Please share your views on the importance of commerce and industry for the future of Oman and the current state of the sector?
Over the last four decades the Sultanate of Oman has witnessed a comprehensive development, a Renaissance, as reflected in the high standard of living and welfare enjoyed by its citizens, the peace and security they enjoy and the remarkable civic and construction development.
The Commerce and Industry sectors have played a significant role in the Development Strategy of Oman and its sustainability. Those two sectors, have contributed to the economic and social development, particularly to employment opportunities for the citizens. In the field of commerce, a remarkable increase has been achieved in the volume of foreign trade and investments. Oman has opened its economy and succeeded in integrating with the world economy.
Accession to the World Trade Organization (WTO) was a major step on the path of openness towards international liberal tendencies. Within the Gulf Cooperation Council (GCC), the formation of the Gulf Common Market has opened new horizons for Oman in terms of growth, productivity, expansion of trade and investments and fostering integration with our neighbors.
As to the industry sector, satisfactory progress has been achieved in realizing the objectives set in the successive Development Plans. This progress is reflected in the figures of the sector contribution to the GDP, the increase in the number of industrial projects, as well as the number of created jobs. At present, the industrial policies lay emphasis on industries using local resources (e.g. minerals, fisheries and agricultural products), and export-oriented industries, which can benefit from Oman strategic geographical location e.g. assembly and re-export industries established in the free zones. The mega gas-based projects have been established along policies that lay emphasis to capital intensive, high-tech industries that also cater for human resources development and creation of jobs for the Omani citizens. Among the most important of such projects are the fertilizers project at Sur, the Sohar Refinery and the polypropylene, fertilizers, methanol, petrochemical products and ethylene industries at Sohar.
Manufacturing has continued to see growth despite the global recession. What are the fastest developing and most promising non-oil industries?
The Omani Government has realized that the challenge of creating jobs for its citizens can only be achieved within a thriving economy. Accordingly our economic strategies place emphasis on raising the level of national and foreign investments, the development of the non-oil sectors and the establishment of new industries.
Within the large and medium manufacturing industries, the fastest growing activities include: manufacturing of basic chemicals, fabricated metal products, furniture industry, food and beverages, plastic products industry, paper and paper products industry, refined and liquefied gas, plastic products, basic metals, manufacturing of machines and equipments, electrical appliances, and electrical machines.
Special attention is presently directed to the development of ports, thus making progress along the path of utilizing the Sultanate advantageous geographical location. The Omani ports, under the Gulf Custom Union, have acquired further importance, being the main entry points to the one Gulf Market. Deriving from this was the establishment of Port Salalah Container Terminal, with its state-of-the-art modern facilities, and the great developments witnessed by Port Sohar.
At the Duqm Economic Zone in the Central region, two important projects are simultaneously being implemented, the Port and the Dry Dock, with capital cost of 1.6 Billion Omani Rial. Duqm Port is planned as a world-scale maritime gateway on the Sultanate’s southeastern coast, and is expected to be one of the main commercial ports in the region, due to its proximity to the international and regional sea lanes.
A number of industrial and commercial projects are expected to be linked to the ports, with the intention of benefiting from positive effects of the ports development. Some projects are already being implemented in the commercial and industrial free zones at Salalah and Sohar. The Free Zones were successful in attracting investments. The volume of investments hosted in the Salalah Port Free Zone is estimated at more than $2 billion, while the relatively newly established Free Zone at Sohar Port has attracted $60 million industrial investments.
Tourism, a sector of priority in the Omani development plans, is witnessing comprehensive development. Some ambitious projects are being executed as part of long term plans for developing this sector. At present studies are being conducted with the objective of achieving further development to this sector in order to make Oman a competitive tourist destination.
Through the 8th Five-Years Development Plan, the Government is introducing further development to the infrastructure of the mining sector, with the objective of allowing the optimum utilization of the country’s mineral wealth, and enabling the mining sector to play a more effective role in the economy’s diversification process.
The 8th Five Year Plan aims to achieve 17.1% annual growth for the industrial sector, and by 2020 industry should contribute by 29% to the GDP of Oman. What are your top priorities in order to meet this goal?
Our top priorities are centered on the welfare of the Omani people. Accordingly, raising the standard of living of citizens shall continue to be our prime objective. The recent measures adopted and implemented by the Government in the areas of job creation and minimum wage are examples of commitment to those principles. The positive and drastic directives by HM the Sultan in this regard, have been well received by people.
