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

  • We expect the formation of a fragile federalised state in Yemen, and the political situation will remain highly unstable over the coming decade. While not our core view, we flag significant risks of a return to civil war and a de-facto break-up of the state.

  • The economic outlook is uninspiring, with growth remaining sluggish over the 2015-19 period. Our core scenario sees business activity continuing to be negatively impacted by civil unrest, while persistent attacks on the country's hydrocarbon infrastructure will weigh on exports.

Key Risks To Outlook

  • Any further disruption to oil or gas exports would weigh heavily on the external position. Yemen's current account dynamics remain precarious; with minimal inflows of capital on the financial account, a...

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Oman Operational Risk Coverage (9)

Oman Operational Risk

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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 following 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 63.1 out of 100 for Logistics Risk, placing fifth out of 19 Middle East and North Africa (MENA) states and 42nd globally.

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

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Oman Crime & Security

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Oman benefits from an extremely strong and secure operating environment. With a well-trained and well-equipped police force, counterterrorism capability and military, Oman is relatively well-secured from crime and armed threat. Similarly, increasing capabilities in the cybersecurity and financial security fields are decreasing Oman's susceptibility to sophisticated crimes. As a result, Oman is ranked as the regional outperformer in the Middle East and North Africa for its Crime and Security Risks, with a score of 78.3 placing it top out of 19 countries in the region.

The biggest threats to Oman's political stability emanating from armed conflict would be the threat of spillover violence from one of the many troubled conflict spots in the region, most likely Yemen, as well as the risk of a messy handover of power following Sultan Qaboos' death. However, Oman's strong military and counter-terrorism capabilities...

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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 53.7 out of 100, which places it seventh out of 19 countries in the Middle East and Africa (MENA) and 75th out of 201 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%). BMI highlights the country's growing barriers to foreign worker employment...

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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 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 59.8 out of 100, which places it sixth out of 19...

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Oman Industry Coverage (14)

Autos

Oman Autos

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BMI has become increasingly negative on the outlook for Omani new vehicle sales over the past quarter. Indeed, we now feel that the indicators that are positive to Oman's economic growth prospects, such as a growing population and increasing urbanisation, are actually putting a burden on its roads. Moreover, we feel that new measures to curb congestion mean that the poorest consumers will be priced out of the car market. As such, we now expect total vehicle registrations (all first time registrations of both new and second-hand vehicles) to fall by 24.3% in 2015, led by a 30% drop in passenger car registrations, as people find it increasingly difficult to afford car purchases.

From May 1, imports of used vehicles more than seven years old have been banned and, while Omani nationals can import any number of vehicles meeting these requirements, non-nationals are restricted to just one. This echoes earlier...

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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: We revised historical data for Oman's consumer electronics market in the Q415 update, with the main change an upward revision to our estimate for handset market size after strong smartphone growth. We also revised our forecast, downgrading the growth outlook to reflect our assessment of a more mature market, as well as the drag on growth from heightened economic uncertainty in the face of a decline in the oil price. As a result, from 2015 we expect growth in the Omani consumer electronics market to be subdued compared to previous years. While a combination of market maturity and a challenging economic environment will weigh on short-to-medium-term growth, we expect a return to growth in the latter years of the forecast period, supported by population growth, the declining average selling prices of various devices and the introduction of...

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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, year...

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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: Oman's government commitment to infrastructure development will allow project activity to remain strong, despite a moderation in the pace of construction industry growth. Addressing the weaknesses in the labour market that affect the construction sector will be instrumental in securing Oman's successful adjustment to the new oil price environment.

Key Trends And Developments

  • Oman's economy is highly dependent on hydrocarbons, but revenue from oil and gas have started to decline. The weakening in hydrocarbons revenue is a structural problem that will weaken the government's capacity to invest in infrastructure projects.

  • ...

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Insurance

Oman Insurance

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BMI View: Oman's insurance sector will record single-digit growth across the forecast period. Strong macroeconomic performance as well as a growing expatriate community will help fuel demand, particularly for the ever dominant basic compulsory lines such as motor and health. Structural issues such as a fragmented market and low retention ratios will, however, continue to undermine the sector's upside potential.

