Economy of Oman
Encyclopedia
Oman
is a country in the Middle East. Current GDP per capita has expanded continuously in the past half-a-century. It grew 339% in the Sixties reaching a peak growth of 1,370% in the Seventies scaling back to modest 12% growth in the turbulent Eighties and rising again to 34% in the Nineties.
For purchasing power parity comparisons, the US Dollar is exchanged at 0.29 Omani Rials only. Mean wages were $15.99 per manhour in 2009.
's economic performance improved significantly in 1999 due largely to the mid-year upturn in oil prices. The government is moving ahead with privatization
of its utilities, the development of a body of commercial law to facilitate foreign investment, and increased budgetary outlays. Oman liberalized its markets in an effort to accede to the World Trade Organization
(WTO) and gained membership in 2000.
When Oman declined as an entrepot for arms and slaves
in the mid-19th century, much of its former prosperity was lost, and the economy turned almost exclusively to agriculture
, camel and goat herding, fishing, and traditional handicraft
s. Today, oil fuels the economy and revenues from petroleum
products have enabled Oman's dramatic development over the past 30 years.
Oil was first discovered in the interior near Fahud
in the western desert in 1964. Petroleum Development Oman
(PDO) began production in August 1967. The Omani Government owns 60% of PDO, and foreign interests own 40% (Royal Dutch Shell
owns 34%; the remaining 6% is owned by Compagnie Francaise des Petroles [Total] and Partex
). In 1976, Oman's oil production rose to 366,000 barrels (58,000 m³) per day but declined gradually to about 285,000 barrels (45,000 m³) per day in late 1980 due to the depletion of recoverable reserves. From 1981 to 1986, Oman compensated for declining oil prices
, by increasing production levels to 600,000 b/d. With the collapse of oil prices in 1986, however, revenues dropped dramatically. Production was cut back temporarily in coordination with the Organization of Petroleum Exporting Countries (OPEC), and production levels again reached 600,000 b/d by mid-1987, which helped increase revenues. By mid-2000, production had climbed to more than 900,000 b/d where they remain. Oman is not a member of OPEC.
Natural gas
reserves, which will increasingly provide the fuel for power generation and desalination, stand at 18 trillion ft³ (510 km³). The Oman LNG
processing plant located in Sur was opened in 2000, with production capacity of 6.6 million tons/YR, as well as unsubstantial gas liquids, including condensates.
Oman does not have the immense oil resources of some of its neighbors. Nevertheless, in recent years, it has found more oil than it has produced, and total proven reserves rose to more than 5 billion barrels (0.8 km³) by the mid-1990s. Oman's complex geology makes exploration and production an expensive challenge. Recent improvements in technology, however, have enhanced recovery.
Agriculture
and fishing are the traditional way of life in Oman. Dates and limes, grown extensively in the Batinah coastal plain and the highlands, make up most of the country's agricultural exports. Coconut palms, wheat, and bananas also are grown, and cattle are raised in Dhofar
. Other areas grow cereals and forage crops. Poultry production is steadily rising. Fish and shellfish exports totaled $34 million in 2000.
capital area has both an international airport at Seeb and a deepwater port at Mina Qaboos
. The newly opened (1999), large scale modern container port at Salalah
, capital of the Dhofar Governate, and a seaport at nearby Raysut
were recently completed. A national road network includes a $400 million highway linking the northern and southern regions. In an effort to diversify the economy, in the early 1980s, the government built a $200-million copper mining and refining plant at Sohar
. Other large industrial projects include an 80,000 b/d oil refinery and two cement factories. An industrial zone at Rusayl showcases the country's modest light industries. Marble, limestone, and gypsum may prove commercially viable in the future.
The Omani Government is implementing its sixth 5-year plan, launched in 2000, to reduce its dependence on oil and expatriate labor. The plan focuses on income diversification, job creation for Omanis in the private sector, and development of Oman's interior. Government programs offer soft loans and propose the building of new industrial estates in population centers outside the capital area. The government is giving greater emphasis to "Omanization" of the labor force, particularly in banking, hotels, and municipally sponsored shops benefiting from government subsidies. Currently, efforts are underway to liberalize investment opportunities in order to attract foreign capital.
Some of the largest budgetary outlays are in the areas of health services and basic education. The number of schools, hospitals, and clinics has risen exponentially
since the accession of Sultan Qaboos in 1970.
