Vision 2040: Economic Transition of Oman

Oct 27, 2023

Introduction

Oman, a picturesque country on the southeastern coast of the Arabian Peninsula, is embarking on a remarkable journey of economic transformation. This transformation, encapsulated in Vision 2040, signifies a monumental shift from an oil-dependent economy to a diversified and sustainable one. Vision 2040 sets the stage for a comprehensive overhaul, envisioning a prosperous and diverse economic landscape for the nation.

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Vision 2040 Oman

Infographics by GO-Globe Oman

 

Historical Economic Landscape of Oman

In the pre-oil era, Oman thrived on traditional industries like fishing, agriculture, and trade. The discovery of oil in the 1960s brought about a significant economic shift. The nation became heavily reliant on oil exports, shaping its economic framework around the revenues generated from this finite resource.

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Vision 2040: A Paradigm Shift

Vision 2040 is a strategic blueprint designed to propel Oman towards a prosperous and sustainable future. It encompasses multifaceted objectives, including economic diversification, human capital development, and environmental sustainability. The Sultanate envisions a future where its citizens enjoy a high standard of living, backed by a robust and diverse economy.

Economic Diversification for Sustainable Growth

Oman recognizes the importance of reducing its reliance on oil revenue and diversifying its economy. This is being achieved through investments in various sectors such as tourism, logistics, fisheries, and manufacturing. These sectors are identified to have significant potential for growth and job creation. To bring Vision 2040 to fruition, Oman has initiated various key strategies. The National Program for Enhancing Economic Diversification (Tanfeedh) identifies sectors for development, fostering innovation, and enhancing competitiveness. Special Economic Zones (SEZs) and Industrial and Logistics Zones are creating hubs to attract investment and facilitate trade.

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Infrastructure Development

A critical aspect of Vision 2040 is the development of world-class infrastructure. This includes the expansion and enhancement of transportation networks, the establishment of advanced healthcare facilities, and the improvement of educational institutions. Oman's vision embraces a revolution in public transportation. This involves the introduction of advanced and sustainable modes of public transport such as high-speed trains, metro systems, and electric buses. These initiatives aim to reduce traffic congestion, lower emissions, and provide convenient options for daily commuters.

Technological Advancements

Technological advancements will be at the forefront of Oman's infrastructure development. Embracing cutting-edge technologies in various sectors will enhance efficiency, productivity, and competitiveness. Smart cities, digital connectivity, and innovative solutions will be pivotal in achieving this transformation.

Promoting Sustainable Infrastructure

Furthermore, sustainability is a core principle of Oman's transportation vision. Implementing sustainable mobility practices involves promoting electric and hybrid vehicles, investing in charging stations, and integrating eco-friendly alternatives to conventional fuels. This shift towards sustainable mobility will contribute to reducing the nation's carbon footprint. The aim is to create a conducive environment that attracts international investments and fosters sustainable growth.

Key Projects

The key projects of Madayn Vision 2040 include completing the development of the industrial cities in Sur, Al Buraimi, Suhar, Raysut, Nizwa, Al Mazunah Free Zone and Knowledge Oasis Muscat (KOM). New industrial cities are also coming up in Ibri, Thumrait, Shinas, Al Mudhaibi and Al Rawdah, in addition to specialised industrial complexes such as the plastic industries complex in Suhar Industrial City, precision manufacturing and nanotechnology in Sur Industrial City, and pharmaceutical industries complex and food industries complex in all the industrial cities, as well as metal works industries in several industrial cities.

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Empowering Small and Medium Enterprises (SMEs)

The Vision 2040 Oman places SMEs at the heart of its development strategy. The aim is to create an enabling environment for SMEs to thrive, innovate, and contribute significantly to the nation's economy. This involves streamlining processes, reducing bureaucratic hurdles, and fostering a culture of entrepreneurship.

Facilitating Growth and Innovation

Empowering SMEs involves providing platforms for growth and fostering innovation. Initiatives such as incubation centres, innovation hubs, and technology parks are being established to nurture startups and SMEs. These spaces encourage collaboration, idea-sharing, and the development of innovative solutions.

Access to Funding and Resources

One of the primary challenges SMEs face is access to funding. Oman's vision includes the creation of funding mechanisms, grants, and financial support schemes tailored for SMEs. Ensuring easy and affordable access to capital will enable SMEs to scale up their operations and drive economic development.

Skill Development and Capacity Building

Equipping SMEs with the necessary skills and knowledge is crucial for their success. Oman's vision incorporates comprehensive skill development programs and capacity-building initiatives. Workshops, training sessions, and mentorship programs are being conducted to enhance the capabilities of entrepreneurs and their teams.

