EDITOR: | April 5th, 2013

Oman: the Country that the ‘Arab Spring’ forgot is open for Business

| April 05, 2013 | No Comments
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omanThe ‘Arab Spring’, the series of socio-political revolts against longstanding regimes in Tunisia, Egypt, Libya, Syria and beyond has passed over perhaps the most mysterious and least talked about country of the region: the sultanate of Oman. The name alone conjures images of the tales of the 1001 Nights and the atmosphere and scenery are similarly evocative. Oman is close to the famous Gulf powers, Saudi Arabia, Dubai and Qatar; however, it is quite different and in many ways better. Long before the world media spoke of an ‘Arab Spring’, Oman embarked in a process of reform extending beyond the façade, at once agreeable for the local population, the migrant workers and the government and Royal family itself – a rare combination.

Oman’s laws facilitate foreign investment, especially in the field of technology, transportation, electricity and water supply. Unlike many Gulf and North African petrodollar fueled economies, Oman has instituted a transparent investment climate (Transparency International ranks it 28th in the world), which reduces risks for foreign companies interested in doing business. This is very important now that many corporations face increased shareholder scrutiny on matters of corporate sustainability. There are also Free Zones, offering financial incentives for investors and tax and customs tax.

Oil was discovered only in 1967 but the path to development began in earnest in 1970 allowing the sultanate to transform from a once poor country to one where there is free health care and education, modern infrastructure and a diversifying economy that is no longer solely reliant on oil. Oil and gas still account for 40% of GDP, but thanks to a determined economic diversification policy, that share is decreasing as other economic sectors such as mining, fishing and port development are growing. Vale SA has established one of its most important and technologically advanced facilities for the production of iron ore pellets for distribution to Asia. Medallion Resources (TSXV: MDL), which plans to extract rare earths from monazite sands, has identified Oman as one of the target locations for its processing plant. Oman would be able to supply the labor, materials, logistics and infrastructure under an agreeable risk umbrella.

Oman is a politically stable country located in a strategic geographic position, sandwiched between the chaotic Yemen and Iran. This has been a boon to Omani ports, and to international shipping as they are located far beyond the risk zone of the Gulf and unaffected by Iranian threats of closures. The Port of the capital, Muscat, has been reserved for cruise and tourism shipping only while the newly inaugurated port at Al-Duqm boasts  the deepest basin of the Middle East anchor to moor supertankers. Tourism is also expanding, and while the Arab Spring has raised risks in established travel destinations such as Egypt or Tunisia, Oman attracted 77% more tourists in 2011.

Oman is not without problems. It has a large youth population and has relied on migrant workers to a similar extent as its neighbors; however, the government has adopted policies to curb this tendency by requiring companies to hire more Omanis. Nevertheless, even when it comes to migrant workers, conditions are superior to those of its neighbors, where labor conditions have been compared to a kind of slavery. In Oman, workers keep their passports and every two years are entitled to a paid trip to the country of origin. In order to avoid the cultural shock that has sometimes generated social turmoil in other parts of the Middle east, the ruler, Sultan Qaboos bin Said, has promoted national culture and identity down to the architectural style. There are no skyscrapers in glass and metal. Urban planning must comply with the Arab tradition also in the colors and materials. Yet, the country is as modern as any of its sky chasing megalomaniac neighbors.

 


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