Oman

Oman was acutely underdeveloped until the discovery in the early 1970s of oil and natural gas. The Government has used some of its oil revenues to develop indigenous industries such as construction, agriculture and tourism and to build up the country's infrastructure: these projects are incorporated in the Vision 2020 economic development programme. In the late 1990s, Oman started to privatise major government-owned parts of the economy and introduce a legislative framework to encourage foreign investment. In the last two years, the economy has recorded steady growth of around four per cent and enjoys negligible inflation and unemployment.

 

Oman's five-year economic plan for 1996-2000 seeks to achieve a balance between government revenue and expenditure while creating a stable macroeconomic framework aimed at the development of the private sector; and to develop human resources, and upgrading Omani skills and competencies to keep abreast of technological progress (Molavi, 1998). Specifically, the plan calls for (1) an annual GDP growth rate of 4.6 percent at current prices; (2) an increase in the GDP share of non-oil sectors to 69 percent by the end of the year 2000; (3) an annual inflation rate not exceeding 1 percent; and (4) a minimum of 880,000 barrels per day of oil production (Ministry of Development, Sultanate of Oman, 1996).

 

In 2000, the Oman government launched its sixth 5-year plan to reduce its dependence on oil. The plan focuses on income diversification and job creation in the private sector as public sector has limited scope to generate revenue and job opportunities every year. Currently, efforts are underway to liberalize investment policies in order to attract foreign capital and create job opportunities for nationals.

 

In an interview with The Washington Times in 1999, His Excellency Abdulmalik Al-hinai stated that the Omani economy is witnessing a gradual and persistent structural change toward the diversification of the sources of national income[1]. Important progress was made in diversifying the economy into the gas and non-energy sectors. According to him, the contribution of non-oil export earnings to total merchandise export earnings has significantly improved from an annual average of only 3.8 percent during 1976-1980 to about 19.4 percent during 1991-1995 and to about 25.6 percent during 1995-1996.

 

Oman faces a significant labour problem. For decades, they have depended on expatriates to perform all kinds of menial tasks. In times when these economies were booming, the foreign work force in some of these countries became disturbingly large. The Omani government has been trying to reduce the expatriate population for several years.

 

However, the country is making steady progress towards replacing foreign workers with local citizens. The number of Omanis working in the country's private sector rose by 25.3 percent in the first four months of 1999, to 47,397 compared with 37,817 during the same period in 1998 (Karim, 2000). Moreover, the number of expatriate workers in the Sultanate at the end of April declined by 6.9 percent to 449,298 from 482,527 during the same period last year (Karim, 2000). With this, Oman is pushing local citizens to take jobs in the private sector to replace the large number of expatriate workers who run various aspects of the economy. Foreigners make up around 600,000 of Oman's 2.2 million population .

 

In Oman, the Omanisation programme has been in operation since 1988. 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 of Information has stipulated fixed Omanisation targets in six areas of the private sector: transport, storage and communications are to have 60% Omanisation, finance; insurance and real estate 45%; industry 35%; hotels and restaurants 30%; wholesale or retail trading 20% and contracting 15%.

 (Ministry of Information, 2003).

 

However, Oman's future growth is significantly challenged by the need to employ thousands of young Omanis currently needing work and the tens of thousands entering the job market every year. Despite Oman's aggressive Omanisaion program, unemployment is a challenge government officials worry about as no other; It is a formidable obstacle to growth. In 1998, with a population of 1.6 million and an estimated 500,000 students expected to enter the job market in the next five years, Oman faces the Herculean task of satisfying these hordes of job-seekers in a time when government ministries are cutting staff and the private sector is resistant to hiring the more expensive, less well-trained Omanis (Molavi, 1998).

 

A familiar Gulf duel is taking place in Oman now between the private sector and the government, with such official luminaries as Sayyid Haitham saying that "the private sector should do more to employ Omanis," and private-sector employers publicly grumbling about Omani workers' inability to compete in the global marketplace (Ministry of Development, Sultanate of Oman, 1996).

 

Exacerbating the conflict is a perception among many businessmen that Omani government ministers are still too personally involved in private commerce. In reality, an elite group of families dominates the private sector, and it has traditionally been from this same elite pool that government ministers were chosen. They were the only ones who possessed the proper education. As a new generation of well-educated Omanis moves up in the ranks, clearer lines will be drawn between private commerce and public business.

 

 

 

References

 

Karim, L. (2000) Growing nations. Al Shindagah, Special Feature, January.

 

Ministry of Development, Sultanate of Oman (1996) Basic Components and Main Indicators of the Fifth Five-Year Plan (1996-2000), January.

 

Ministry of Information (2003). Omanisation Policy. Available at [www.omanet.com]. Accessed [15/11/03]

 

Molavi, A. 91998) Oman's Economy: Back on Track. Middle East Policy, Vol. 5.

 

National economy is moving toward growth (1999). Interview by The Washington Times' representative Ayan Ahmed with His Excellency Abdulmalik Al-Hinai.

 

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[1] National economy is moving toward growth (1999). Interview by The Washington Times' representative Ayan Ahmed with His Excellency Abdulmalik Al-Hinai. http://www.internationalspecialreports.com/middleeast/99/oman/trade_investment/

 

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