Environmental Sustainability

Oman is committed to preserving its rich natural heritage while pursuing economic growth. The country is actively investing in renewable energy projects, water conservation, and waste management initiatives. By doing so, Oman aims to contribute to global sustainability goals and ensure a clean and healthy environment for its citizens.

Public-Private Collaborations

Collaborations between the public and private sectors are vital to empower SMEs effectively. Partnerships can provide SMEs with access to expertise, resources, and market networks. These collaborations can range from mentorship programs to joint ventures, driving sustainable growth within the SME sector.

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Tourism Development

Tourism is a key pillar of Vision 2040, with Oman aiming to become a premier tourist destination. One of the economic pillars of Oman's 2040 Economic Vision is to increase revenue from tourism. The nation is investing in the development of tourism infrastructure and promoting its unique cultural heritage and breathtaking landscapes. From historical sites to pristine beaches, Oman offers a diverse range of attractions for visitors. The country is already seeing many new international players entering the market through resort and hotel developments. James Hewitson, GM, Al Baleed Resort, Salalah, which is part of Anantara Hotel group, says, “Oman with its culture, unique topography and 3500km of coastline has been on our radar for many years to try and establish the Anantara brand.

Diversification and Attractions

Diversifying the attractions and experiences is a key element of Oman's tourism vision. The nation plans to develop and promote various attractions, including historical sites, stunning landscapes, adventure activities, traditional souks, and luxury resorts. By offering a wide array of experiences, Oman seeks to cater to the preferences and interests of different types of tourists.

Sustainable Tourism

Sustainability is a fundamental principle of Oman's tourism vision. The nation is committed to promoting sustainable tourism practices that preserve its natural and cultural heritage. Sustainable initiatives include eco-friendly resorts, responsible tourism campaigns, waste reduction efforts, and conservation projects aimed at protecting Oman's delicate ecosystems.

Community Involvement

Involving local communities in the tourism sector is a priority for Oman. The vision emphasises empowering communities to actively participate in tourism-related activities, benefiting economically and socially. By integrating local culture and traditions into the tourism experience, visitors gain a deeper understanding of Oman's heritage.

Promoting Cultural Exchange

Cultural exchange is a vital aspect of Oman's tourism vision. The nation aims to foster an environment where visitors can interact with the local population, understand their way of life, and appreciate their cultural nuances. This exchange enriches the visitor experience and fosters cross-cultural understanding.

Related: Tourism in Bahrain: Re-Inventing the Developmental Journey

 

Human Capital Development

Oman's Vision 2040 places significant emphasis on human capital development and job creation. Recognizing that human resources are the foundation of any nation's progress, this vision is designed to ensure that the people of Oman are equipped with the right skills, education, and opportunities for a prosperous future. The goal is to nurture a skilled and knowledgeable workforce that can drive economic growth and innovation. This involves investing in education, healthcare, skill development, and creating an environment that encourages lifelong learning and development.

Upskilling and Education

To prepare for the jobs of the future, Oman is investing heavily in upskilling its workforce. Education forms a significant part of this endeavor. The vision envisages a transformation in the education system, focusing on equipping individuals with the skills and knowledge needed to thrive in a rapidly evolving job market.

Creating Job Opportunities

Job creation is a pivotal aspect of Vision 2040. Oman aims to diversify its economy, create a conducive business environment, and attract investments that will generate a multitude of employment opportunities. The focus is on both quantity and quality of jobs, ensuring a sustainable and inclusive job market.

Empowering the Youth

Empowering the youth is a core theme of Vision 2040. Oman is dedicated to providing the youth with the necessary tools, opportunities, and mentorship to realize their potential. By fostering entrepreneurship, innovation, and leadership, the vision seeks to channel the energy and ideas of the youth towards constructive nation-building.

Gender Equality and Inclusivity

Ensuring gender equality and inclusivity in the workforce is a vital aspect of Vision 2040. Oman is committed to providing equal opportunities for both genders and breaking down barriers that hinder women's participation in the workforce. By promoting inclusivity, the nation aims to maximize its human capital potential.