United States
firms faced a small and highly competitive market dominated by trade with Japan
and Britain
and re-exports from the United Arab Emirates
. The sale of U.S. products has also been hampered by higher transportation costs and the lack of familiarity with Oman on the part of U.S. exporters. However, the traditional U.S. market in Oman, oil field supplies and services, should grow as the country's major oil producer continues a major expansion of fields and wells. In addition, on 20 July 2006 the U.S. Congress approved the US-Oman Free Trade Agreement
. This took effect on 1 January 2009, eliminating tariff barriers on all consumer and industrial products. It also provides strong protections for foreign businesses investing in Oman.
Academics working on various aspects of Omanization include Ingo Forstenlechner from United Arab Emirates University and Paul Knoglinger from the FHWien.
The Ministry has issued a decision regulating tourist guides, who in future will be required to have a license. This Ministerial decision aims at encouraging professionalism in the industry as well as providing career opportunities for Omanis who will be encouraged to learn foreign languages so as to replace foreign tour guides. In January 1996, a major step forward in the training of Omanis in the hotel industry came with the opening of the National Hospitality Institute (NHI). The Institute is a public company quoted on the Omani Stock exchange. In February 1997, the first batch of 55 male and female trainees, sponsored by the Vocational Training Authority, were awarded their first level certificates and were given on-the-job training in several hotels. In May 1999, the fourth batch of 95 trainees obtained their NVQs, bringing the number of Omanis trained by the Institute to around 450. Omanis now make up 37% of the 34,549 employees in the hotel and catering business, which exceeds the Omanization target of 30% set by the Government. The NHI has also trained catering staff from the Sultan’s Armed Forces and has launched a two year tour guide course, which includes language training, safe driving, first aid and a knowledge of local history and geography.
of listed companies in Oman was valued at $15,269 million in 2005 by the World Bank
.http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20394793~menuPK:1192714~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html
Oman is one of those countries with little or no national debt, but national wealth, managed via a number of sovereign wealth funds.
The most significant of those is the State General Reserve Fund, or SGRF.
lowest 10%:
NA%
highest 10%:
NA%
Industrial production growth rate:
5.9% (2006 est.)
Electricity - production:
14.33 billion kWh (2004)
Electricity - production by source:
fossil fuel:
100%
Electricity - consumption:
13.33 billion kWh (2004)
Electricity - exports:
0 kWh (1998)
Electricity - imports:
0 kWh (1998)
Agriculture - products:
dates, limes, bananas, alfalfa, vegetables; camels, cattle; fish
Exchange rates:
Omani rials per US dollar - 0.3845 (2005), 0.3845 (2004), 0.3845 (2003), 0.3845 (2002), 0.3845 (2001)
Oman
Oman , officially called the Sultanate of Oman , is an Arab state in southwest Asia on the southeast coast of the Arabian Peninsula. It is bordered by the United Arab Emirates to the northwest, Saudi Arabia to the west, and Yemen to the southwest. The coast is formed by the Arabian Sea on the...
is a country in the Middle East. Current GDP per capita has expanded continuously in the past half-a-century. It grew 339% in the Sixties reaching a peak growth of 1,370% in the Seventies scaling back to modest 12% growth in the turbulent Eighties and rising again to 34% in the Nineties.
Macro-economic trend
This is a chart of trend of gross domestic product of Oman at market prices estimated by the International Monetary Fund with figures in millions of Omani Rials.| Year | Gross Domestic Product | US Dollar Exchange | Inflation Index (2000=100) |
Per Capita Income (as % of USA) |
|---|---|---|---|---|
| 1980 | 2,190 | 0.34 Omani Rials | 80 | 43.12 |
| 1985 | 3,591 | 0.34 Omani Rials | 76 | 39.15 |
| 1990 | 4,493 | 0.38 Omani Rials | 95 | 30.89 |
| 1995 | 5,307 | 0.38 Omani Rials | 100 | 23.75 |
| 2000 | 7,639 | 0.38 Omani Rials | 100 | 23.78 |
| 2005 | 11,660 | 0.38 Omani Rials | 101 | 29.36 |
For purchasing power parity comparisons, the US Dollar is exchanged at 0.29 Omani Rials only. Mean wages were $15.99 per manhour in 2009.
