Country Profile

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From The Report: Oman 2016

Oman, located on the south-eastern end of the Arabian Peninsula, is the only
member of the GCC located outside the gulf. Leveraging its strategic location
on the Strait of Hormuz, the government is ramping up infrastructure
investment in line with the sultanates goal of establishing itself as a global
logistics centre. Oman Vision 2020, the countrys long-term development
plan, emphasizes the expansion of industry, greater private-sector
participation in the economy and the further boosting of Omanisation rates
across all sectors. Oman, with a population of 4.3m in 2015, has long been
regarded as a bastion of peace and stability in the region, with the raft of
economic, political and social reforms initiated by Sultan Qaboos since his
accession in 1970 being instrumental in transforming the country into the
modern state it is today. This chapter contains a viewpoint from Sultan
Qaboos bin Said Al Said; and an interview with Shahin Mustafayev,
Azerbaijani Minister of Economy and Industry.
Located in the south-eastern quarter of the Arabian Peninsula, Oman is the
only member of the GCC situated outside of the Gulf. Leveraging on its
strategic location, investments in infrastructure have focused on the goal of
becoming a global logistics centre. While less hydrocarbons-rich than its GCC
neighbours, diversification efforts are a driving force behind Omans
economic growth. The sultanates long-term development strategy, Oman
Vision 2020, emphasises industrialisation, privatisation and Omanisation.
Logistics, tourism and industrial manufacturing have been identified as
potential future economic drivers, and will be the focus of development
under Vision 2040.

Economic Plan
The sultanates eighth five-year plan (2011-2015) came to an end in 2015.
The plan succeeded in its effort to foster infrastructure development, while
also aiding critical social sector programmes. According to the Ministry of
Finance more than $17.9bn has been allocated to new projects to date,
including the building of five hospitals, 29 schools, the Al Batinah
Expressway, new infrastructure on the Samail, Ibri and Duqm industrial
estates, and for the implementation of scientific research and technology
projects.
Efforts are now under way to lay the groundwork to support these sectors. In
its ninth five-year plan (2015-20), the sultanate continues its drive towards
social development, economic diversification of many production sectors and
the ideal utilisation of available natural resources. Also planned are the
ongoing implementation of the countrys mega and priority infrastructure
projects such as the Al Batinah Expressway, airport projects, the railway
network, the Special Economic Zone at Duqm, key seaport upgrades and
BPs Khazzan project.
2015 marked the 45th anniversary of the accession of Sultan Qaboos bin
Said Al Said and the establishment of the Sultanate of Oman, making Oman
the longest continually independent Arab country in modern history. Each
year November 18 marks Oman National Day, which coincides with the
sultans birthday. Since the sultan took power in 1970, Oman has been
transformed into a regional power with a non-confrontational and pragmatic
approach to foreign relations.

Hereditary Monarchy
Oman is a hereditary monarchy. Sultan Qaboos is both the head of state and
of government. He took over the reins of government from his father, Sultan
Said bin Taymur, in 1970. At that time, Oman was an isolated, undeveloped
state, lacking in basic facilities and infrastructure. Sultan Qaboos set about
making changes that would transform Oman into the modern state it is
today. One of his first acts was to change the name of the country from
Muscat and Oman to the Sultanate of Oman, indicating that this would be a
united country. The sultan also proceeded to appoint a Cabinet of ministers
responsible for various government departments and functions a first for
the country.

Just 25 years later, Oman was no longer among the ranks of lower-income
nations that required World Bank loans. Sultan Qabooss ambitious economic
goals, which include plans for easing the sultanates dependence on
petroleum resources by diversifying its economic base, have seen an
opening to tourism and major improvements in the countrys infrastructure.
In 1996 the sultan decreed the Basic Law of the State, which is considered to
be Omans constitution. The law established a bicameral legislature, clarified
the royal succession, provided for a prime minister and proscribed ministers
from holding interests in companies doing business with the government. It
also guaranteed basic civil liberties, such as freedom of religion and speech,
a free press, as well as a number of legal rights, such as the right to a fair
trial.

Governement Structure
The Council of Oman (Majlis Oman) is a bicameral consultative council, with
advisory powers only. The upper chamber of the council is called the Majlis Al
Dawla, or the State Council, the members of which are appointed by the
sultan. Members of the lower chamber, the Majlis Al Shura, are elected by
popular vote for four-year terms. The Majlis Al Shura is authorised to draft
legislation sanctioned by the sultan. Since 2002, citizens over 21 years of
age have been eligible to vote in elections.

