The diversification of this oil-rich economy hinges on the performance of its manufacturing sector—so far, the indicators are pointing in the right direction.

Celebrated every February 9, Omani Industry Day gives observers just a taste of how much of a priority HM Sultan Qaboos has made the non-oil sector. The celebration commemorates His Majesty's visit to Rusayl Industrial Estate on this day in 1991. Established in 1983 and situated just 45 kilometers from Muscat, the estate is the Sultanate's flagship industrial zone and has grown from 12 factories when first opened to over 150 in operation today. Factories, many more of which are on the way, produce goods ranging from chemicals, batteries, electrical and building materials, fiber-optics cables, and foodstuffs to textiles and garments, stationery, and paints. It is a microcosm of what is happening across Oman; diversification in the face of depleting oil reserves, despite the temporary reprieve the latter has received thanks to enhanced oil recovery (EOR).

Oman's non-oil sector enjoyed a strong year in 2012, accounting for 16% of GDP when including manufacturing, construction, and utilities. With a target to bump this figure up to 29% by 2020, industrialists will have their work cut out. The daunting task has not deterred investors, however, with investment reaching $65.94 billion by end-August 2013. Non-oil exports also looked good in 2012, growing 18.5% to reach a value of OMR3.59 billion ($9.33 billion) including re-exports.

There is also plenty of support on offer, with the Industrial Innovation Center (IIC) being established in 2010 as a means of bettering links between industry and higher education institutions. The Public Establishment for Industrial Estates (PEIE) is also on hand as overseer of the country's industrial estates, such as the Al Mazunah Free Zone close to the Yemen border, which offers unique incentives including tax exemptions and more manageable Omanization quotas.


Oman considers manufacturing, construction, and utilities a part of its non-oil sector, which accounted for 16% of GDP in 2012. At the same time, however, 45% of the workforce is engaged in this area, meaning there is much room for growth. According to Oman Vision 2020, the non-oil sector's share is expected to rise to 29% of GDP. Manufacturing represents the largest contribution to non-oil GDP currently, and is expected to contribute 15% to GDP alone by 2020. At its current pace, however, the target may be realistic—manufacturing grew at a speedy average of 8.5% between 2007 and 2011, and 6.5% in 2012 thanks to growing capacities in petrochemicals, fertilizers, cement, metals, and refineries. Meanwhile, overall non-oil growth was recorded at a rate of 10.4% between 2007 and 2011. Qatar National Bank (QNB) now forecasts slightly more muted growth in manufacturing at 4.2% until 2014, as the petrochemicals and fertilizer industries suffer due to a shortage of gas feedstock. By 2015, however, claims QNB, the opening of the Sohar refinery will have added 60,000 barrels per day (bbl/d) to the current capacity of 220,000 bbl/d.

Further figures also shed light on the investment appetite within Oman's industrial sector. According to the Ministry of Commerce and Industry, investments in industry reached $65.94 billion by end-August 2013, with 109 new industrial facilities opening so far, bringing the total to 2,539 for the same period.


In line with growth in the non-oil sector, non-oil exports, including re-exports, also grew in 2012, up 18.5% from OMR3 billion ($7.8 billion) in 2011 to OMR3.59 billion ($9.33 billion) in 2012. According to data from the National Center for Statistics & Information (NCSI), India was the largest destination for non-oil exports, up 48% in 2012 to OMR611.6 million ($1.59 billion) from OMR413 million ($1.07 billion) in 2011. It is India's first time on the top plinth, edging out the UAE, which was the second largest recipient with OMR550 million ($1.43 billion), up 22.3% from OMR450 (1.17 billion) in 2011. The biggest moving categories were mineral products and base metals, with 173.3% and 23.8%, respectively. However, at the same time, the export value of chemical products and plastic and rubber dropped by 8.9% and 16.1%, respectively.

The US placed highly on Oman's non-oil export destination list in 2012, coming in at a surprise fifth. This followed a doubling of exports from the category, up to $603.72 million from $289.9 million in 2011, thanks mainly to chemical products, according to the NCSI. Over the same year, re-exports also grew by 10.6% to reach a value of $6.47 billion in 2012 from $5.85 billion in 2011.

The figures suggest non-oil exports are thriving on the world market, in line with government targets to lower the contribution of oil to GDP.


In 2010 Oman's Research Council (TRC) established the IIC in the Rusayl Industrial Estate in order to build collaboration between industry and academia. In April of 2013, the IIC signed a Memorandum of Understanding (MoU) with the Public Authority for Investment Promotion and Export Development (PAIPED) in order to boost competitiveness in the manufacturing sector. The partnership is a tantalizing opportunity for Oman, and will “drive collaboration between large and small firms, industry associations, universities, vocational education providers, research institutions, and government agencies," said Dr. Hamed Al Dhahab, Chairman of the IIC, at the MoU, adding “this collaborative effort will undoubtedly strengthen Oman's export basket."

There has never been a better time to be an industrialist in Oman, with industrial facilities in the Sultanate exempt from income tax and customs duties on imports. Aside from that, PEIE, which also hosts a meeting between government officials and industrialists every year on Industry Day, was established to manage, operate, and develop industrial estates in the country. PEIE now manages a series of industrial estates, including the Al Mazunah and -Salalah Free Zones.

“The banking system is very good and the logistics are improving every day. Many ports are now being built, and the best thing I can envisage for Oman is that it could become a manufacturing hub," states Hussain Salman Al-Lawati, Managing Director of Oman Cables Industry, concluding that “I always encourage people to consider manufacturing and not to limit themselves to historical or traditional industries."