Overview
OmanOman
Oman , officially called the Sultanate of Oman , is an Arab state in southwest Asia on the southeast coast of the Arabian Peninsula. It is bordered by the United Arab Emirates to the northwest, Saudi Arabia to the west, and Yemen to the southwest. The coast is formed by the Arabian Sea on the...
's economic performance improved significantly in 1999 due largely to the mid-year upturn in oil prices. The government is moving ahead with privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
of its utilities, the development of a body of commercial law to facilitate foreign investment, and increased budgetary outlays. Oman liberalized its markets in an effort to accede to the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
(WTO) and gained membership in 2000.
When Oman declined as an entrepot for arms and slaves
Slavery
Slavery is a system under which people are treated as property to be bought and sold, and are forced to work. Slaves can be held against their will from the time of their capture, purchase or birth, and deprived of the right to leave, to refuse to work, or to demand compensation...
in the mid-19th century, much of its former prosperity was lost, and the economy turned almost exclusively to agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
, camel and goat herding, fishing, and traditional handicraft
Handicraft
Handicraft, more precisely expressed as artisanic handicraft, sometimes also called artisanry, is a type of work where useful and decorative devices are made completely by hand or by using only simple tools. It is a traditional main sector of craft. Usually the term is applied to traditional means...
s. Today, oil fuels the economy and revenues from petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
products have enabled Oman's dramatic development over the past 30 years.
Fahud
Fahud is a permanent oil camp and oil field in the middle of the central plain area of Oman, named after the nearby Jebel Fahud believed to mean "Leopard Mountain" from the time when wild leopards used to roam the area...
in the western desert in 1964. Petroleum Development Oman
Petroleum Development Oman
Petroleum Development of Oman is the foremost exploration and production company in the Sultanate. It accounts for more than 90% of the country's crude-oil production and nearly all of its natural-gas supply...
(PDO) began production in August 1967. The Omani Government owns 60% of PDO, and foreign interests own 40% (Royal Dutch Shell
Royal Dutch Shell
Royal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...
owns 34%; the remaining 6% is owned by Compagnie Francaise des Petroles [Total] and Partex
Partex
Partex Oil and Gas Corporation is an oil company which is fully owned by the Calouste Gulbenkian Foundation, from Lisbon, Portugal.-History:...
). In 1976, Oman's oil production rose to 366,000 barrels (58,000 m³) per day but declined gradually to about 285,000 barrels (45,000 m³) per day in late 1980 due to the depletion of recoverable reserves. From 1981 to 1986, Oman compensated for declining oil prices
1980s oil glut
The 1980s oil glut was a serious surplus of crude oil caused by falling demand following the 1970s Energy Crisis. The world price of oil, which had peaked in 1980 at over US$35 per barrel , fell in 1986 from $27 to below $10...
, by increasing production levels to 600,000 b/d. With the collapse of oil prices in 1986, however, revenues dropped dramatically. Production was cut back temporarily in coordination with the Organization of Petroleum Exporting Countries (OPEC), and production levels again reached 600,000 b/d by mid-1987, which helped increase revenues. By mid-2000, production had climbed to more than 900,000 b/d where they remain. Oman is not a member of OPEC.
Natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
reserves, which will increasingly provide the fuel for power generation and desalination, stand at 18 trillion ft³ (510 km³). The Oman LNG
Oman LNG
Oman LNG is a LNG plant in Qalhat near Sur, Oman. The company was established by the Royal decree of Sultan Qaboos of Oman in 1994. The construction was launched in November 1996, and the plant was commissioned in September 2000. The main shareholder is the Government of Oman in cooperation with...
processing plant located in Sur was opened in 2000, with production capacity of 6.6 million tons/YR, as well as unsubstantial gas liquids, including condensates.
Agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
and fishing are the traditional way of life in Oman. Dates and limes, grown extensively in the Batinah coastal plain and the highlands, make up most of the country's agricultural exports. Coconut palms, wheat, and bananas also are grown, and cattle are raised in Dhofar
Dhofar
The Dhofar region lies in Southern Oman, on the eastern border with Yemen. Its mountainous area covers and has a population of 215,960 as of the 2003 census. The largest town in the region is Salalah. Historically, it was the chief source of frankincense in the world. However, its frankincense...
