Investment Opportunities In Oman
Oman offers significant opportunities and incentives to foreign investors for their export and investment activities.
With the sharp fall in global oil prices, Oman’s need for economic reform in 2020 became urgent. International credit rating agencies such as Moody’s Investors Service, S&P Global Ratings and Fitch Group lowered the country’s credit rating to negative in 2019 and 2020 due to financial deficits and dependence on external financing. The quarantine measures implemented in 2019 and 2020 to control the spread of the COVID-19 pandemic have exacerbated Oman’s economic problems.
The prediction that Oman’s current oil reserves will run out in less than 20 years poses a serious economic threat. These challenges, combined with increasing local energy demands and high per capita carbon emissions, make it necessary to seek alternative energy sources sooner or later. On the other hand, Gulf Cooperation Council (GCC) officials reported that the country’s economy has become more vulnerable in 2020 due to the economic impact of the COVID-19 outbreak, as well as low oil prices.
Oman’s foreign trade policies are dominated by a liberal perspective, with the effect of the country’s import-dependent structure. The factors that determine the foreign trade policies of the country are the fact that it is a growing market despite limited domestic production, new investments are encouraged, public and private sector projects are open to international companies, the country’s population is young and its consumption tendency is high, per capita income is more than 15,000 dollars, being a member of the World Trade Organization (WTO) and GCC. In short, Oman offers significant opportunities and incentives to foreign investors for their export and investment activities.
According to 2020 data, Oman realized 31.7 billion dollars of exports and 17.7 billion dollars of imports. The most imported products of the country are respectively; machinery, automotive, electrical equipment, iron and steel and energy. Considering the imported products, a trade deficit in the industrial sector stands out. In addition, the country is in an effort to diversify the economy to reduce its dependence on oil. Therefore, the Government has concentrated on the field of production. In Oman, which wants to attract investors in the industry and offers various incentives to investors, there are incentives such as cheap land rental, flexibility in labour rules, electricity-gas-water supply, infrastructure opportunities. In addition, there is foreign dependency in the agricultural sector since the topography of the country is an obstacle to agricultural activities. There is investment potential in sectors such as agricultural production consultancy, modern irrigation techniques, and product supply in this field.
Since the country’s topography is an obstacle to agricultural activities, there is foreign dependency in the agricultural sector
Experts of the Brookings Institution recommend that Oman should focus on non-oil sectors with high-income potential such as tourism and invest in these areas in order to realize sectoral diversification and structural economic change soon. The report also stated that it is important to increase new sectoral opportunities and increase the Omani people’s role and presence in the workforce.
In the Gulf Countries Economic Update report published by the World Bank in August 2021, it is stated that the economy of Oman has gained positive momentum with a large infrastructure investment program, that the country’s economy will experience a partial recovery in 2021 with a modest growth rate of 2.5%, and that medium-term growth will continue with an estimated average of 5.3%. Under the Vision 2040 National Program, Oman aims to revive tourism, modernize agriculture, create free industrial zones and invest in technology. The Government of Oman aims to reach its goal of a non-hydrocarbon, sustainable and knowledge economy, which it has not achieved in practice in its 2040 vision. Within the scope of the 2040 vision, the country has targets to reach 90% of the non-oil sectors’ GDP and double its per capita GDP share to 6%. In addition, Oman aims to increase private sector participation in the economy to 42% and foreign investment to 10% of GDP by 2040. It can be said that the Oman Government tends to balance expenditures in order to increase management efficiency and cost savings, as it is aware that the economic diversification move requires private sector investment.
We can say that there is a momentous investment and growth potential in Oman, especially in the health, logistics, transportation, digitalization and manufacturing sectors
When we look at the issue in terms of Turkey-Oman bilateral trade, we can say that Turkish companies and products have a positive image and high awareness in the country. Turkish products, especially food products, have a positive image in Oman. In addition, Turkish products are in an advantageous position in the market with their reputation and trust as well as their high quality. Due to Oman’s oil-based economy, the decline in oil prices adversely affects the budget of the people of the country and is reflected in their spending habits. It is also noteworthy that Omanis do not tend to consume poor quality products, even if they are cheap.
We can say that there is a momentous investment and growth potential, especially in the health, logistics, transportation, digitalization and manufacturing sectors. Construction and infrastructure are the leading sectors in Oman. Even though the countries in the region continue with giant projects, possible fluctuations in oil prices to cause budgetary restrictions should be taken into consideration. The fact that the Turkish construction industry has an intense demand and high awareness both in Oman and in the region creates a serious advantage for Turkish businesspeople.
Relations between Turkey and Oman are relatively good. It is foreseen that the relations between the two countries will continue to strengthen, and it is desired to be crowned with mutual investments in commercial/economic fields and increasing trade volume by the managers and business people of both countries. Furthermore, essential incentives are made in this regard.