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Vision 2040 Oman: Facts, Figures and Latest Statistics

  • The Gross Domestic Product (GDP) in Oman was worth US$114.67 billion in 2022.
  • GDP in Oman is expected to reach US$117.54 Billion by the end of 2023.
  • The GDP value of Oman represents 0.05% of the world economy.
  • Construction industry in Oman is expected to grow by 3.5% to reach OMR 2,544 million in 2023.
  • The growth momentum is expected to continue over the forecast period, recording a CAGR of 4.6% during 2023-2027.
  • The construction output in Oman is expected to reach OMR 2,861.0 million by 2027.
  • Of the projects under development, localizing of 6,500 industrial projects (factories) in Oman shall provide around 270,000 job opportunities.
  • Madayn Vision 2040 aims to achieve OMR15 billion of investment and localizing 10,000 projects in various fields by the end of the plan.
  • In terms of the workforce, Madayn (Vision 2040) has achieved more than 70% of the target as it provided more than 40,000 job opportunities during the ten-year plan.
  • The total number of the workforce was 22,000 by the end of 2010 compared to more than 62,000 towards the end of 2020.
  • By the end of 2020, the Omanization rate has touched nearly 35% with more than 21,000 Omani working in Madayns various industrial cities today.
  • Madayn came close to achieving 85% of the target as it was able to localize more than 1,650 projects in various sectors in its ten-year plan. Today in May 2023, the number of these projects is approaching 2,400.
  • Madayn has worked on developing phase 7 of Suhar Industrial City on an area of approximately 8 million square metres, expansion project of Raysut Industrial City, phases 1 and 2 of Al Mazunah Free Zone, development works in Al Buraimi, Sur and Nizwa Industrial Cities, and completing the masterplan of Knowledge Oasis Muscat.
  • By 2040, Oman aims to become a world class premium tourism destination driving the diversification of the economy, attracting 5 million plus tourists, and offering a total of 560,000 jobs.
  • Out of the 560,000 jobs in Oman, an estimated 75% of those are expected to be Oman nationals.
  • The ministry is looking to invest around RO20bn for its strategy through 2040. A great majority of that investment (86-89%) will be through the private sector.
  • Muscat’s share of accommodation is expected to decrease from 53% now to 30.8% in 2040 as more hotel rooms come up in other parts of the country.
  • The ministry expects tourism to create 535,574 direct and indirect jobs by 2040. The strategy will be implemented in three stages: Preparation (2016-20), Growth (2021-30) and Stability (2031-40). 
  • Oman is on course to surpass its 2023 employment and replacement plan after hitting 53% of its target for job creation in the first half of the year.
  • The latest figures from the Labor Ministry show the total number of new jobs in government and private sector entities touched 18,716 by the end of June 2023.
  • Oman is one of the world´s biggest oil producing countries and oil and natural gas extraction account for 51% GDP.
  • The services sector represents 37% of the wealth in Oman. Within services the largest segments are:
  1. Wholesale and retail trade- 8%
  2. Public administration and defense - 7%
  3. Transport, storage and communication - 6.8%
  4. Manufacturing and mining contribute - 6%
  5. Construction, electricity and water distribution - 5%
  6. Agriculture - 1%

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Challenges and Mitigation Strategies

The journey towards economic diversification is not without challenges. Oman grapples with reducing its dependency on oil revenues and bridging the workforce skills gap required for a diversified economy. Vision 2040 has laid out strategies to overcome these challenges while aligning with sustainable development goals. Oman also understands the importance of global partnerships in achieving its economic objectives. Collaborations, trade agreements, and partnerships with other nations are pivotal in enhancing economic ties and fostering a global market presence for Omani products and services.

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Conclusion

Vision 2040 represents a pivotal moment in Oman's history, steering the nation towards a promising economic future. It is a testament to Oman's commitment to progress, sustainability, and prosperity. By diversifying the economy, empowering SMEs, nurturing human capital, and embracing sustainability, Oman is laying the foundation for a vibrant future. As the nation progresses towards 2040, the world watches in anticipation of the transformation that will unfold.

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FAQs

Q1. What is Vision 2040?

Vision 2040 is a long-term economic plan by Oman aimed at diversifying the nation's economy, reducing its reliance on oil, and creating a sustainable and prosperous economic landscape.

Q2. How does Vision 2040 benefit Oman's economy?

Vision 2040 benefits Oman by promoting economic diversification, attracting investments in non-oil sectors, fostering entrepreneurship, and enhancing the quality of life for its citizens.

Q3. Are there specific industries targeted for development under Vision 2040?

Yes, Vision 2040 targets various sectors for development, including tourism, logistics, manufacturing, and renewable energy, to name a few.

Q4. How is Vision 2040 addressing environmental concerns?

Vision 2040 addresses environmental concerns by promoting sustainability, green initiatives, and a circular economy approach to ensure economic growth is in harmony with environmental preservation.

Q5. How can investors participate in Oman's economic transformation?

Investors can participate in Oman's economic transformation by exploring investment opportunities in non-oil sectors, taking advantage of FDI incentives, and engaging with the country's support systems for SMEs and startups.

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