We anticipate that Oman's insurance sector as a whole will achieve steady single-digit growth, though significantly below the highs of recent years. This will be largely driven by the non-life segment, and in particular basic lines such as health and motor, which accounts for the majority of total premiums. Looking ahead, the market will continue to operate at sub-optimal levels due to ingrained structural impediments...

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Medical Devices

Oman Medical Devices

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BMI Industry View: A small but fast growing market, we expect the medical device market to expand by a CAGR of 11.4% per annum to reach USD191.4mn by 2018. Imports account for the majority of the market, as domestic production is limited. Public healthcare sector infrastructure projects are contributing to growth momentum.

Headline Industry Forecast

  • The Omani medical device market is projected to expand by a CAGR of 11.4%, which should see it rise from an estimated USD111.6mn (OMR43.0mn) in 2013 to around USD191.4mn (OMR72.7mn) in 2018. By product area, the 2013-2018 CAGRs are expected to range from 15.9% for orthopaedics & prosthetics to 6.3% for patient aids.

  • Medical device imports supply over 95% of the market. In 2013, imports rose by 21.5% to reach USD108.1mn (OMR41.6mn). In recent years, the...

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Oil & Gas

Oman Oil & Gas

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BMI View: We believe that Oman's oil industry still provides 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, due to the current deflated decreased pricing environment, smaller energy producers such as Oman will have more challenges attracting upstream investment.

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Headline Forecasts (Oman 2013-2019)
2013e 2014e 2015f

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Pharmaceuticals & Healthcare

Oman Pharmaceuticals & Healthcare

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BMI View: Growth in Oman's pharmaceutical and healthcare markets will be driven by the roll out of medical insurance schemes and the completion of two medical cities, capitalising on the increased demand for healthcare services in both the domestic and international markets. Both projects are valued at over USD1bn each and will significantly improve the level of healthcare provision in Oman.

Headline Expenditure Projections

  • Pharmaceuticals: OMR203mn (USD528mn) in 2014 to OMR217mn (USD564mn) in 2015; 6.8% in local currency and US dollar terms. Forecast broadly in line with Q215....

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Shipping

Oman Shipping

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BMI View: The outlook for Oman's shipping sector remains mixed, reflecting the country's main ports' specialisation. The port of Salalah is expected to post another strong annual increase and achieve historic highs in total tonnage helped by higher demand for limestone and gypsum it handles while box volumes at the country's top container facility will endure another year of decline in 2015, affected by decreasing transhipment.

The port of Sohar will enjoy strong growth in 2015 - both in terms of total and container throughput. This is largely due to the transfer of operations from Sultan Qaboos, although continued investment into new dry bulk industries will also prompt growth. Over the medium term, we project further growth...

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Telecommunications

Oman Telecommunications

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BMI View: The possible entry of a third player into the mobile market, plus strong competition in the form of MVNOs, will keep mobile growth in positive territory, despite near saturation. We expect established operators Omantel and Ooredoo to respond to additional competition in the mobile market with a wider range of converged service offerings. Little subscription growth opportunity means retaining subscribers is equally, if not more, important than attracting new ones. Omantel and Ooredoo will achieve this by migrating subscribers on to shared data multi-play and packages, increasingly including smarthome solutions, thus deepening their relationships with customers. Meanwhile, though mobile remains the dominant...

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Tourism

Oman Tourism

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BMI View: Oman's tourism industry is underdeveloped in comparison to neighbouring UAE and Saudi Arabia, however the country offers substantial long term growth potential. Oman is home to a diverse range of tourism attractions and benefits from its proximity to major regional source markets. Tourism infrastructure is the subject of extensive government investments, and efforts to simplify visa applications and raise awareness are yielding results in the form of increased visitor numbers and higher rates of tourism related expenditure.

Oman is developing a reputation as an attractive beach holiday destination, with a long coastline and increasing volume of holiday resorts on offer. The capital Muscat is also a popular city break destination and visitors stand to benefit from development of social infrastructure including shopping malls and leisure facilities. Oman...

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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 to foreign...

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