Complex Made Simple

 Oman making strong economic moves

Oman is showing some zest in moving forward with investment and diversification plans

Oman's state-owned Asyad is considering buying ports and terminals abroad Overall GDP is projected to grow around 2.5% in 2021 Oman and Saudi cooperate to enhance joint action in many economic spheres

Oman’s state-owned Asyad is considering buying ports and terminals abroad and could divest assets outside its core logistics business, such as a college and project management operation, its chief executive said on Thursday.

The plans by the company, which is owned by the Oman Investment Authority, align with the small oil-producing Gulf state’s broader strategy to reduce reliance on crude revenues and expand its non-oil industries.

Chief Executive Abdulrahman Salim Al Hatmi told Reuters the company’s mandate included engaging with the private sector in Oman and attracting foreign investment.

“International growth has been part of our strategy, whether it’s ports or freight forwarding,” he said. “Our objective is to look at all the assets that the government has invested in – in Oman – put them together and integrate them.”

Asyad, with $5 billion in assets, focuses on logistics, transportation, port services, shipping, and free zones. Hatmi said there were still some missing elements in the company’s portfolio, such as freight forwarding, courier and parcel services, and a temperature-controlled supply chain.

“We have a fantastic wealth of fishery in Oman, we want to support the food market in Oman, so we are looking at expanding some activities in that area that can help us fill the gap,” he said.

To support its expansion plans and organic growth, Asyad would decide by the end of the year whether to raise debt via bonds or loans, Hatmi said, adding that bonds were “one of the instruments we are looking at.”

Hatmi said the company was considering divesting non-core assets, which included a college, as well as project management and public transport activities, such as buses and ferries. He also said Asyad was considering divesting from Hutchison Ports Sohar, a joint venture operator owned by Asyad, Hutchison Ports, and other shareholders.  

Oman’s economy- IMF

Gradual recovery is expected in 2021 and beyond, but combating the pandemic and mitigating its effects remains the key near-term priority for Oman until the recovery is firmly established.

The banking sector remains well-capitalized and liquid, benefiting from the sustained prudent oversight by the central bank and the strong buffers before entering the crisis. Over the medium term, accelerating structural reforms is paramount to unlock growth potential.  

Official provisional data indicate that real GDP contracted by 2.8% in 2020, with non-hydrocarbon growth at -3.9% and a shallower decline in hydrocarbon GDP. Overall GDP is projected to grow around 2.5% in 2021 with about 3% average growth over the medium term. Non-hydrocarbon GDP growth of 1.5% is projected for 2021.

Enhancing competitiveness in the private sector is a crucial element in boosting non-oil private sector growth. Flexible labor policies would ease human resource reallocation and strengthen job creation. To this end, recent steps taken by the authorities include:

  • The system of multiple minimum wages linked to qualification levels has been simplified and a single minimum wage of OMR 325/month ($844) is now in place;
  • A time-bound wage subsidy of OMR 200/month ($520) for first time Omani jobseekers to facilitate private sector employment of Omanis, initially expected to cover about 15,000 persons;
  • Relaxation of restrictions on job transfers for expatriates;
  • The Job Security Fund, an unemployment benefits scheme to facilitate the reallocation of workers between different employers

 The authorities are taking action to develop a greener Omani economy. In addition to reducing domestic electricity and water subsidies, plans are being developed to utilize Oman’s abundant wind and solar energy resources, which have the potential to attract domestic and foreign investors and eventually contribute to growth and job creation.

Oman and Saudi coordination

Oman and Saudi Arabia have welcomed the signing of a memorandum of understanding (MoU) on the establishment of an Omani-Saudi Coordination Council to strengthen bilateral relations in all fields.

Oman’s Sultan Haitham Bin Tarik and Saudi Arabia’s King Salman bin Abdulaziz Al Saud recently held a session of talks to review the various aspects of cooperation and the ways in which they could enhance joint action in many spheres. They agreed to direct the departments concerned to expedite the opening of the direct land route and border checkpoint, which will contribute to the smooth movement of the citizens of the two countries and ease the connectivity of supply chains.
 
They also directed the officials concerned to work on finalizing a number of agreements and MoUs for cooperation in various economic, commercial, investment, security, cultural, diplomatic, and educational fields and everything that might generate benefits or bring about prosperity to the peoples of the two countries.

This can be done through the launch of joint initiatives covering key areas of cooperation, “including investment in the Duqm zone, cooperation in the field of energy, partnership in food security and cooperation in the fields of culture, sports and tourism,” the communiqué said.