Services sector fuels Oman’s non-oil GDP growth

MUSCAT, AUG 12 - The growth of the non-hydrocarbon sector accelerated to 3.9 per cent in 2017, up from 2.6 per cent during 2016, according to the Central Bank of Oman (CBO). Contributing to non-oil GDP growth were service-related activities. Although the share of services activities in non-petroleum value addition continued to be the highest, its contribution to incremental value addition declined while that of non-petroleum industrial activities increased in 2017, mainly due to an upsurge in manufacturing activities, the apex bank said.

“The non-petroleum sector continued to attract the attention of policy authorities, reflecting the importance of this sector for economic diversification and sustainable growth in the economy. The concerned authorities are pushing non-petroleum activities through improving the investment climate, facilitating trade with countries in GCC region and outside, promoting tourism, and so on,” the Central Bank stated in its 2017 Annual Report.

The World Bank’s Ease of Doing Business report ranked Oman 3rd among the GCC countries and 71st globally. The various initiatives implemented under the 9th Development Plan, which has been drawn from the Vision 2020, made rapid progress in 2017 with a tangible contribution to the economic diversification in the economy.

“The Vision 2020 aims at steering the Sultanate towards a more diversified and stable economy by creating favourable economic conditions. The government intends to use hydrocarbon revenues to achieve economic diversification, but at the same time for providing basic public services and improving human capital. Non-petroleum activities made good progress in the last few years due to diversification efforts and various other policy measures undertaken to nurture the private-sector led growth in the economy. The rebound in petroleum activities also contributed to the non-petroleum activities, reflecting strong inter-linkages,” a report by the CBO said.

The National Programme for Enhancing Economic Diversification (Tanfeedh), an action-oriented programme formulated to bolster economic activities in non-oil sector to achieve the goals of the 9th Development Plan, continued to concentrate on five sectors: (i) manufacturing, (ii) tourism, (iii) logistics, (iv) fisheries and (v) mining for identifying and implementing various projects and initiatives with a monitorable action plan. Besides, the finance and labour act as facilitators for implementing policy and programmes in the aforementioned sectors.

Under the Tanfeedh plan, a total of 121 projects and initiatives would be taken up, which are expected to generate significant investment opportunities with the private sector bringing in the major share. It is anticipated that around 30,000 jobs for Omanis would be created through this by 2020. Furthermore, the Vision 2040 also continues to foster economic diversification to develop a more diversified, globally integrated and competitive economy for ensuring a sustainable growth over the long-run with increased participation of the private sector.

The public-private partnership (PPP) also focuses on promoting private-sector-led diversification and growth in the economy under the 9th Development Plan, which targets projects worth RO 2.52 billion to be delivered by 2020 through PPP.

According to the CBO, the government is contemplating setting up a dedicated PPP authority for execution and monitoring of infrastructure and other civil projects, which would pave the way for enhanced participation of private sector in the Sultanate. Furthermore, the participation of private sector would be increased through privatisation of government assets, aiming at improving efficiency and productivity, besides helping in generating non-oil non-tax receipts for financing fiscal deficit.

The enactment of a Foreign Investment Law and Bankruptcy Law are under active consideration, which would encourage domestic and foreign investors greatly and promote diversification in the Sultanate, the Central Bank said.

The Capital Market Authority (CMA) recently issued the regulatory framework for introduction and trading of real estate investment trusts (REITs) on the Muscat Securities Market, which would boost private investment in the real state sector and contribute to non-petroleum activities.