The most recent elections took place on October 25, 2015 where 84
members of the Consultative Assembly were elected from 61 constituencies,
23 with two seats and 38 with one. Voter turnout landed at 56.66%, and the
process was widely hailed by Oman observers as a success.

Population
The population reached 4.3m in 2015, having grown 7.5% since 2014.
Omanis compromise 56% of the total population, while expatriates account
for around 44%. The Governorate of Muscat has the highest population of
expatriates, at 61%. Children under the age of 15 make up 25-30% of the
population, while the young ( 15-29 years) constitute 27%. This puts the
productive population, those aged 15 to 64, at 64-69% of the total. The
population is expected to grow by around 1m by 2040, according to
estimates from the National Centre for Statistics and Information.
The majority of the population is concentrated along the Batinah coastline,
an area in the north stretching from the capital, Muscat, to the city of Sohar.
The second-most-populous area is the Dhofar region, home to Omans
second biggest city of Salalah. Situated in the south near the border with
Yemen, Salalahs population stands at around 200,000. The government has
a policy of actively applying quotas for hiring Omani nationals, although
many positions are also filled by foreign workers, mainly from South Asian
countries. The largest foreign communities come from the Indian states of
Kerala, Tamil Nadu, Karnataka, as well as the Philippines, and represent over
half of Omans labour force. Foreign workers tend to live in the sultanates
larger cities. Muscat, for example, has an expatriate community of 847,667
against a population of 495,056 Omani nationals, as of December 2015.
North Batinah reported the second highest population, with a total of
697,774. Other regions reported higher numbers of Omanis than expatriates.
Al Wusta and Musandam are the least populated governorates, each
reporting populations of under 50,000 people.

Diplomatic Ties
Since 1970, Oman has worked to expand its diplomatic relations according to
a moderate foreign policy. Ties with the UK have remained close, while
relations with the US have also strengthened. Oman is affiliated with over
105 regional and international organisations including the UN, the World

Trade Organisation, the IMF, the World Bank, the GCC and the Greater Arab
Free Trade Area.
However, Oman is not a member of the Organisation of the Petroleum
Exporting Countries (OPEC). Free trade agreements are shared with the GCC,
Singapore and the US.

Regions
The nation is divided into 11 governo-rates; Muscat, Musandam, Al Buraimi,
Al Dakhiliyah, Al Batinah North, Al Batinah South, Al Sharqiyah North, Al
Sharqiyah South, Al Dhahirah, Al Wusta and Dhofar. The governorates are
then further subdivided into a total of 59 wilayat ( provinces). Each wilayat is
presided over by a wali, who is responsible for collecting taxes, overseeing
local administration, and acting as a link between the government, its
institutions and the public. Over a series of five-year plans, Oman has been
able to ensure that development efforts take place in a balanced and
integrated manner across all its different regions.
Major projects and industrial estates have been set up nationwide within the
framework of a scheme that seeks to balance the priorities and needs of
every region. The Governorate of Muscat is Omans political, economic and
administrative heartland, the location of the capital city Muscat as well as
the seat of government and the centre of the states administrative
apparatus. It has also become a vibrant centre of local and international
economic, commercial and tourist activity.
The Governorate of Dhofar has played a pivotal role in Omans history. In
ancient times it was known as the Arabian Peninsulas Land of
Frankincense and the gateway to the Indian Ocean and the crossroads of
southern Arabias caravan routes. Its main city, Salalah, was the birthplace of
Omans modern development strategy, masterminded by Sultan Qaboos bin
Said Al Said. Today, it remains an important portal to Omans prosperity. As
part of the sultanates regional development plans, major investment has
gone into the Port of Salalah and its surrounding infrastructure. The port,
which is located near the main shipping lanes of the northern Indian Ocean,
handled over 10m metric tonnes of cargo in 2014 and is expected to handle
more than 12m in 2015.

