While the UAE, Saudi, and other GCC countries have enjoyed being in the international spotlight, boasting strong tourism figures and prosperity, Oman has languished in the background, stuck in the shadows of its bigger, more pompous brothers.
Reuters confirms this, reporting that Oman’s financial position is among the weakest of the wealthy Gulf oil exporters.
Well, as it turns out, it is known for more than its purebred Arab horses.
It seems that Oman is stepping up, refusing to be forgotten.
Following in the tracks of its neighbors, it is diversifying its economy, following a major hit the country’s economy received post the 2014 oil slump.
A new, changed Oman is about to dawn in the Middle East.
A renewed sense of purpose
“With the increasing demand among young markets, the growing interests of residents in new lifestyle experiences, as well as the influx of tourists entering the sultanate, industry observers are seeing the country’s retail sector to be at a prime position to significantly contribute to the GCC’s continuing retail growth story,” Muscat Daily explained.
The market confidence in Oman is hugely attributed to the country’s soaring economic growth, projected to rise to 2.9% this year from 1.1% in 2017.
In comparison, Saudi’s IMF predictions are for 1.7% growth only.
Among the GCC countries, Oman is seen as the fastest growing economy with tourism being one of the key components as arrivals are expected to increase at a compound annual growth rate of 13% between 2018 and 2021, according to a report by Colliers International.
The country’s hospitality market is expected to grow at a compound annual growth rate (CAGR) of 7.5% (2017-2022) to $1 billion by 2022, according to the GCC Hospitality Industry report published by Alpen Capital, an investment banking advisory firm.
Oman’s state budget deficit nearly halved in the first five months of this year as higher oil prices boosted export revenues sharply and a corporate tax hike took effect, figures released by the official statistics agency showed.
This comes as a sign of relief after the country fell on hard times following the oil price drop a few years ago.
Figures paint a bright picture
The government’s deficit in January-May shrank to $2.86 billion (1.10 billion Omani rials (OMR)) from $5.3 billion (OMR 2.04 billion) a year earlier. The International Monetary Fund has predicted it will run a fiscal deficit of 5.7% of gross domestic product this year, down from 11.4% in 2017.
The Sultanate’s economy was growing at a rate of 8% by the end of the fourth quarter of 2017, data issued by the National Centre for Statistics and Information (NCSI) revealed.
Net oil revenues jumped to $6.2 billion in the first five months from $4.6 billion a year earlier. Brent crude averaged $70.22 a barrel during the period, up from $53.75.
Meanwhile, revenues from corporate income tax climbed 24% to $915 million after the government lifted the tax rate to 15% from 12%.
The government also recorded a leap in proceeds from the sale of assets to $196 million (75.4 million rials) from $17.6 million (6.8 million rials). The agency did not say which assets had been sold.
Total state expenditure including expenditures under settlement, or funds that had been allocated but not yet disbursed, dropped 3% to $13.5 billion (5.19 billion rials).
The government continued to spend heavily on development projects designed to create jobs and diversify the economy beyond oil and gas exports, Reuters reports. However, “participation and support”, which includes state subsidies, fell to $492.5 million from $829 million, they continued. Oman cut fuel subsidies this year to ease the burden on state finances.
The positive figures above should serve well in attracting investors seeking to capitalize on the tourism and retail boom in the country.
New projects on the horizon
Over the past two years, Oman’s logistics performance has significantly improved, jumping five places from 48th to occupy the 43rd position on the World Bank’s recently released Logistics Performance Index (LPI) 2018 report.
Key initiatives that have contributed to Oman’s improved ranking include the establishment of the border One-Stop-Shops for joint inspections, new rules for bonded warehouses, introduction of the Authorised Economic Operator (AEO) programme, pre-clearance of goods by Customs and risk-based import controls, Dr Ahmed Mohammed Salem Al-Futaisi, Minister of Transport and Communications, explained.
Now, the Sultanate is considering privatizing its national airline, Oman Air. The airline has been in fierce competition with local aviation companies such as Etihad Airways and Emirates Airlines. Privatization would help make the company’s business model much more efficient and competitive, enough to keep up with competitors. An IPO of Oman Air would raise hundreds of millions for the government.
The Sultanate is also working hard to open a road that passes through the Sahara desert, according to the Implementation Support and Follow-Up Unit (ISFU) of Tanfeedh. The quickest route between Oman and Saudi Arabia is currently 1,638 kilometers long, passing through the UAE and taking between 16 and 18 hours. The new road is expected to shave off more than 800km of the journey, potentially cutting the journey duration by half.
This new road will facilitate trade between the two GCC countries, as well as with other Gulf nations. It will prove instrumental in the Sultanate’s future development.