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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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 a number...

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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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Over the first 10 months of 2014, a total of 99,391 passenger cars (PCs) were registered in Oman, according to BMI calculations based on figures from Oman's National Centre for Statistics and Information. August (14,576) and September (14,691) were particularly strong months for new registrations (all segments).

On current sales trends, this would imply PC sales of around 119,000 units for the full year. When added to our estimate of 111,000 commercial vehicle (CV) sales for 2014 (based on BMI calculations derived from OICA sales data), this would suggest total vehicle sales of around 230,000 units for the full year. This would represent year-on-year sales growth of around 5%.

Looking forward, as with other oil-producing nations in the Gulf, BMI has become more cautious on the outlook for Oman's economy, and by extension its auto...

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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: Growth in the Omani consumer electronics market will slowdown over our new forecast period, ending in 2019, compared to previous years on the back of increasing market saturation in some segments of the market. Meanwhile, the country's economy is heavily reliant on oil, and the decline of oil prices in 2014 has impacted on public and private sector spending. While this will weigh on consumer confidence in the short- to medium-term, we expect the declining average selling prices of various devices and the introduction of devices with new features to sustain demand in the market.

Headline Expenditure Projections

Computer Hardware Sales: USD247mn in 2015 to USD262mn in 2019. Tablet sales are reshaping the market as they cannibalise notebook...

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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: We have revised down our construction industry growth forecast for Oman in 2015 from 5.5% to 4.5% in light of falling oil prices and its impact on Oman's economy. This reflects our view that weaker crude prices will have a moderate impact on infrastructure investment in Oman, given its centrality to the government's objectives. Should oil prices remain low over a sustained period of time, we would consider a further downward revision to our medium-to-long term forecasts.

Key Trends And Developments

  • We forecast gross fixed capital formation (GFCF) to average 6.2% in the next 5 years by comparison to the 7% in the last 5 years. This difference reflects our more moderate construction industry growth forecast in the short term, on the back of falling oil prices.

  • In addition to...

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Insurance

Oman Insurance

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BMI View: The Omani insurance sector will post steady growth over the forecast period. Premium growth will remain largely driven by compulsory, basic lines, which in turn will be fuelled by sustained economic growth. Structural issues such as low retention ratios will suppress optimal growth across most sub-sectors.

We remain of the view that solid economic growth will drive sustained year-on-year growth over the forecast period. However, the market will continue to operate at sub-optimal levels due to ingrained structural impediments. These barriers are largely caused by intense price competition in basic lines, such as motor and health. These sub-sectors make up the majority of non-life premiums, which in turn is the dominant of the two segments. Price competition along dominant lines suppresses the development of the market by limiting profitability. As such the sector is characterised by sub-...

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Medical Devices

Oman Medical Devices

Oil & Gas

Oman Oil & Gas

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BMI View: Beginning in 2015, Oman will witness the gradual and steady decline of its oil reserves. The country's crude oil production levels will reach their peak in 2017, with total hydrocarbon production reaching their height in 2020. Incremental increases in the country's domestic consumption will be aggravated by decreasing returns from the enhanced recovery efforts. 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, due to the current deflated decreased pricing environment, smaller energy producers such as Oman will have more challenges attracting upstream investment.

Oman's positioning for a greater role in the...

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Pharmaceuticals & Healthcare

Oman Pharmaceuticals & Healthcare

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BMI View: Despite Oman being the most exposed of the Gulf Cooperation Council states to lower oil prices, the government announced an increased state budget with the healthcare sector, highlighting the importance of the sector in political stability and economic diversification. We are encouraged by the government's commitment to expanding access to healthcare and speeding up pharmaceutical registration times.

Headline Expenditure Projections

  • Pharmaceuticals: OMR204mn (USD530mn) in 2014 to OMR218mn (USD567mn) in 2015; 6.8% in local currency and US dollar terms. Forecast broadly in line with Q115.

  • ...

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Shipping

Oman Shipping

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The outlook for Oman's shipping sector is mixed. The port of Salalah is expected to endure a third consecutive year of decline in 2015, but the port of Sohar will enjoy extraordinary growth once more. This is largely due to the transfer of operations from Sultan Qaboos, but continued investment into new dry bulk industries will also prompt strong growth. Despite the at-times challenging outlook, Oman continues to invest in its maritime facilities.

Headline Industry Data

  • 2015 container throughput at Salalah is forecast to contract by 3.5%. Growth will return in 2016, and from 2015 to 2019 will average 3.1%.

  • 2015 total tonnage throughput at Sohar forecast to reach 58.96mn tonnes - an expansion of 9.8%. Growth will average 11.8% over...

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Telecommunications

Oman Telecommunications

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BMI View: Despite the maturity of the market and its relatively small size, positive growth continues to be registered across all sectors of Oman's telecommunications market. The high mobile penetration rate proves no barrier to expansion of both the wireline voice and broadband markets (although we believe apparent growth dynamics in mobile are skewed by the retention of large numbers of inactive subscriptions). Omantel 's investment in VDSL upgrades and fibre serve to boost demand for advanced services, including pay-TV, and this bodes well for the emergence of a new player, Oman Broadband Company (OBC), over the next few years. The opportunities for growth are reflected in our revised forecasts for the mobile and wireline sectors, which have now been extended through to 2019.

...

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Tourism

Oman Tourism

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BMI View: The tourism sector of Oman, already a key area economically, is expected to see significant growth over our forecast period. With inbound travel set to increase from all geographical regions, strong international interest in the hotel sector and major improvements to the country's airports, tourism holds a lot of opportunities for potential investment.

As with many of the Middle Eastern countries, Oman has seen a substantial growth in tourism over recent years, something the country has embraced as it seeks to diversify its economy. Traditionally most inbound travel has come from Asia where strong transport links have been established but the figures for European travel to Oman are steadily increasing as well. We forecast continued significant growth in both over our forecast period, with inbound travellers from Asia hitting 479...

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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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