENDITURE TO IMPACT
The next phase of local content development in Oman must move the measurement of impact to the center of its activities. The key question must become “What impact did our activities create?” instead of “How much did we spend?”
There are multiple ways to answer the latter question. Local industries, businesses, and companies must assess the number of jobs created, small and medium enterprises (SMEs) established, local manufacturing, imports substitution, investment and other economic and developmental activities.
Additionally, local content can integrate large scale economic activities and help achieve diversification of the economy and its growth in Oman.
Accomplishing local content is not about limiting the flow of capital. Channeling resources to strategic areas of the economy helps build competitive edges. Ultimately, this can advance the position of the economy and enhance value addition, processing, and exports.
The real impact of local content will therefore be measured not simply by procurement percentages, but by the businesses created, skills developed, industries established and economic opportunities generated for future generations.