Oman Manufacturing 2040: A cluster strategy

Manufacturing is one of the key pillars of Oman’s economic diversification and long-term development. Under Oman’s Manufacturing Strategy 2040, the ambition goes beyond expanding existing factories or increasing production capacity. The strategy seeks to transform the structure of the manufacturing sector by creating new industries, developing advanced production capabilities, attracting technology and knowledge, and integrating Omani companies into regional and global value chains. In this context, the New Firm and Knowledge-Driven Industrial Cluster Creation Programme represents the first major programme of the Manufacturing Strategy and provides an important framework for developing the next generation of Omani industries.
The fundamental premise of the programme is that industrial development cannot be achieved simply by establishing individual factories. A competitive industry requires an integrated environment that brings together investment, finance, skilled human capital, technology, infrastructure, suppliers, markets, research, innovation and appropriate government policies. The programme therefore adopts a broader approach, focusing on creating the conditions necessary for new firms and industrial clusters to emerge, grow and become internationally competitive.
One of the programme’s main priorities is to invest in new priority firms and high-technology industrial clusters. This creates an opportunity for Oman to move beyond traditional manufacturing activities and develop industries with greater potential for value addition, technology transfer, productivity growth and exports. Emerging areas such as pharmaceuticals and medical equipment, food processing, renewable energy technologies, advanced electrical and mechanical equipment, specialised chemicals, transport manufacturing (including ships, vehicles and buses), recycling and other knowledge-intensive activities offer significant opportunities to develop new industrial capabilities in the Sultanate of Oman.
However, attracting investment alone is not sufficient to establish sustainable industries. New industries require appropriate packages of incentives and regulatory measures that reflect their specific characteristics and stages of development. The programme therefore emphasises the creation of an enabling investment and regulatory environment capable of attracting both domestic and international investors while encouraging long-term industrial development.
Advanced manufacturing requires engineers, technicians, specialists, managers and workers with the technical and digital skills necessary to operate increasingly sophisticated production systems. Strengthening education and technical and vocational education and training (TVET) is therefore central to the success of new industrial clusters. The objective should not be limited to providing workers for new factories; it should also focus on building national capabilities that enable Oman to progressively move from technology adoption to technology absorption, innovation and, ultimately, the development of new technologies and products.
The programme also recognises the importance of attracting and retaining specialised skills in emerging industries. Appropriate incentives for skilled workers in new industries can help companies access the expertise they need during the early stages of development while simultaneously creating opportunities for knowledge transfer and the development of national talent.
Public procurement can also serve as an important instrument for supporting the emergence of new industries. Government demand can provide an initial market for innovative products manufactured in Oman, allowing new companies to build production capacity, improve product quality, achieve economies of scale and demonstrate their competitiveness. When appropriately designed, public procurement can therefore contribute not only to meeting government demand but also to supporting industrial development and innovation.
Trade measures represent another component of the programme, particularly during the early stages of developing emerging industries. New firms may initially face strong competition from established international producers with greater economies of scale and longer market experience. Appropriate and carefully designed trade measures can help emerging industries develop their capabilities as they work towards achieving international competitiveness.
Perhaps one of the most important aspects of the programme is the development of industrial ecosystems that facilitate information exchange, knowledge sharing, learning spillovers and skills development. Modern industrial competitiveness increasingly depends on the relationships between companies, universities, research institutions, financial institutions, training providers and government entities. Strong connections among these stakeholders can accelerate technology transfer, encourage innovation, improve supplier capabilities and strengthen the overall competitiveness of industrial clusters.
This approach is particularly relevant to Oman’s small and medium-sized enterprises (SMEs). SMEs should not be viewed merely as businesses requiring financial or technical support; they can become an integral part of the supply chains and industrial ecosystems surrounding major manufacturing investments. By connecting SMEs with anchor companies and emerging industrial clusters, Oman can create opportunities for local supplier development, increase domestic value addition and enable smaller companies to participate in regional and global value chains.
Access to investment and finance is equally important. Many new and high-technology industries require significant initial investment, have long development periods and involve higher levels of technological and commercial risk. Ensuring the availability of appropriate financing mechanisms can therefore determine whether promising industrial opportunities are successfully transformed into commercially viable businesses.
The programme also recognises that each industrial cluster has its own characteristics and requirements. A pharmaceutical cluster, for example, requires specialised laboratories, regulatory capabilities, skilled professionals and quality infrastructure, whereas a renewable energy manufacturing cluster may require different technologies, suppliers, skills and market conditions. This makes cluster-specific interventions particularly important and highlights the need for industrial policies to remain sufficiently flexible to respond to the requirements of individual industries.
Ultimately, the ‘New Firm and Knowledge-Driven Industrial Cluster Creation Programme’ represents a strategic shift from focusing primarily on individual investment projects towards building comprehensive industrial capabilities and integrated ecosystems. The objective is not simply to establish more factories, but to create industries that generate knowledge, develop local suppliers, transfer technology, create skilled employment, increase domestic value addition and compete in international markets. In this sense, the first programme of Oman’s Manufacturing Strategy 2040 provides a foundation for building a new generation of manufacturing industries capable of contributing to a more diversified, productive, innovative and globally competitive Omani economy.