Oman has progressed well during the last four decades, as demonstrated by local and international indicators such as gross domestic product (GDP), growth per capital income and social indicators such as human development and female empowerment. Furthermore, Oman has invested wisely in upgrading its infrastructures including roads, ports, and airport network. However, Oman has had limited success in diversifying its economy, boosting the private sector, utilizing natural resources and capitalizing on its strategic location.
Vision 2040 is working towards change and development, centered on local participation. The vision relies on investment, production and export, built on our achievements, the readiness of infrastructure, human resources, and the availability of natural resources. It is thoroughly and precisely formulated using input from public discussion, dialogue and participation of the multiple social groups and incorporates present expertise as well as future-oriented lessons from scenario development and foresight exercises. The vision’s formulation also took into account the national priorities set by Oman Vision 2040 committees, international reports and indicators in relation to the themes and outputs of the Vision 2040 office, the National Program for the Promotion of Economic Diversification (Tanfeedh), Oman Vision 2020 committee outcomes, strategic studies, reports, lessons and achievements, United Nations Sustainable Development Goals 2030, Sectoral Strategies, the National Strategy for Spatial Development and the Ninth Five-Year Development Plan.
Vision 2040 revolves around four main pillars: social development, economic development, environment and governance. Integrating these pillars is a new ‘social contract’, where the main role of the state is to support, rather than compete with, the private sector. The private sector will act as the main engine of growth and employment. Other sectors in society have an explicit role to play. These include households and non-profit, non-government organizations (NGOs). All sectoral strategies will operate within the framework of Vision 2040. This will ensure consistency and address the trade-offs between the visions’ aspirations and the country’s overall resources. The government, private sector, households and NGOs – have a clear and complementary role to play in both the implementation (production of goods and services) and financing of the vision’s action plan. In doing so, a paradigm shift will take place at three levels: production, financing and cost bearing. Until now, the government has largely assumed control of the three roles. The private sector has been relying directly or indirectly on government funding and households rely on the government to cover costs. At the production and financing level, the private sector is expected to become the main entity. At the cost-bearing level, the household sector is expected to increasingly share the social cost with the government. Thus, the paradigm shift is of sharing responsibilities.
Major issues facing the business environment include lack of economic leadership, government size, the public administration’s low performance and the need to improve the relationship between the state, business and society. Furthermore, Oman’s economy is mainly dependent on hydrocarbon sales, whilst domestic expenditure and demand are met mainly through import of goods and services, which is unsustainable and calls for a shift to non-oil industry, such as factories and farms, for the long term and self-sufficiency. Despite investing in its infrastructure for decades, Oman’s ROI has not reached potential.
The vision’s aims align with national priorities developed during its preparation. The Omani business cycle for instance operates in parallel with hydrocarbon sales, leaving Oman vulnerable to price shocks. Vision 2040 aims to reinforce the cycle by enhancing the production of goods and services, export-oriented policies and FDI, while strengthening all links within the economy. This also includes intensifying the use of financial, monetary, social, and trade policies, amongst others. The vision also aims improve the labor market, which is heavily reliant on low-skilled labour. Improvements include attracting global talent and creating incentives to work and stay in Oman.
In business and finance, the vision encourages the development of SMEs to enable growth in the private sector. Exposing the sector to international banks will enable diversity to supply consumers with financial services and creativity thus attracting foreign investment. Furthermore redefining the relationship between the state, business and society will provide a good business environment and help the private sector grow. Society needs to be aware of the challenges and changes in order to increase productivity, support the private sector, create a culture of saving and investment and have a more considerate and efficient with the use of energy, water and foods. NGOs must also play a more active role in this.
Finally yet importantly, the vision also inspires Omanis to become more entrepreneurial, thus encouraging our multi-cultural society to see the myriad of opportunities in Oman.
Dr Yousuf Hamed al Balushi
Economist at Smart Investment Gateway