The Sultanate of Oman is among the top destinations for China's overseas direct investment. This marks a significant development in the economic relationship between the two countries and bodes well for Oman's economic growth.
China's overseas direct investment (ODI) has been increasing rapidly in recent years, with the country's outward investment reaching $40.47 billion in Q1 2023, an increase of 18% compared to the same period last year. In particular, non-financial direct investment reached $31.54 billion, an increase of 17.2%, while China’s ODI in countries along the Belt and Road reached $5.76 billion, an increase of 9.5% on an annualised basis, according to Ernst & Young’s report titled 'China’s Foreign Investment Survey Q1 2023.'
Asia is the most popular ODI destination, with both deal value and volume ranking, with four of the top ten top-investment countries in the world come from Asian region, including Oman, Japan, South Korea and Vietnam. These four countries collectively account for 87% of China’s total investment value in Asia. According to the report, China's investment in Oman reached $193 million during the Q1 2023.
The growth of China's investment in Oman is also a sign of the strong economic ties between the two countries. China is Oman's largest trading partner, with bilateral trade between the two countries reaching $32 billion in 2021. Chinese imports from Oman increased 18.5 per cent to 44.082 million tonnes in 2021.
In 2022, trade exchange during the first seven months of the year totalled $20.5 billion in value, representing an increase of 40 per cent over the corresponding period of 2021.
One of the biggest areas of investment has been in the energy sector. China has been investing heavily in Oman's oil and gas industry, with Chinese companies taking stakes in a number of major oil and gas projects in the country. These investments have helped to boost Oman's energy sector and have contributed to the country's economic growth.
In addition to the energy sector, China has also been investing in Oman's infrastructure. Chinese companies have been involved in a number of major infrastructure projects in the country, including the construction of a new airport and the development of a new port. These projects have helped to improve Oman's transportation infrastructure and have made the country more attractive to investors.
In 2019, the State Grid Corporation of China purchased a 49% share in the Oman Electricity Transmission Company, the Sultanate of Oman's first significant privatisation of its kind.
Additionally, the Asian Infrastructure Investment Bank (AIIB) has grown to be a crucial source of finance for Oman's projects; in 2016, the Bank authorized loans totaling $36 million and $265 million for the nation's first railway system and maritime infrastructure at Duqm Port, respectively.
In March 2020, AIIB committed $60 million in non-sovereign investment for Oman's Ibri II 500MW Solar PV Independent Power Plant Project. In 2017, AIIB invested $239 million in the national fibre internet network.
The growth of China's investment is a positive development that bodes well for the Oman’s economic future. China's investment is helping to boost Oman's economic growth and is creating new opportunities for businesses in the country. It's also helping to diversify Oman's economy and reduce the country's dependence on oil and gas.
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