With its diversified economy welcoming of foreign participation, Oman continues to attract growth-sustaining investment, not least from Europe.
Longstanding, and multidimensional relations between the EU and Oman gelled further in Brussels on September 20 with the signing of the latest Cooperation Arrangement between High Representative for Foreign Affairs and Security Policy/Vice-President of the European Commission Federica Mogherini and Omani Foreign Affairs Minister Yusuf bin Alawi bin Abdullah.
Separately, Oman has stood back from the blockade of Qatar. Its principle agent, Saudi Arabia, extended an invitation for Qatar to attend the December 2018 GCC Summit, which Qatari Emir Sheikh Tamim Al Thani declined. Oman’s conciliatory nature duly gained weight in regional politicking.
Broad Economic Development Oman has diversified its economy, in step with the National Programme for Enhancing Economic Diversification (Tanfeedh), and by extension, its sources of investment revenue. The government aims at an 81% non-oil sector contribution to GDP by 2020, with 90% deriving from the private sector.
The EU is Oman’s third-largest trading partner, and its primary source of FDI. Bilateral relations are enhanced through a special EU-Oman Parliamentary Friendship Group. The bloc, and certain individual constituents, are contributing technically to Oman’s ambitious Vision 2040. FDI into Oman by official figures was above OMR9.34 billion in 2017 (OMR9.7 billion in 2Q2018, up by OMR1.4 billion YoY). Predictably, the primary recipient, on OMR5 billion, was oil and gas exploration, with financial intermediation on OMR1.41 billion. For 2017, the UK led the field with investments of OMR4.45 billion, trailed by the UAE on OMR1 billion and Kuwait on OMR416.5 million. In 2Q2018, the UK maintained its lead, a cool OMR1 billion up YoY at OMR4.7 billion. We also noted respective FDI commitments from Switzerland and the Netherlands of OMR290.4 million and OMR260.3 million, respectively, by end-2Q2018.
Getting Business Done
The 2019 World Bank Doing Business Report scoping 190 countries for commercial convenience across such parameters as establishing a business, and obtaining permits, credit and utilities, among numerous others, ranks Oman 78th. Yet, Oman was first among GCC countries in terms of cross border trade and second for starting a business. The Sultanate had also climbed two places in the ownership registration index, to 52nd globally. Notably, the only Arab nation to make the top 20 list of the easiest destinations for investment, at 11th, was the UAE. Morocco was 2nd among Arab nations (60th overall), and Bahrain 62nd globally.
His feet on the ground, Simon Penney is Her Majesty’s Trade Commissioner for the Middle East. He informed TBY that while the GCC was the region’s priority economic group, (GBP40 billion in 2017), “most notable is the increase in total trade in goods and services between the UK and Oman, which grew 92% YoY to GBP3.14billion in 2017.” In the context of the PPP business model, he noted the UK’s extensive experience with it. And pointing to the academic component of Oman’s economic progress, he mentioned the regional spread of UK universities to shore up local knowledge and skill sets across the commercial spectrum. Back in the Euro-zone, Romania has assumed the rotating presidency of the Council of the European Union as of January 2019. Bucharest has now opened its first embassy. The country is keen to cement deals across a panoply of sectors spanning energy, agriculture and infrastructure, as well as IT, health, and education.
Finally, Germany’s exports to Oman have soared more than six-fold since 1990, with Omani exports to Germany seeing five-fold expansion over the period. Annual trade today largely sees cars and industrial machinery headed to Oman and plastics and chemicals headed the other way. Meanwhile, German direct investments in Oman are at around OMR60 million, with notable participation in infrastructure underpinning its transformative Vision 2040. Among the active names, Siemens has delivered gas turbines for power plants in Sohar and Barka. Elsewhere, German-Omani JV Europoles produces super-strength spun-concrete poles for energy transmission.
We note then, that European relations bridge the academic and commercial arenas and a comprehensive range of economic sectors. Let’s close with another prime example of developing tomorrow’s technical specialist locally today. Since 2018, Oman has hosted a collaboration between the German University of Technology in Oman (GUtech) and Siemens, in the form of Siemens Mechatronics Systems Certification Program (SMSCP). Successful students are certificated directly by Siemens, having completed courses that replicate specific job scenarios that will boost local content.