The aim of MOCI is to create an environment that enables the private sector to make an effective contribution to the economic and social development of the Sultanate, while pursuing policies and measures aimed at maximizing the private sector effectiveness. We are also directing greater attention to the non-oil exports and re-exports trade, as this constitutes a cornerstone in our policy of diversification. Both MOCI and the Public Authority for Investment Promotion and Export Development (PAIPED) are presently exerting good efforts towards promoting the non-oil exports and increasing their contribution to the Balance of Payments. The Export Promotion Strategy is currently subjected to continuous updating.
Oman has already started adopting an industrial strategy that suits the post - oil era, by directing emphasis to capital intensive, high-tech and IT industries. In the coming period we intend to lay emphasis on:
i) Small and medium projects.
ii) Industries that utilize local raw materials.
iii) Export-oriented industries which can benefit from Oman’s strategic location; examples here are assembly and re-export industries that may be established in Free Zones.
iv) Knowledge and ICT based industries.
In response to the continued escalation in the prices of food products at the international level, we are presently working towards providing a comprehensive system for food security and stabilizing the prices of the primary consumer goods. In that regard, MOCI shall encourage the private sector to utilize the local agricultural and fisheries resources as raw materials for agro industries. Oman’s potential livestock resource can also be utilized for the production of meat and dairy products.
We shall continue with the constructive trade cooperation with countries of the world, at the various international, regional and bilateral levels, along the principle of mutuality of benefits. In the area of GCC, we intend to further foster cooperation with our sister GCC States, to achieve a higher degree of economic and social integration. We shall intensify efforts that enable us reap benefits of the GCC Common Market, particularly as regards growth, productivity, expansion of trade and investment, and furthering cooperation with GCC trading partners.
Could you please elaborate on Oman’s competitive advantages?
In the context of the contemporary international environment, the increasing effects of globalization and the escalating competition between countries for markets, investments and trade, Oman is becoming more aware of the importance of maximizing benefits of its competitive advantages. Our strategic location, supported by developed infrastructure in the field of transport and communications, gives Oman a competitive advantage in the Gulf, Indian Ocean and East Africa regions. This enables Oman to serve as a hub for marketing and distributing products and services for these regions. I have already mentioned the great developments being implemented in the area of infrastructure, and ports in particular.
Another major area where Oman has an advantage is tourism. This can be derived from its historic civilization, culture and heritage not to mention is natural beauty: a pristine extended coastline, the sun and sand are all elements that can turn the country into a leading tourist destination in the region. The Omani government is currently developing the necessary tourism infrastructure and providing world class tourist facilities that match with the country’s heritage, culture and natural beauty. Tourism is expected to make a greater contribution towards raising the level of employment, income and overall social economic development. The private sector is also becoming conscious of the investment opportunities in this sector and has already responded to them by investing in hotels and other tourism related facilities.
In its initial push for industrialization, the government has focused on developing upstream industries producing mostly basic goods, particularly in the petrochemical and metallurgical sectors. Today, Oman is more focused on developing downstream industries in order to retain more value at home. What is your strategy to generate more revenue by adding value to the natural resources?
Created in 1995, Vision 2020 is a long-term development strategy for the diversification of Oman’s economy, and it also contains approved policies and mechanisms for its achievement. Top ranking among the dimensions of the Diversification Strategy is pursuing a high Value-Added Strategy, characterized by adopting capital intensive production methods, and depending on highly advanced technology, scientific Research and Development. The most important policies adopted in order to ensure the success of the high Value-Added Strategy are:
a. Developing private sector and enhancing its role in the national economy.
b. Enhancing the strategic, control and supervisory roles of the government.
c. Developing human resources and improving market mechanisms in a manner that ensures the increased participation of the national labor force and raising the efficiency of the labor market.
d. Developing industries which depend on domestic resources, with special priority to be given to gas and focusing on the following industries:
- Industries that aim at the manufacture and export of natural resources.
- Industries that depend on the products of other industries from local resources, such as agriculture, fisheries and mining.
- Import substitution industries (whenever feasible).
- Industries that depend on the utilization of traditional techniques.
- Export industries that benefit from the Sultanate's strategic location.
- Establishment of mineral industries, building materials industries and the encouragement of assembly line production.
