Dec 1, 2010
Over the past decade, the Sultanate of Oman has been pursuing a policy of sound economic diversification and sustainable expansion. Oman's economic growth has continued its rapid growth, assisted by the government's long-term economic plan to diversify income sources. The Sultanate’s infrastructure sector is primed to remain one of the most active in the region, supported by strong state spending and the economy, as part of government's plan, called Vision for Oman's National Economy: Oman 2020.
The Omani banking sector continues to pick up and is forecasted for a steady recovery in 2011 and beyond. Oman is actively pursuing a development plan that focuses on diversification, industrialization, and privatization, with the objective of reducing the oil and gas sector's contribution to Gross Domestic Product (GDP) to 9 per cent by 2020. Oman’s limited water resources have led the country to focus on the development of desalinated water. It is undoubtedly the pioneer of independent power and water projects (IWPPs) in the region.
Oman has been actively seeking private foreign investors, especially in the industrial, data technology, tourism and transportation, and higher education fields. Industrial development plans focus on gas resources, metal industrial manufacturing, petrochemicals, and international transshipment ports. In 2009 Oman spent about $16 billion on local infrastructure and other projects, and this year the government has already signed contracts worth $11.5 billion out of the $18.7 billion spending budget, according to national economy ministry statistics.
Oman is well regarded as a place for conducting business and it has, compared to other countries in the Middle East, has good relations with most of the countries especially with the US, the UK, India, Pakistan and China. The Omani government is set to develop infrastructure projects with every economic sector benefiting from increased public spending.
Oman is heavily dependent on dwindling oil and gas resources, but maintained high oil and gas prices or pricing in recent years have aided in building Oman's budget and trade (imports and exports) surpluses and foreign national reserves. Economically, oil and gas account for about 75% of Oman's total exports.
Oman holds positive outlook regarding its further economic development over the medium-term and forecast 4.4% real GDP growth for 2010. It is estimated that 38% increase in export revenues in 2010, 80% of which will be due to oil and gas shipments, which will increase in volume as well as in price. The foreign trade surplus surged to a two-year high of $1.6 billion, with higher hydrocarbon exports pushing overall exports up by 72 per cent from last earlier.
The ministry of tourism aims to attract 12mn visitors by 2020. The tourism industry is expected to become one of the largest contributors to GDP by then. The World Travel & Tourism Council (WTTC) expects the industry to grow from 1.5% of total GDP in 2010 to 2.4% of GDP by 2020. The contribution to the economy by tourism-related activity is expected to increase from 7.6% of GDP in 2010 to 9.2% of GDP by 2020.
Oman has been investing heavily in tourism, especially in infrastructure and airports. Three new airports will be built to boost the industry and the government is spending at least US$3.2bn upgrading its gateway airport, Muscat International Airport. Oman specializes in ecotourism and first class tourism, but increasingly it has to compete with other countries that offer similar experiences for western and regional tourists.
Many firms in developing economies have suffered from lower demand for their exports and a drop in private capital flows. At the same time businesses in low-income economies on average still face more than twice the regulatory burden that their counterparts in high-income economies do when starting a business, transferring property, filing taxes or resolving a commercial dispute through the courts. Developed economies have on average 10 times as many newly registered firms per adult as Africa and the Middle East - and a business density four times that in developing economies.
Omani government is investing in IT as part of its Digital Oman initiative and strategy to diversify the economy. In addition to ongoing demand from the oil and gas sector, this should generate IT spending in verticals such as telecoms, financial services and aviation.
The PC market in Oman should grow at around 6% a year to US$190mn by 2014, as per the government's 'Towards Digital Oman' strategy and the elimination of custom duties within the Gulf Cooperation Council (GCC). Wireless connectivity will boost demand for notebooks, stimulated by product innovation and new technologies. Small and medium-sized enterprises (SMEs) as well as large enterprises are expected to invest in equipment to deal with increased competition and take advantage of regional opportunities.
The software market in Oman is projected at US$62mn in 2010 and is expected to grow at a CAGR of 5% over the 2010-2014 forecast period. With the evolution of the IT market, a stronger enterprise focus on software spending is also being seen, with companies preparing to compete in a regional environment of greater trade freedoms. The government has also been the keen driving force behind it.
IT services market is estimated at around US$85mn in 2010, accounting for around 19% of overall IT spending in Oman. About one-third of spending will be on support and maintenance, with SI the second largest category and managed services/outsourcing at about 20%. Many vendors see an opportunity to expand their services portfolios, as enterprises demand look to get more out of their IT investments. Oman’s consumer electronics devices market, defined as the addressable market for computing devices, mobile handsets and video, audio and gaming products, is forecast at US$480mn in 2010.
Oman’s construction industry is expected to grow at an average annual rate of 8.7% over 2008-2012 and to reach a value of US $2.5 billion over the forecast period. Oman plans to raise spending by 11 per cent in its 2011 budget to push ahead with infrastructure and development projects. considering basing its 2011 budget on an average oil price of $55 per barrel.
Oman is the "THE HAPPENING" place to be in business as it is showing strong economic growth, which encourages privatization of infrastructure and services. The country has absolute tax freedom, with tax exemptions for 5 years (sometimes renewable) for industrial enterprises which contribute to Oman's economy. Foreign investors are able to hold 49% of equity, which may be increased depending on the circumstances, to add it all a clear and efficient legal network which governs company law, agency law etc.
Oman has emerged as a modern state creating a identity in the world for its comprehensive development in political, economic and social sectors. Under the leadership of Sultan Qaboos Bin Saeed Al Saeed, for 40 years Oman has seen amazing changes through these years and each year has cemented the growth of Oman in every aspect. Oman and the people of Oman are blessed to be part of such glorious years.