. Other areas grow cereals and forage crops. Poultry production is steadily rising. Fish and shellfish exports totaled $34 million in 2000.
Modernization
The government is undertaking many development projects to modernize the economy, improve the standard of living, and become a more active player in the global marketplace. Oman became a member of the World Trade Organization in October 2000, and continues to amend its financial and commercial practices to conform to international standards. Increases in agriculture and especially fish production are believed possible with the application of modern technology. The MuscatMuscat, Oman
Muscat is the capital of Oman. It is also the seat of government and largest city in the Governorate of Muscat. As of 2008, the population of the Muscat metropolitan area was 1,090,797. The metropolitan area spans approximately and includes six provinces called wilayats...
capital area has both an international airport at Seeb and a deepwater port at Mina Qaboos
Mina Qaboos
Mina Qaboos is the largest port in Muscat, Oman. Developed initially as a part of a plan for a "Greater Muttrah" by the Qaboos bin Said al Said's prececessor , Mina Qaboos' construction was completed in the 1970s....
. The newly opened (1999), large scale modern container port at Salalah
Salalah
Salalah , is the capital and seat of the governor or Wali of the southern Omani province of Dhofar. The population of Salalah was 197,169 in 2009....
, capital of the Dhofar Governate, and a seaport at nearby Raysut
Raysut
Raysut is a port town in southwestern Oman. It is located at around ....
were recently completed. A national road network includes a $400 million highway linking the northern and southern regions. In an effort to diversify the economy, in the early 1980s, the government built a $200-million copper mining and refining plant at Sohar
Sohar
Sohar is the most developed city in Sultanate of Oman outside the capital Muscat. It is about 200 kilometers north of Muscat. Sohar was an ancient capital of Oman and many believe it to be the birthplace of Sinbad the Sailor...
. Other large industrial projects include an 80,000 b/d oil refinery and two cement factories. An industrial zone at Rusayl showcases the country's modest light industries. Marble, limestone, and gypsum may prove commercially viable in the future.
The Omani Government is implementing its sixth 5-year plan, launched in 2000, to reduce its dependence on oil and expatriate labor. The plan focuses on income diversification, job creation for Omanis in the private sector, and development of Oman's interior. Government programs offer soft loans and propose the building of new industrial estates in population centers outside the capital area. The government is giving greater emphasis to "Omanization" of the labor force, particularly in banking, hotels, and municipally sponsored shops benefiting from government subsidies. Currently, efforts are underway to liberalize investment opportunities in order to attract foreign capital.
Some of the largest budgetary outlays are in the areas of health services and basic education. The number of schools, hospitals, and clinics has risen exponentially
Exponential growth
Exponential growth occurs when the growth rate of a mathematical function is proportional to the function's current value...
since the accession of Sultan Qaboos in 1970.
United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
firms faced a small and highly competitive market dominated by trade with Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
and Britain
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
and re-exports from the United Arab Emirates
United Arab Emirates
The United Arab Emirates, abbreviated as the UAE, or shortened to "the Emirates", is a state situated in the southeast of the Arabian Peninsula in Western Asia on the Persian Gulf, bordering Oman, and Saudi Arabia, and sharing sea borders with Iraq, Kuwait, Bahrain, Qatar, and Iran.The UAE is a...
. The sale of U.S. products has also been hampered by higher transportation costs and the lack of familiarity with Oman on the part of U.S. exporters. However, the traditional U.S. market in Oman, oil field supplies and services, should grow as the country's major oil producer continues a major expansion of fields and wells. In addition, on 20 July 2006 the U.S. Congress approved the US-Oman Free Trade Agreement
US-Oman Free Trade Agreement
The U.S.-Oman Free Trade Agreement is a trade pact between Oman and the United States. On November 15, 2004, the George W. Bush administration notified the U.S. Congress of its intent to sign a trade agreement with the Middle Eastern Sultanate of Oman...
. This took effect on 1 January 2009, eliminating tariff barriers on all consumer and industrial products. It also provides strong protections for foreign businesses investing in Oman.
