Trade And Diplomatic Relations Between Oman And Turkey
Oman offers significant partnership and investment opportunities to our country's participation finance institutions.
Ambassador of Turkey to the Sultanate of Oman, Ayşe Sözen Usluer, conveyed her valuable views on issues such as Turkey-Oman commercial and diplomatic relations and the participation finance sector to Katılım Finans.
What would you say about Oman's economic situation in the second year of the COVID-19 pandemic? What is your opinion on the impact of the pandemic on the country's economy and the innovations it brings?
In the last period, the epidemic and the drop in oil prices have adversely affected Oman's economy and public budget. In 2020, public revenues decreased by 20.5%, and the budget deficit reached 11.7 billion dollars, 1.8 times the projected level. The government took austerity measures, and in April 2021, the country introduced VAT for the first time in its history. These measures aimed to halve the budget deficit with a 2% increase in public revenues and a 15% decrease in expenditures. In the first half of the year, these targets seem to have been met with a public revenue of 11.3 billion dollars, a public expenditure of 14.2 billion dollars and a budget deficit of 2.86 billion dollars.
I think that Oman will offer export opportunities to our country's investors in a vast geography in order to access other markets.
The country's economy shrinked by 2.8% in 2020, and the non-oil economic downsizing reached 4%. It is expected to grow by 2.5% in 2021 with increasing oil prices and the vaccination campaign implemented as of June. With normalization, the non-oil economy is expected to return to 2019 figures in 2022. One of the most important effects of the pandemic on the economy has been the acceleration of the "Omanisation" program, which has been tried to be implemented for many years. The number of foreign workers decreased by 270 thousand in 2020 and by 60 thousand in 2021 to 1.38 million. The ratio of foreign residents to the total population, which reached its highest level with 46% in April 2017, decreased to 37%.
Could you evaluate the upcoming period regarding the development of diplomatic and commercial relations between Turkey and Oman?
A cordial telephone conversation was established between our President and the Sultan of Oman, Heytham bin Tariq. There are mutual commitments for a for a visit, which we hope to happen at an appropriate time after the pandemic. Minister Çavuşoğlu visited Oman in February, the effects of which were discussed for a long time. During this visit, he met with his Omani counterpart Sayyid Badr Al-Busaidi, and was received by Sayyid Fahd bin Mahmud Al Said, Deputy Prime Minister for Council of Ministers in Oman and gave messages that accelerated both diplomatic and economic relations.
Our economic and commercial relations are at an outstanding level, but we think there is an even higher potential. Turkish investors stand out especially in the engineering-contracting, defence industry and food and beverage sectors. To date, our companies have undertaken projects worth approximately 7 billion dollars in the construction and contracting sector.
Turkish investors stand out in Oman, especially in the engineeringcontracting, defence industry and food and beverage sectors
Turkish cuisine, which has become popular with the rapid increase in the number of Omani tourists in our country since 2016, also attracts our investors from the food and beverage sector to Oman. Could you tell us about the current and potential areas of cooperation in the field of foreign trade between the two countries? Which sectors can stand out for Turkish investors?
There has been a continuous increase in the trade volume between Turkey and Oman since 2017. Under the conditions of the pandemic and low oil prices, the decrease in the trade volume was relatively limited in 2020, amounting to 854.1 million dollars, of which 524.6 million dollars was exports and 329.5 million dollars was imports.
The main items of our exports to Oman consist of petroleum oils, iron and steel products, chemicals, machinery and equipment and construction materials. Petroleum-based intermediates and aluminium are among the products we import. The health sector of our country has proven its quality in terms of hospital capacity, equipment and personnel competence to the Oman public as well as the whole world. The launch of a Turkish hospital in Oman after the epidemic will be a valuable investment in health tourism. The defence industry is also an essential sector in Oman. About a quarter of the state budget is devoted to defence expenses. We are making efforts to meet the needs of the Oman army from our country. In the past, the Presidency of Defense Industries and representatives of related companies have come to Oman many times. We are working to ensure that this continues after the pandemic.
Undoubtedly, the most significant development for investors from our country was the agreement between Gebze Organized Industrial Zone (GOSB) and the Oman Special Economic and Free Zones Administration (OPAZ) in May. The project for constructing a Turkish Industrial Zone with the GOSB model in the Dukum Exclusive Economic Zone, which is the most critical pillar of the 2040 Vision, aims to reduce the Oman economy's dependence on oil become operational in 2023. I think that Oman, which is the only country with open ports in the Gulf, will offer export opportunities to our country's investors in a vast geography in order to access other markets. What would you say about the latest situation of Islamic finance in Oman? What is your view on Islamic finance's current and potential role in the economic relations between the two countries?
After the pandemic, the launching of a Turkish hospital in Oman will be a valuable investment in terms of health tourism.
Since 2012, Oman has offered Islamic banking services with two full-fledged Islamic banks (Bank Nizwa, Alizz Islamic Bank) and six Islamic banking windows. With a market share of 15% in 2021, the industry ranks 13th in the world with $14 billion in assets. Under the pandemic conditions, conventional banking grew by 2% in 2020, while Islamic banking grew by 10%. In Oman, the industry is expected to reach a 20-25% market share by 2025. In recent years, there has been significant activity in the Sukuk issuance and Islamic insurance sector. The main problem with Islamic banking is that it has a narrow capital base compared to conventional banks.
Oman's Islamic banking sector, which is young and small compared to other Gulf countries, offers significant partnership and investment opportunities to the participation financial institutions of our country, which has nearly 40 years of experience and knowledge in Islamic banking, thanks to its relatively large Muslim population and rapid growth potential in the Gulf scale. As the Embassy, we are ready to support any initiative of our companies with all our means.