As one of the smaller Gulf oil producers, Oman has had to diversify its economy earlier than most. The country has a wealth of historical sites, providing a good basis for tourism expansion. Construction is booming around the industrial port of Sohar, though most services depend on a healthy oil economy. High standards of living and the absence of personal income tax help to maintain support for Sultan Qaboos bin Said al-Said.

We keep our clients informed of the latest market moves and political developments in Oman, as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 14 of Oman’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert research teams. Our aim is to keep you ahead of the curve, so you can operate with confidence in Oman.

Country Risk

Oman Country Risk

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Core Views

  • Uncertainty over the health of Sultan Qaboos bin Said al-Said, who has governed Oman since 1970, is bringing the succession question to the fore. We see major risks in the succession process. Governance is set to become more unpredictable in the future, and the Omani political system - with the Sultan enjoying all-encompassing powers - is largely unsustainable in its current form.

  • The decline in oil prices will have a more severe impact on government and private consumption in Oman than in the rest of the GCC, given the country's fiscal vulnerabilities. We forecast the Omani economy to grow by 3.2% in real terms in 2015, down from an average rate of 3.5% between 2009 and 2012.

  • The fall in oil prices will leave Oman posting budget and...

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Oman Operational Risk Coverage (9)

Oman Operational Risk

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BMI View: Oman performs strongly in the BMI Operational Risk Index, ranking among the Middle East and North Africa (MENA) region's top three countries to do business. BMI 's appraisal of the operating environment indicates that upside risks outweigh downside risks, making Oman an attractive prospect for investors. Reasons for investing in Oman include its low crime rate, strong legal system, low taxation levels, the high-quality transport network and minimal red tape. In spite of this positive outlook, there are some risks that need serious consideration, including the limited skilled labour pool and declining export growth rates.

Oman's score is based on...

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Oman Crime & Security

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Oman is generally a very safe country for foreign business travellers, expatriate workers and tourists, but there is still a lingering threat of terrorism. This poses the greatest risk to investors, hence its relatively low score in BMI's Terrorist Threat ratings. The 2011 anti-government protests, associated with the region-wide 'Arab Spring' movement, could produce extremist factions that violently push for greater democracy in Oman. The likelihood of this occurring, however, is very low, with the majority of Omanis holding Sultan Qaboos in high esteem. A more probable terrorist threat comes from neighbouring Yemen, where al-Qaeda maintains a strong foothold in the Arabian Peninsula. Oman's pro-Western stance makes it a more-attractive target for Muslim extremists, such as al-Qaeda, whose indiscriminate attacks could catch expatriates in the 'cross-fire'. Oman scores 74.2 out of 100 for Crime and Security Risk.

Cyber...

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Oman Labour Market

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Overall, Oman's Labour Market rank is significantly boosted by a relatively flexible workforce and decent standard secondary education infrastructure; but at the same time, it is depressed by a severely inadequate tertiary education system, which has diminished the country's skilled labour pool. The country is firmly in the top tier for this indicator in BMI's Operational Risk Index, with a score of 52.3 out of 100, which places it seventh out of 18 countries in the Middle East and Africa (MENA) and 72nd out of 170 states worldwide.

The Labour Cost score is the country's second-highest scoring segment in the Labour Market Risk Index, largely due to its relatively flexible workforce, non-existent severance pay for redundancy dismissals and strong international migrant stock (29.5%). Oman scores 51.6 out of 100 for this indicator, which places it seventh within MENA and 88th globally out of 170 nations....

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Oman Logistics

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Oman presents a moderate degree of logistical risk to investors, who will be concerned by a lack of diversity in Oman's transport network and high levels of trade bureaucracy. Broadly speaking, these are the primary downside risks, but we expect to significant improvements vis a vis infrastructure development. The Omani government's five-year infrastructure development plan is now yielding results, and eliminating threats that stem from supply chain inadequacies. We therefore expect Oman to rise in the BMI Logistics Risk Index in the years to come. The Gulf state currently scores 62.4 out of 100 for Logistics Risk, placing fifth out of 18 Middle East and North Africa (MENA) states.

The government's USD78bn five-year (2011-15) infrastructure spending plan has financed hundreds of infrastructure projects which are at varying stages of completion. Investors are now starting to see new roads and...

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Oman Trade & Investment

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BMI View: Oman's Trade And Investment Risk performance is boosted by a strong legal system that offers robust legislation regarding the protection of business interests and minimal red tape, which expedites the process of starting and locating a company. Although previous restrictions on foreign ownership have limited foreign direct investment (FDI), Oman is keen to develop the inflow of FDI and create a positive business environment. For these reasons, Oman is a regional outperformer for Trade And Investment Risk, with a score of 59.7 out of 100, which places it sixth out of 18 countries in the Middle East and North Africa...