Similarly, the Governorate of Musandam is of immense strategic importance,

because of its position overlooking the Strait of Hormuz, the most important
international shipping lane for oil exports and trade between the Gulf region
and the outside world. Around 90% of the Gulfs oil exports pass through the
strait, which also forms the eastern gateway for shipping to and from the
Gulf littoral states.
The Governorate of Wusta lies to the south of the Dakhiliyah and Dhahirah
regions, and enjoys a temperate climate throughout the year. Bordering the
Arabian Sea to the east, the Empty Quarter desert to the west and the
Governorate of Dhofar to the south, it has a large number of oil- and gasproducing fields. It comprises four wilayats. Three of these, Mahawt, Al Duqm
and Al Jazer, are on the Arabian Sea, while the fourth, Haima, is situated
further inland.
Developments in the Duqm area constitute a major pillar of Vision 2020 and
are expected to generate a number of logistical, warehousing, distribution
and re-export opportunities. With the countrys plans to become a hub for
heavy, medium and light industries, the need to attract investors is key to
the success of the special economic zone and also fundamental to
sustainable development in Al Wusta Governorate.

Infrastructure
Efforts to build the sultanates transport and logistics capabilities have been
a major economic driver in recent years. The countrys seaports, airports and
road network are constantly being expanded and improved. The road
network has been ranked the third best globally by the World Economic
Forum, and by recent estimates comprises approximately 29,685 km of
paved roads and 30,545 km of unpaved roads.
The road network covers most parts of the country and paved roads are
generally of high quality. The sultanates modern roads have helped to
facilitate trade with neighbouring countries and have also helped to improve
safety conditions for drivers. In 2015 the government announced that traffic
accidents had declined by nearly 15% in the year to November 2015 to 5254
accidents, down from 6171 in 2014. Oman has also nearly completed
construction on a historic highway that will link Oman and Saudi Arabia for
the first time. The 680-km highway cost Oman OR200m ($517.8m) and is
expected to increase trade and tourism between the two GCC countries.

Ports
With such a long seafaring history, it is no surprise that seaports play an
important economic role in Oman. The largest seaports, the Port of Salalah,
the Port of Sohar and the Port of Duqm, are an integral part of the economy
and are poised to drive growth and assist with diversification. Each port is
located in a different part of the country and serves a different function.
Major upgrades to the international airports in Muscat and Salalah have been
under way to accommodate the expected growth in domestic and
international traffic, both of passengers and cargo. In addition to the new
airports under construction in Muscat and Salalah, there are currently three
regional airports being built in Sohar, Ras Al Hadd and Al Duqm. To complete
the logistics picture, Oman Rail is currently in the process of designing and
tendering the National Railway Network. The completed railway is set to
cover 2244 km and will connect the sultanates port cities Duqm, Salalah
and Sohar with the other GCC countries.
In terms of communication networks, the sultanate is connected to the UAE,
Yemen and Pakistan via fibre-optic cables. Work is under way to establish a
fibre-optic link with Saudi Arabia, and the National Broadband Strategy is
expected to increase the scope and connectivity of broadband across the
country. The National Broadband Strategy has received a great deal of
support from the Omani government. The Ministry of Transport and
Communication has approved a plan which will see the government invest
OM450m ($1.2bn) into broadband projects over the next 10 years.

History
The territory that comprises modern-day Oman has long benefitted from its
strategic geographical location. From there, merchants without needing to
sail far from land made easy contact with historical Persia to the north,
India to the east and Africa to the south. Between the third and seventh
centuries CE Oman was controlled by two other dynasties, the Parthians and
the Sassanids. This lasted until the arrival of Islam in the seventh century,
during which time Muscat and Oman were under the control either of the
Persian Empire or of rulers from neighbouring Yemen. From 751 onwards,
imams were chosen to rule the region as spiritual leaders. This elective
theocracy lasted for four centuries, until the succession of Banu Nabhan in
1154, establishing a dynasty of hereditary kings.

The early 16th century brought the entry of the Portuguese, who were
opening up their trade route to India. From 1507 to 1650 they occupied
Muscat and various local garrisons, including a captured island on the Strait
of Hormuz. After a turbulent period of fighting with the Ottoman Turks,
Ahmad bin Said regained control of the country in 1741 and expanded its
territory to parts of Iran and the coast of East Africa. The descendants of
Sultan Ahmad rule Oman today. Zanzibar, the former capital of Oman, fell
from Omani control in 1861; to this day, Oman and Zanzibar enjoy close ties.
The African lands of the Omani Empire, known as Muscat and Oman in the
19th century, steadily came under British influence and were the subject of a
Franco-British rivalry during that period. Through gradual economic and
political encroachment on its overseas holdings, Omanis were forced to
retreat to their homeland. Said bin Taymur ruled Muscat and Oman until the
present ruler, Sultan Qaboos bin Said Al Said came to the throne in 1970.
The country declared independence the following year and renamed itself
the Sultanate of Oman. The new sultan embarked on a modernisation and
liberalisation programme that helped to expand social services and
infrastructure in Oman.
With Sultan Qaboos bin Said Al Said as ruler, the country also worked for
closer integration with its neighbours. These efforts culminated in 1981 with
the founding of the GCC.

