Oman has had an incredible 50 years filled with many great milestones. Its citizens and general population have reaped the benefits of its growth and security under the wise leadership of our late Sultan Qaboos bin Said al Said (May the Almighty rest his soul in peace) and His Majesty Sultan Haitham bin Tarik.
The journey has been filled with challenges and we have been able to navigate through them and make them into successes.
The first ten years were the defining years.
As we all know, the modern birth of Oman started in 1970, when the late Sultan assumed the throne. Oman became a member of United Nations and the Arab League.
The fruits of modern Oman were symbolised with the opening of Seeb Airport in 1973 and before that we had a basic airstrip in Ruwi.There have been many important milestones of progress. A few of them are indicated in the chart.
Our population and real GDP have grown to commendable levels on the back of a prosperous hydrocarbon industry. The five-year development plans have evolved over the different slices of ten years.
Albeit, the fundamentals of our socio-economic landscape are changing. Profit margins are shrinking, while a growing young population puts a strain on the private and public sectors. At this juncture, we need to be united and find ways to move forward in an unpredictable diverse world.
To this end, the government put in motion the Ninth 5-year Development Plan (2016 – 2020).
Mining, fisheries, tourism, logistics and manufacturing were identified as sectors for strategic and economic diversification.
At the outset, the criteria for the economic sectors encompassing diversification are four-fold: creation of job opportunities, developing a competitive business environment, supporting sustainable growth, and catalysing the development of other sectors.
Mining’s share of GDP is expected to grow to 0.5 per cent from 0.4 per cent.
The fisheries sector is expected to grow to 0.6 per cent of the GDP, from 0.5 per cent, with average annual growth of 7 per cent per annum and expected investment of RO 1.1 billon.
Tourism will increase to 3.3 per cent of the GDP, from 3 per cent. Investments in tourism are expected to increase to RO 1.6 billon for the period 2016 to 2020. According to the National Centre for Statistics (NSCI), tourism grew 4.9 per cent in 2019, from the previous year to RO 1.3 billion.
Transport & Logistics’ share of the GDP is expected to grow to 7 per cent from 6.2 per cent. The average growth is expected to be 5.4 per cent per annum, with total investment of RO 6.1 billion.
Manufacturing’s share of the GDP will grow to 11 per cent from 9.8 per cent, with total investment of RO 2.6 billion.
Additionally, the national diversification programme (Tanfeedh) involved the government and experts from the industry to carve out initiatives to diversify and sustain Oman’s economy with the aid of workshops and labs to find solutions.
It is very clear the government has worked very hard to diversify the economy away from hydrocarbons. Still, the hydrocarbon and energy industries are still a major component of our economy.
There is a clear focus and opportunity to increase gas production and renewables. This fits well with Oman’s commitment to control GHG emission growth by 2 per cent in 2020 – 2030, based on the UN Conference of Parties (COP19).
This will help avoid climate change impacts like coastal erosion, heat waves, water scarcity and their general impact on the ecosystem and biodiversity.
In 2020, we had an unprecedented situation of the COVID-19 pandemic, which brought the world economy to a grinding halt. Oman’s oil prices for January to September 2020 average $47.2 per barrel, compared to $64.6 in the same period in 2019.
The oil budget for 2020 is $58 per barrel, resulting in a sharp deficit. Oman’s fiscal balance during the last few years has been on a downward trend. The fiscal deficit in 2014 was RO 1.5 billion and it sharply increased to RO 17.6 billion in 2019.
Tawazun, the national fiscal balance programme, has the mandate to reduce the fiscal deficit within the next few years with efficiency measures and increase revenues from government companies.
Indeed, the government is doing a sterling job to reduce cost duplication, enhance cost optimisation, incentivise foreign direct investments and initiate other measures. This has resulted in Oman Investment Authority taking control of all government companies (except for PDO and a few others).
Also, some ministries were merged and enhanced, and new ones to take Oman into the future with confidence and resilience under the wise leadership of His Majesty Sultan Haitham bin Tarik.
In 2018, Oman was ranked 78th in “Ease of Doing Business in Oman”, up from 68th in 2019. Currently the Financial Committee of the Majlis Ash’shura is discussing the Tenth 5-Year Plan (2021 – 2025) on its objectives, as well as to realise the all-important 2040 Vision.
As we move forward, we need to keep the momentum going, to make the business environment favourable for companies to prosper, create more jobs, add value and create opportunities.
To this end, we may foresee more cleaner energy options, renewables, diversification initiatives and general investments coming into Oman with a win-win approach, where the government, public and international companies are all working together to support a sustainable future. (The writer has more than 20 years of experience in the oil, gas & investment sectors. He can be reached at firstname.lastname@example.org)
Mohammed al Riyami