A recent survey (ME Free Zones of the Future 2012/13, by fDi magazine, a division of the FT) ranked Oman 12th in the world among the most attractive environments for international investors, based on its government and efficiency. What are the main government incentives to channel FDI towards non-energy sectors and what investment opportunities would you like to highlight?
The various Five-Years Development Plans of the Vision 2020 emphasize the important role to be played by the Private Sector. Accordingly, the various Government levers are geared towards providing a positive environment that enables the Private Sector to contribute to the economic and social development of Oman.
We believe that The Sultanate is ideally oriented to attract and host international investments due to its liberalized, positive and flexible policies. The stability and security prevailing in Oman are important factors in this regard. Oman’s unique geographical location is another attractive factor. We hope to capitalize on those factors, and further proceed with all the required improvements in the various aspects of investment environment, legislations, and facilitated flexible procedures. Other favorable aspects of the investment environment in Oman are:
The comprehensive legal framework, which is being continuously revised with the objective of introducing further liberality and openness.
Oman international and regional liberalization commitments.
Oman being a signatory to Encouragement and Reciprocal Protection of Investments Agreements with a number of countries.
The One Stop Shop which has been established with the objective of facilitating investments procedures.
As you pointed out, Oman is extremely competitive in terms of location and infrastructure, but human resources skills are an area that still needs to be improved, as there is a shortage of workforce from top management to blue collar workers. With 85% of the population under the age of 30, what challenges are you facing in developing the skills of Omani youth for generating employment opportunities?
The creation of job opportunities for the Omani youth is a central objective of the government. Small and medium size projects proved to be very effective in achieving that objective and thus fostering economic growth and sustainable economic and social development. However, the SME sector faces the challenge of finance. Dynamic youth with bright ideas and entrepreneurial drive face the obstacle of getting the necessary start-up financing and the required guarantees that enable them implementing their projects. To support these SMEs, the government is taking the following steps:
• In cooperation with the American Small Enterprises Department, MOCI has initiated a special fund that extends loans and provides guarantees for SMEs, to be jointly managed by Oman Development Banks and MOCI. A number of Omani commercial have joined in making contributions to the fund.
• There is a tendency to activate the special Account for financing SMES sponsored by the Arab Fund for Economic and Social Development, aimed at providing soft loans to SMEs.
• A National Business Centre (NBC) is being established, in cooperation with, and technical support from the American Small Enterprises Department, the task of the (NBC) is to train entrepreneurs running their SMEs and assist them in managing their projects in an efficient and professional manner, with emphasis on the areas of management, marketing, finance and accounting.
• MOCI is conducting training programs covering various regions, with the objective of raising the capabilities of the young and inexperienced entrepreneurs.
• In coordination with the Omani Universities and technical colleges, MOCI is promoting the free work culture, and developing incentives conducive to self reliance for universities and colleges graduates.
How do you see the future of Oman’s industrial, non-hydrocarbon sector in the next decade?
Our vision for the Omani economy for the coming decade is centered on the following pillars: sustainable development within a stable macro economic framework; development of human resources; an effective and competitive private sector; a diversified and dynamic economy, open to the world economy. The necessary policies for achieving those objectives have been incorporated in the consequent Five-Years Development Plans. Satisfactory steps have been taken in the path of implementing Vision 2020. Rather than reflecting on what has already been achieved, we intend to focus on our Vision for the future of the industry and non-hydrocarbon sectors during the coming decade.
• We aim to maximize benefits drawn from the economic and social returns for the mega industrial projects which have been implemented during the last period.
• Special emphasis shall be directed to the downstream industries and to Research and Development. Particular attention shall go to the Small and Medium Enterprises (SMEs), human resources development and increasing job opportunities and training.
• We shall encourage investors to establish Small and Medium projects in the Sohar Industrial Port area that can benefit from the available infrastructure represented by the Port, the handling terminals and the water and electricity services. Such industries shall also benefit in the future from the Airport and motorways that are planned to connect the area with the other Gulf countries.
• The future Industrial Strategy aims at raising the level of efficiency and competitiveness of the Omani industry through Research and Development. That was the idea behind establishing the Industrial Innovation Centre, which shall extend its services to the industrial enterprises, and the SMEs in particular.
• As part of the Industrial Strategy for the post-oil area, we shall give special attention in the coming decade to industries based on local raw materials, SMEs and export oriented industries. We shall encourage the private sector to utilize agricultural products, livestock and fisheries as raw materials for agro-industries. We shall also support the Knowledge and ICT- based industries.