Tradition
The dhow, an ancient sailing boat, is an enduring symbol of Omans close
relationship with the sea and its extensive knowledge of seamanship.
Evidence exists of an Omani dhow reaching China in the eighth century, and
they can still be seen today along Omans coastline as vehicles for trade,
fishing and tourism. In the desert interior, meanwhile, life takes on a more
tribal and traditional bent, with many families tending livestock and growing
crops. This cultural and geographical split historically had important
consequences, with the interior peoples choosing to be ruled by imams and
the coastal peoples ruled by sultans.
Sultan Qaboos unified these two areas when he ascended to power. In
addition to the historical interior-coastal divide, the whole of northern Oman
is separated from the southern region of Dhofar by hundreds of miles of

desert. This additional geographic detail results in its own characteristics, as

many Dhofaris maintain cultural and historical ties with neighbouring Yemen.
Most Omani men wear the traditional clothing of their ancestors,
the dishdasha, a collarless, tasselled ankle-long white robe. Traditionally, the
tassel was scented with a drop of one of Omans famous perfumes. During
holidays, men wear ceremonial dress including the elaborately carved Omani
khanjar knife, with its curved dagger. Most Omani women wear the hijab and
abaya, and while some women cover their faces and hands, most do not. On
holidays, Omani women dress in brightly coloured traditional clothing
consisting of a long tunic worn over trousers.

Religion
Ibadi Islam makes up the majority, accounting for 75% of Omanis. Ibadism is
dominant in Oman and Zanzibar, but Ibadis are also found in parts of North
and East Africa, including Algeria, Tunisia and Libya. The Ibadi movement is
said to have been founded 20 years after the death of the Prophet
Muhammad, and as such it predates both the Sunni and Shia denominations.
The remaining 25% of the population mostly comprises a mixture of Sunni
and Shia Muslims. While Shia Muslims constitute slightly less than 5% of the
population, they are well integrated into society.
The majority of non-Muslims are South Asian migrant workers, who practice a
variety of faiths including Buddhism, Sikhism, Christianity and Hinduism. All
religious organisations in Oman must be registered with the Ministry of
Endowments and Religious Affairs. Freedom of religion is guaranteed in
Oman, and the sultanate reaffirmed this right with a legal circular issued in
2006 that decreed all people in Oman could practice their beliefs without
interference from the government. However, this was on the condition that
services are held in government sanctioned religious buildings.

Economy
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From The Report: Oman 2016

Omans GDP at current market prices stood at OR31.45bn ($81.4bn) in 2014,

up 4.6% on 2013, according to the Central Bank of Oman. However, the drop
in global oil prices has put significant pressure on Omans GDP expansion. To
address this, and indeed to pave the way for a non-oil future, various
diversification strategies have been put in place that aim to reduce the
countys reliance on hydrocarbons revenues and stimulate growth across the
board. Large infrastructure investment is under way, with the development
of Omans transport and logistics offerings a key target moving forward. The
services sector meanwhile dominates non-oil GDP and comprised 40.7% of
total economic activity in 2014. Looking ahead, the government is
increasingly aiming to encourage greater private sector activity, with the
privatization of various state-owned firms and support for SMEs being
significant drivers in this regard. This chapter contains an interview with
Sultan bin Salim Al Habsi, Secretary-General, Supreme Council for Planning;
and Khalifa Al Barwani, CEO, National Centre for Statistics and Information.
Omans GDP grew 4.6% between 2013 and 2014 according to the Oman Central
Bank, with hydrocarbons the main driver of the economy at almost 50% of GDP.
Although the dip in oil prices has put pressure on government revenues, authorities
are pressing ahead with spending plans for the sector, particularly in the
downstream segment. The countrys infrastructure expansion plans are also moving
forward, particularly at the countrys three ports as the country seeks to leverage its
strategic position on the Strait of Hormuz and establish itself as a global transport
and logistics hub. Feeding off this development drive are the sultanates banks, with
project finance regarded as one of the most promising areas for lending growth. In
the longer term, Oman Vision 2020 seeks to boost private sector participation in the
economy and fuel SME growth in key sectors, including construction, retail, tourism
and transport.