Globally, manufacturing has been helping drive economic growth and raising living standards for almost three centuries. And today it continues to grow, accounting for approximately 16% of global GDP and 14% of employment.
The manufacturing sector has many characteristics, making it a key determinant of economic growth. It is the fastest-growing sector, as compared to other economic sectors. Its productivity is higher than that of the agricultural and service sectors. The possibility of specialization is greater in the manufacturing sector. Moreover, it has forward and backward linkages with other sectors. Given industrial products are tradable and have access to international markets, the manufacturing sector has better opportunities for increasing demand.
In Oman, manufacturing started in 1975 and currently the sector employs 61,000+ people and exports to 140 countries. In 2021, Omani non-oil exports to other countries jumped by 122.7 per cent to $7.15bn against $3.21bn in 2020, which shows the impact of Covid-19 in the sector in 2020, but also it shows the importance of this sector in the economy of Oman.
The Sultanate of Oman’s manufacturing industry has been growing steadily since the 1970s. The share of the manufacturing industry increased from 0.8 per cent of GDP in 1970 to around 3 per cent in 1999 and again to around 9.6 per cent in 2020. The country’s manufacturing industry has witnessed ups and downs, but since the advent of the new millennium, manufacturing has become a key driver of the Omani economy.
Manufacturing has been central to Oman’s economy and is key to the creation and retention of good-paying jobs, and providing a solid standard of living for Omani families. A strong manufacturing industry is fundamental to Oman’s continued prosperity and vital to boosting the Sultanate of Oman’s non-oil exports.
The government has been working hard to establish a new place-based vision for Oman’s economic growth and prosperity, integrating the work of several public sector agencies to promote sustainability, inward investment, and economic competitiveness.
The government clearly recognises that manufacturing’s success and ability to create jobs are dependent on having a skilled, multi-lingual, internationally focused workforce, a modern infrastructure to transport Oman-made goods, a commitment to ongoing improvement through energy efficiency and waste reduction and a stable supply of appropriate manufacturing workspace. Moreover, critical to all these factors are public-private partnerships that create an increasingly competitive and attractive Omani manufacturing sector.
As for Oman Vision 2040, 'Manufacturing for Wellbeing' sets the vision for the manufacturing sector, where knowledge-driven industries focused on health and environmental clusters produce goods that will enhance the welfare of peoples around the world and will sustain diversification, innovation, and high-tech development in the Sultanate of Oman.
This will be supported by an expanding, modern capital-intensive industry that is heavily involved in the emerging Fourth Industrial Revolution and hence continuously adopts the most advanced production and communication technologies and the accompanying cutting-edge sets of skills. Natural resource-based industries will gradually evolve away from their formerly dominant role to one of supporting other industries and sectors. The manufacturing sector of 2040 will be able to compete globally and will thus not only serve the local Omani or GCC markets but the entire world, very much like Singapore or Ireland currently do.
The availability of a good number of projects including refinery, petrochemical, ports, airport, etc sets the foundation of having a successful manufacturing cluster that includes machinery, transportation, and equipment; chemicals and plastics; metals; and electrical and electronics. The machinery, transportation, and equipment sector has the highest number of high-potential products.
Some examples of potential manufacturing and assembly projects include but are not limited to the following: aluminum extrusion for construction, 3D printing centre, manufacturing electric vehicle batteries, fabrication of fishing fleet, assembly of domestic appliances, manufacture of food products and medical supplies, ACs, refrigerators, washing machines and cooking machines, assembly of batteries and assembly of tyres.
To conclude, Oman’s manufacturing sector has demonstrated growth over the past five decades and is moving forward with confidence. The Omani domestic market remains underdeveloped and over 90% of its goods and services are currently met through imports, which yet offers additional lucrative manufacturing opportunities in the local market. The current focus is to encourage local manufacturing through infrastructure support, The Export Credit Guarantee Agency, tax benefits, entrepreneurship support, and attracting FDI that can fulfill the local demand and export. Oman has all that it takes to position the manufacturing sector as an engine of growth.
In this series, the author, an Omani economic planning strategist, and consultant —discusses the distinctive and advantageous geopolitical, economic, legal, and regulatory characteristics that underpin Oman’s investment appear.
Dr Yousuf Hamed al Balushi
yousufh@omaninvestgateway.com
www.omaninvestgateway.com
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