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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Opportunity Oman: From resource extraction to value creation

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Oman stands at a pivotal moment in its economic journey, where the strategic transformation of its natural resources could revolutionize its economic landscape. While the nation has made significant strides in sectors like oil and gas, which contributes 30% to GDP and 68% to 85% of government revenue, a vast reservoir of untapped opportunities awaits exploration and development.


The success story of Vale's $1.35 billion iron ore pelletising plant in Sohar demonstrates the transformative power of value addition. By processing raw iron ore locally, the facility has created hundreds of direct jobs and fostered a network of downstream industries. Similarly, the petrochemical sector's evolution, exemplified by the OQ8 refinery in Duqm, showcases how value addition can transform raw exports into high-value products.


However, current practices reveal missed opportunities.


Oman, the world's largest gypsum exporter, ships this mineral primarily in raw form while importing finished construction materials at premium prices. The fisheries sector, despite a 3, 165km coastline, exports unprocessed fish while importing value-added seafood products. This pattern represents not just lost economic value but exported job opportunities.


The potential for transformation is substantial. In the minerals sector alone, shifting from raw gypsum exports ($500 million) to processed construction materials could generate $2 billion in revenue. The fisheries sector could triple its current $700 million export value through processing and aquaculture development. The renewable energy sector promises 13, 000 new jobs by 2030 through green hydrogen production and associated industries.


Strategic opportunities exist across sectors. The petrochemical industry could expand beyond basic refining to produce specialized chemicals and plastics. The mining sector could establish processing facilities for copper, chromite, and rare earth elements. The agricultural sector could develop food processing clusters, turning raw produce into high-value products for export.


Government initiatives like Oman Vision 2040 and the In-Country Value (ICV) program provide a foundation for this transformation. However, accelerated progress requires focused investment in infrastructure, technology adoption, and skill development. The establishment of specialized industrial parks, enhanced port facilities, and research centers could catalyze this transformation.


Consider the ceramics industry's success in Sohar, where processing local clay instead of exporting it raw created 200 direct jobs and 600 indirect positions. This model could be replicated across sectors, creating employment cascades through manufacturing, logistics, maintenance, and support services.


The path forward requires strategic intervention in three key areas. First, infrastructure development must focus on creating integrated industrial clusters that facilitate value addition. Second, human capital development through technical training programs and industry-academia partnerships must prepare the workforce for higher-value jobs. Third, policy frameworks must incentivize value-added manufacturing while strategically managing raw material exports.


Success stories from countries like Malaysia demonstrate the potential impact. Malaysia transformed from a raw material exporter to a manufacturing hub, creating millions of jobs and sustainable economic growth. Oman, with its strategic location, established infrastructure, and abundant resources, is well-positioned to achieve similar success.


Oman faces a defining moment. The nation can continue exporting its abundant natural resources in raw form, or it can embrace a new path – one where value creation fuels economic growth, job creation, and long-term prosperity. This transformation demands a shift in mindset, from mere resource extraction to a focus on adding value, developing downstream and upstream industries, and strategically developing key sectors like green energy, agriculture, and fisheries.


This strategic shift will unlock Oman's immense potential for economic growth and job creation. By processing raw materials into higher-value products, Oman can capture a larger share of the global market, generate increased revenue, and create new employment opportunities. The development of downstream and upstream industries will further enhance economic diversification, reducing reliance on raw material exports and building a more resilient economy.


This transition will require a concerted effort from all stakeholders. The government must continue to play a proactive role, investing in infrastructure, technology, and human capital. The private sector must embrace innovation and invest in value-added manufacturing. International partners can provide expertise and investment to support Oman's transformation.


The path to value creation is interconnected and mutually reinforcing. Developing downstream industries creates demand for processed raw materials, which in turn drives the growth of upstream industries and value-added processing. Similarly, the growth of the green energy sector can support the decarbonization of other sectors, such as transportation and industry, while also creating new economic opportunities.


However, this transition also presents potential challenges. Oman must prioritize sustainable practices, invest in research and development, and foster strong partnerships with international organizations and the private sector to mitigate risks related to investment needs, workforce development, and environmental impacts.


By embracing this path of economic diversification and sustainable development, Oman can secure a prosperous and sustainable future for its people, maximizing the benefits of its natural resources while minimizing its environmental impact.


The author is founder and CEO - Smart Investment Gateway, economists, board adviser & business transformation mentor


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