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Oman Industry Coverage (14)

Autos

Oman Autos

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BMI retains its view that new vehicle sales will see essentially flat performance over 2014. 8M14 sales figures stood at 145,954 units, according to information on the Best Selling Cars Blog website, down by five units year-on-year (y-o-y). Market consolidation, following stellar growth across 2012 and 2013, appears to be the most likely explanation for the slightly underwhelming performance of Omani new vehicle sales in 2014, with the high prices charged for vehicles and parts by certain local dealerships another contributing factor.

On the macroeconomic front, BMI's Country Risk team is only predicting a slight fall in GDP growth; from 3.9% in 2014 to 3.7% in 2015. Our core view is that Oman's development model of state-led economic diversification will continue driving robust growth throughout 2015, thanks to continued public spending on infrastructure projects and strong domestic demand....

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Commercial Banking

Oman Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Consumer Electronics

Oman Consumer Electronics

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BMI View:   Vendors have continued to report strong revenue growth in Oman, fuelled by new technologies and products, as well as retail channel expansion. An evolving retail landscape and growing acceptance of hypermarket retailing will help stimulate sales, while a growing population is attracting more large retailers. Growing demand for high-end smartphones continues to compensate for stagnant sales of feature phones. Rising household incomes offer potential for strong growth in consumer electronics demand as consumers want the latest devices. Downside potential to our outlook is the impact of credit tightening and regional property slump, which may lead to a slowdown in sales. Downside to our outlook could come from sustained low oil prices, which could lead to higher taxes to the telecoms sector and could be...

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Freight Transport

Oman Freight Transport

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Volumes handled on Oman's freight transport network are set to enjoy strong growth over the coming years. The sector will benefit not only from a rapidly growing economy, and consumer base, but also from sizeable investment. This will not only benefit the sector directly, through the construction of a new railway line, investment in airports, and new terminals at the country's ports, but will also develop industries heavily reliant on the freight network system. An example of this is Vale's iron ore pelletising plant at Sohar, which generates considerable traffic of dry bulk ships at the port of Sohar. 

Headline Industry Data

  • 2015 tonnage throughput at Salalah is forecast to reach 9.39mn tonnes on growth of 7.9%, with growth to average 7.6% to 2019.

  • 2015 total tonnage throughput at Sohar is forecast to reach 59.38mn tonnes,...

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Information Technology

Oman Information Technology

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BMI View:  BMI has a bullish outlook for the development of the IT market in Oman. The total size of the Omani IT was estimated to have reached OMR164mn in 2013 - up 7.3% from 2012. We forecast growth of 5.8% in 2014 and 5.6% in 2015. Moreover, we expect to see strong medium term growth, with total spending on course to reach OMR210mn by 2018. Several factors are converging, including rapid population growth, rising incomes, declining device prices and modernisation by enterprises and public authorities. Moreover, investments in key verticals such as oil and gas, banking, utilities and aviation will drive overall enterprise spending growth, while small- and medium-sized enterprises will be a key source of growth. Spending by the government will also be a key source of spending, with the national initiative to increase PC ownership and e-government services both key projects

...

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Infrastructure

Oman Infrastructure

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BMI View: We have upwardly revised our construction industry growth forecast for Oman in 2015 on the back of stronger than expected official data and strong momentum in the project pipeline, particularly in non-residential construction and transport infrastructure. As such, we currently forecast construction industry real growth of 6.7% y-o-y for 2015 and an average of 4.8% over the next five years.

Key Trends And Developments

  • We forecast gross fixed capital formation (GFCF) to grow by 7.0% in real terms in both 2014 and 2015, from an average of 3.2% over 2009-12. This is on the back of a strong infrastructure project pipeline, particularly in the transport segment. The government's USD78bn five-year (2011-15) spending plan is a major part of this view, along with investment associated with a burgeoning tourism industry.

    ...

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Insurance

Oman Insurance

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BMI View:    BMI remains of the view that the Omani insurance sector will achieve steady single-digit growth over the forecast period, largely driven by a strong economy. However, the market will remain regionally small and underdeveloped. As such, the sector will continue to be characterised by sub-scale insurers competing on the basis of price across basic lines.

Steady growth, largely as a result of sustained economic growth will characterise the Omani insurance sector over the forecast period. However, the market will remain small in absolute terms. Moreover, intense price competition in basic lines among sub-scale players will continue to prevent the sector achieving optimal growth in premiums. As is the case with many regional markets, low retention rates, often below 50%, continue to undermine insurers'...

