Oman shifts to a diversified economy away from oil and gas
Oman’s recent shuffle of key personnel in its military establishment comes in preparation for the US Vice-President’s visit next month. As the United States hopes to gather regional support for its stance against Iraq, Oman is striving to diversify its economy away from oil and gas, and has launched several key initiatives to achieve this objective.
Although diversification efforts have just begun, recent economic indicators already appear promising. For instance, the Sultanate’s nominal GDP totaled $15.12 billion during the first nine months of 2001, up 4.3 percent from the corresponding figure the previous year. Oman also continues to exhibit a healthy trade balance. During the first nine months of 2001, exports reached $8.5 billion, compared to imports of $4.16 billion during the equivalent period.
Oman is seeking to diversify its economy away from oil and gas through the development of a vibrant industrial sector. Last week, Oman’s Oil Minister signed a memorandum of understanding (MoU) with Swiss-based ABB and LG International of South Korea for construction of a $200 million polypropylene plant. The facility will have the capacity to produce 340,000 tons of polypropylene annually. The completion of this plant will coincide with the construction of a 70,000-barrell per day refinery at Sohar, which will provide feedstock to the new complex. According to the MoU, the Omani government would own 60 percent of the project and the remainder would go to foreign investors.
The above project represents the government’s first major endeavour to diversify sources of national income. The government is also taking steps to encourage private sector investment in the information technology (IT) sector. Along these lines, an agreement was recently signed to establish an IT complex at the Public Authority for Industrial Estates (PAIE) by the end of the year.
Oman’s efforts to diversify its economy and encourage investment take on added importance with its accession to the World Trade Organization and the upcoming Gulf Cooperation Council (GCC) Customs Union law, which is due to be enforced as of January 2003. Recent efforts appear promising, and a more stable regional political climate would only enhance Oman’s attraction to foreign investors. — (menareport.com)
© 2002 Mena Report (www.menareport.com)