HISTORY MATTERS

Oman 2015 | DIPLOMACY | FOCUS: ASIAN RELATIONS

Oman is building on its long history of diplomacy and trade with Asia to strengthen ties and tap into new markets in the region.

For more than six millennia, Omani merchants have been writing the book on cultural and trade diplomacy. Embarking from their ports, and located at the nexus of Asia and Africa, Omanis traversed remarkable distances as they traded and explored throughout Africa, Arabia, Persia, India, and China. Over the millennia, Omani precious metals, perfumes, and wood were prized and traded for silk, porcelain, and other rare commodities. As historians piece together ancient trade routes, evidence is emerging that the majority of what is known as the Silk Road trade actually happened in the maritime context, with Omani traders being among the most prominent merchants. Now, thousands of years later, new diplomatic and trade developments promise to reignite this phenomenon, with Oman again forming a crucial hub.

In late 2014, Chinese President Xi Jingping announced plans to contribute $40 billion to finance a “Silk Road Economic Belt," running from China, through central Asia, and into Turkey. The plan also entailed a, “21st Century Maritime Silk Road," which would connect major port cities from western China through the Middle East before turning down the West African coast. This development engages Oman in a larger regional competition between China and India for access to the oil-rich Gulf region, as both countries struggle to consolidate oil output to feed their growing economies. Bilateral trade between Oman and China reached $23 billion in 2013, with around $20 billion of the total trade being in oil and gas, according to Chinese officials. This substantial trade was enough to bump Oman up to China's fourth largest trading partner in the West Asia and North Africa region.

Omani delegates have taken an active role in the process. In late 2014, a delegation led by HE Dr. Ali bin Masoud Al Sunaidi, the Minister of Commerce and Industry, visited corporate and political leaders in India to raise awareness about investment opportunities in the Sultanate, especially in industry, ports, free zones, communications, and logistics services. Currently, there are over 1,500 Indo-Omani joint ventures, and 140 Indian companies operating in Oman. This is reflected in the remarkable increase in total trade between both nations, from $4.6 billion in 2012 to 2013, to $5.77 billion in 2013 to 2014. According to Al Sunaidi, Omani FDI to India has increased from $24 million in 2005 to about $340 million in 2012. Meanwhile, Indian FDI to Oman grew by over 7% between 2008 and 2012, amounting to $652 million.

While India and China grab headlines, Oman's relations with other Asian states are also well established. The year 2014 marked the 40th year of diplomatic ties between Oman and South Korea. The two countries celebrated the milestone aboard the Korean Naval Vessel Dae Jo Yeong, which was docked at Port Sultan Qaboos. Trade has been increasing alongside these diplomatic exercises. In 2013, trade between the Sultanate and South Korea reached $6 billion. To illustrate this growth, exports to South Korea increased from OMR842 million in 2001 to OMR1,765 million in 2013.

With a growing population of over 180 million, Pakistan is also emerging as an important diplomatic and trade partner of Oman. But with bilateral trade currently at just $450 million, both parties are invested in improving that statistic. Transnational trade has an interesting history between the two states, dating back centuries to when Oman controlled Gwadar, a port located in modern day Pakistan—and transferred to the Pakistanis in 1958. Now, the Oman Chamber of Commerce and Industry (OCCI) and its Pakistani counterpart have established a joint investment committee, which will work to increase commercial activities and find solutions to commercial disputes. Even as the committee is starting its activities, investment and education activities are already underway. Pakistani schools operate throughout the country, and companies such as the Pak-Oman Investment Company, and its subsidiary, the Pak-Oman Micro-finance Bank are well established in Pakistan and seeing substantial growth.