|
A steady progress
towards diversification
Lacking the significant hydrocarbons endowment of the other Gulf states,
Oman is an active front runner of attracting foreign direct investment,
intent on transforming the Oman economy from a purely oil producing and
exporting economy to a diversified non-oil based economy.
Economic Growth
At present, Oman’s economy is witnessing accelerated growth. The growth
is due to current high oil prices, strong domestic demand arising from
increased oil receipts and continuing steady growth of the non-oil
sectors of the economy. Oman’s GDP has accelerated to RO 13.3 billion at
the end of 2006 from around RO 7.6 billion at the end of 2001, with 83%
of the growth occurring in the past two years. The momentous growth has
meant that the current account surplus has swelled to RO 2.4 billion in
2006, from RO 1.8 billion in 2005.
Despite the declining oil production, the recent growth is mainly
spurred by high oil prices. The contribution from the petroleum sector
has increased to 67% in 2006 from 42.6% in 2001. The average oil price
realization was US$ 62 per barrel at the end of 2006 compared to US$ 23
per barrel in 2001.
The government is using a mix of prudent fiscal and monetary policies to
curb inflationary pressures. The inflation recorded during 2006 was
3.1%. Expenditure is expected to increase due to major investment
projects in the oil and gas sector, tourism and higher outlays on
priority social sectors.
The diversification of the economic base is one of the successes of the
government of Oman. The diversification policy was adopted mainly to
sustain development in the long run, with the main objectives aimed at
enhancing the contribution to GDP of the non-oil sectors, development of
natural gas-based industries, upgrading tourism and promoting non-oil
exports.
New Initiatives
Sohar port is a 50:50 joint venture between the Government of Oman and
the Port of Rotterdam and is strategically situated close to the energy
resources and outside the Strait of Hormuz. The greenfield port is at
the core of a US $ 12 billion integrated economic development and will
be critical to the success of 3 clusters - petrochemicals, metals and
logistics / energy.
The petrochemicals cluster includes the oil based value chain revolving
around 116,400 bpd Sohar Refinery Company and the gas based value chain
comprising US $ 3 billion Oman Petrochemicals Industries Company (a
joint venture between Government of Oman, Oman Oil Company and Dow
Chemicals Company). The metals cluster includes the US $ 2.4 billion
Sohar Aluminum Company (a joint venture between Oman Oil Company, ADWEA
and LG International), US $ 350 million Shadeed Steel Complex and US $
46 million steel mill of Al Jazeera Tubes. The energy cluster includes
the captive 1000 MW power plant for Sohar Aluminium Company and 585 MW /
33 million gallons per day Independent Water and Power Plant (IWPP) at
Sohar. Oman Oil Company SAOC has recently registered a new company,
Takamul, for co-investing into various downstream industries that could
convert the outputs from the various units in the above clusters into
further value adding products.
Salalah Free Zone (SFZ) is positioned to take advantage of the trem endous
potential offered by the transshipment terminal at Salalah and the
current industrial activity at the 150
hectare Raysut Industrial Estate. Salalah port is competing with
regional ports including Dubai, Aden,
and
Colombo, for its share of traffic as a hub for the global equatorial sea
routes.
Oman’s tourism strategy focuses on marketing its ecological and geographical
diversity and developing a world class social infrastructure to high
quality / networth tourists. In quantitative terms, tourism is expected
to increase it share of contribution to GDP to 3%.
|