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Medical Devices

Oman Medical Devices

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BMI Industry View:   BMI estimates the Omani medical device market stood at US$111.6mn in 2013, equal to US$31.0 per capita. Imports account for the majority of the market, as domestic production is limited. The market as a whole is expected to grow at a healthy CAGR of 11.4% per annum to reach US$191.4mn by 2018.

Headline Industry Forecast

  • ...

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Oil & Gas

Oman Oil & Gas

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BMI View: Unless significant discoveries are made in the short term, 2015 will start the gradual but inexorable decline of Oman's oil reserves. The country's crude oil production levels will reach their peak in 2017, with total hydrocarbon production reaching their zenith in 2020. Incremental increases in Omani domestic consumption will be aggravated by the decreasing returns from the enhanced recovery efforts that Muscat has pursued in the last few years. BMI feels that Oman's oil industry will still provide new lucrative opportunities from the approval of additional upstream projects to new discoveries, with a specific focus on offshore being a unique area of opportunity. However, with significant decline in global oil prices that started in the latter half of 2014, smaller energy producers such as...

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Pharmaceuticals & Healthcare

Oman Pharmaceuticals & Healthcare

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BMI View: The Omani government is placing an increasing emphasis on the healthcare sector, demonstrated by a large increase in funding for the 2015 national budget. Much of this investment is allocated to building state-of-the-art healthcare infrastructure in an attempt to promote the medical tourism industry. We highlight continuing commercial opportunities in the Omani pharmaceutical market for multinational drugmakers due to the high penetration of patented medicines, lack of local competition and the development of the private healthcare sector.

Headline Expenditure Projections

  • Pharmaceuticals: OMR187mn (USD487mn) in...

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Shipping

Oman Shipping

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Oman continues to develop into a regional powerhouse for the shipping and transhipment of dry bulk goods such as iron ore. To this end a new port is being constructed at Duqm and new cargo terminals at Salalah and Sohar. The new Duqm port will also boast a new oil refinery. Further port developments include the announcement that all cargo operations were moved from the Muscat port of Sultan Qaboos to Sohar as of the end of 2014. All of this is aided by Oman's position on the Arabian Sea, outside the Gulf, enabling it to offer shorter shipping lines than ports within the congested body of water. On the macroeconomic side, growth in the Omani ports sector will be supported by expanding GDP and rising private consumption.

Headline Industry Data

  • 2015 container throughput at Salalah is forecast to grow by 3.7%. Growth to 2019 will average 4.6%.

  • 2015 total...

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Telecommunications

Oman Telecommunications

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BMI View:  Oman's small size and high penetration rates for mobile voice and broadband services means there are few opportunities for prospective new players in the market. Its maturity is reflected by Nawras Telecom 's rebranding as Ooredoo in October 2014, accompanied by a barrage of price-led promotional campaigns designed to retain existing customers as much as secure new clients. The exercise is aimed at cannibalising the success of Oman's unofficial third mobile operator, MVNO FRiENDi , which claims to account for 70% of the 686,000 'reseller' user base and which has been driving market growth over the last 12 months. The official third operator - Samatel - has yet to launch and it seems...

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Tourism

Oman Tourism

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BMI View: Oman's tourism sector remains a key area of economic growth, with several domestic and international developers showing strong interest in building luxury hotels and resorts in the sultanate. BMI retains a positive view on Omani tourism as we enter 2015.

Oman's tourism sector has grown substantially in recent years. Asia represents the largest market for inbound travel and is expected to continue to do so over the forecast period. We are forecasting growth in arrivals from Asia of 37.3% over the 2014-2018 period, to reach 450,210. Europe represents the second-largest source market for Omani tourism. Here, we are forecasting arrivals to increase by 12.8% between 2014 and 2018 to reach 348,930.

The Omani government continues to promote tourism as one of the key sectors that will move the economy away from a reliance on hydrocarbons. It...

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Water

Oman Water

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BMI View: This quarter we have extensively expanded and revised our forecasts for extraction by source, mains, non mains and household consumption, and water losses. Overall we expect steady investment to result in reduced losses and higher water production levels; however, although residential demand growth will remain muted, we expect industrial and commercial demand to rise steadily driving future investment in the sector.

Oman's water infrastructure sector offers extensive opportunities across both supply and distribution, with a healthy project pipeline, as older facilities are being decommissioned and new projects and networks are needed to replace them. The country is open...

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