• In response to the general decline in demand for goods and services caused by the international financial crisis, we are presently looking into ways of increasing the opportunities for the Omani exports entering the international markets. We are updating our Export Promotion Strategy to cater for that aspect.
• Also in response to the repeated waves of rising food prices at the international level in recent years, the Omani Government is intensifying its support and encouragement for the food security related sectors. Among the major steps taken in that regard is the setting of the Food Security Strategy.
• The mineral products provide both raw materials as well as inputs for a good number of industries. Realizing that potential, we trust that the mining Sector is qualified to play an effective role in diversifying the production base of the Omani economy. The 8th Five Years Development Plan includes plans for future developing the geological infrastructure in order to enable the optimum utilization of the countries mineral wealth.
As one of the most progressive countries in the region, Oman is a key contributor to peace and stability in the Arab world, as well as a vital partner of the US in their fight against international terror. How would you assess the US-Oman relations and in which areas would you like to see increased cooperation?
The Sultanate of Oman and the United States have enjoyed cordial and productive economic and political relationship since 1833, when Oman became among the first Arab States to sign Treaty of Amity and Commerce with the United States, which can be considered as a Free Trade Agreement of that time. Those ties have gained greater momentum during the recent past with the signing of the Trade and Investment Framework Agreement (TIFA), which was an expression of the two countries desire to enhance the bonds of friendship and spirit of cooperation and to promote further their international trade and economic interrelationship by promoting an attractive investment climate and expanding trade. TIFA paved the ground for the conclusion of the FTA, which was a major step towards further cementing friendship relations, and political, economic and trading interests. The Oman- US FTA, which entered into force on the 1st. January 2009 was aimed at improving the economic and trade relations as well as further strengthening the overall relationship between the two countries.
Oman is one of the only four Arab countries that enjoy a Free Trade Agreement (FTA) with the US, and as a result 100% of goods traded between the two countries are duty free. What are the main benefits of the FTA and opportunities US investors should be aware of?
The conclusion of the FTA with the United States was a natural result and a logical development of Oman economic and trading liberal tendencies. It is also consistent with the trend of developing Oman trading relations in a selective manner, i.e. by laying emphasis on countries of trading and investment weight with which Oman can achieve practical and tangible benefits. No doubt the US ranks top among such countries. This FTA is more than just an agreement concerned with the abolition of custom duties between the two countries, as the case with traditional FTAs. It is of much wider scope, as it establishes a base for broader economic cooperation that includes the liberalization of investment procedures, the deregulation of services trade and the protection of Intellectual Property Rights (IPR). The abolition of custom duties on exports shall lead to a greater flow of Omani exports to the United States, and shall encourage Omani and foreign companies to invest in Oman with the objective of exporting their products to the wide US market and benefiting from the custom duty exemption.
The liberalization of the Services Trade, including the professional consultations services and the free access to the Omani market, shall make Oman more attractive to investors from the U.S., and shall accordingly increase the American investments in the field of services in Oman, thus opening greater job opportunities for the Omani nationals, and at the same time providing more efficient and competitive services which shall benefit the Omani consumers and trading enterprises.
Among the areas for further cooperation between Oman and the United States, in addition to the trade, investment, and other economic fields covered by the FTA, we may cite Education and Tourism. In the field of Education, it will be of great benefit to Oman if one or two leading American universities can open up satellite campuses in Oman. This will provide an opportunity to a large number of Omani youth and avail them with the high standard American education at home. In the area of Tourism, if direct air links between the two countries are established, that will enhance the exchange of tourists.
Finally what would your message be to the readers of USA Today in this time of major changes and upheaval in the region?
We would like to highlight the wonderful opportunities that exist here in Oman. Oman is ideally oriented to attract and host international investments due to its liberalized, positive and flexible policies, the stability and security of the country and its unique strategic geographical location. The great tourism potential, based on the natural, cultural and historic heritage is another important investment attraction factor.
The Omani Government has already taken important steps along the path of integrating the Omani economy with the world economy. Oman is abiding with its commitments to the World Trade Organization, the Free Trade Agreement with the United States, and the Greater Arab Free Trade Agreement; thus further paving the way to a healthy investment environment.
The Omani Government has liberalized the services sector, including the communication, banking, insurance and other financial services.
The potential mineral wealth of Oman qualifies it to play an effective role in diversifying the production base of the economy.
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