Introduction
In Oman, the Omanization program has been in operation since 1988, working toward replacing expatriates with trained Omani personnel. by the end of 1999, the number of Omanis in government services exceeded the set target of 72%, and in most departments reached 86% of employees. The Ministry has also stipulated fixed Omanization targets in six areas of the private sector. Most companies have registered Omanization plans. Since April 1998 a 'green card' has been awarded to companies that meet their Omanization targets and comply with the eligibility criteria for labour relations. The names of these companies are published in the local press and they receive preferential treatment in their dealings with the Ministry.Academics working on various aspects of Omanization include Ingo Forstenlechner from United Arab Emirates University and Paul Knoglinger from the FHWien.
Training and Omanization
In order to meet the training and Omanization requirements of the banking sector, the Omani Institute of Bankers was established in 1983 and has since played a leading role in increasing the number of Omanis working in the sector. The Central Bank monitors the progress made by the commercial banks with Omanization and in July 1995 issued a circular stipulating that by the year 2000, at least 75% of senior and middle management positions should be held by Omanis. In the clerical grades 95% of staff should be Omanized and 100% in all other grades. At the end of 1999, no less than 78.8% of all positions were held by Omanis which is a considerable achievement for the banking sector in general. Women made up 30% of the total. During 1999 the percentage of Omanis employed at senior and middle management levels went up from 76.7% to 78.8%. There was a slight increase in the clerical grade percentage to 98.7%, while the non-clerical grades had already reached 100% Omanization in 1998. The banking sector currently employs 2,113 senior and middle managers supported by 4,757 other staff.The Ministry has issued a decision regulating tourist guides, who in future will be required to have a license. This Ministerial decision aims at encouraging professionalism in the industry as well as providing career opportunities for Omanis who will be encouraged to learn foreign languages so as to replace foreign tour guides. In January 1996, a major step forward in the training of Omanis in the hotel industry came with the opening of the National Hospitality Institute (NHI). The Institute is a public company quoted on the Omani Stock exchange. In February 1997, the first batch of 55 male and female trainees, sponsored by the Vocational Training Authority, were awarded their first level certificates and were given on-the-job training in several hotels. In May 1999, the fourth batch of 95 trainees obtained their NVQs, bringing the number of Omanis trained by the Institute to around 450. Omanis now make up 37% of the 34,549 employees in the hotel and catering business, which exceeds the Omanization target of 30% set by the Government. The NHI has also trained catering staff from the Sultan’s Armed Forces and has launched a two year tour guide course, which includes language training, safe driving, first aid and a knowledge of local history and geography.
Investment
The stock market capitalizationMarket capitalization
Market capitalization is a measurement of the value of the ownership interest that shareholders hold in a business enterprise. It is equal to the share price times the number of shares outstanding of a publicly traded company...
of listed companies in Oman was valued at $15,269 million in 2005 by the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
.http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20394793~menuPK:1192714~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html
Oman is one of those countries with little or no national debt, but national wealth, managed via a number of sovereign wealth funds.
The most significant of those is the State General Reserve Fund, or SGRF.
Statistics
Household income by percentage share:lowest 10%:
NA%
highest 10%:
NA%
Industrial production growth rate:
5.9% (2006 est.)
Electricity - production:
14.33 billion kWh (2004)
Electricity - production by source:
fossil fuel:
100%
Electricity - consumption:
13.33 billion kWh (2004)
Electricity - exports:
0 kWh (1998)
Electricity - imports:
0 kWh (1998)
Agriculture - products:
dates, limes, bananas, alfalfa, vegetables; camels, cattle; fish
Exchange rates:
Omani rials per US dollar - 0.3845 (2005), 0.3845 (2004), 0.3845 (2003), 0.3845 (2002), 0.3845 (2001)
See also
- Central Bank of OmanCentral Bank of OmanThe Central Bank of Oman was established in December 1974 and began operations on 1 April 1975. It replaced the Oman Currency Board as the principal currency authority in Oman....
- Omani RialOmani rialThe rial is the currency of Oman. It is divided into 1000 baisa .-History:Before 1940, the Indian rupee and the Maria Theresa Thaler were the main currencies circulating in Muscat and Oman, as the state was then known, with rupees circulating on the coast and Thaler in the interior...
- List of companies of Oman
- US-Oman Free Trade AgreementUS-Oman Free Trade AgreementThe U.S.-Oman Free Trade Agreement is a trade pact between Oman and the United States. On November 15, 2004, the George W. Bush administration notified the U.S. Congress of its intent to sign a trade agreement with the Middle Eastern Sultanate of Oman...