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 well in the BMI Operational Risk Index, with many of its risks being outweighed by opportunities and advantages over its regional peers. BMI therefore regards Oman as an attractive prospect for investors, with particular reference to endeavours that can maximise the potential of Oman's low taxation and crime levels, high-quality infrastructures, reliable and accessible utility provision, and smooth bureaucratic mechanisms. The major risks to investors stem from poor education, consequent labour pool limitations, and decreasing utility subsidies. In particular, pressures from the recent slump in global oil prices are impacting the Omani investment environment negatively in the short-term, but may galvanise further diversification away from hydrocarbon production in the future. BMI consequently secures 46 thposition globally in the BMI Operational Risk Index...

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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 70.9 out of 100 for Crime...

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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 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 19 countries in the...

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Oman Industry Coverage (14)

Autos

Oman Autos

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The year 2014 was a positive year for Omani new vehicle sales, which ended the year up by 8.6% year-on-year (y-o-y), at 141,646 units, according to BMI calculations based on figures from Oman's National Centre for Statistics and Information. Passenger car sales were up by 12.3 y-o-y, to 119,115 units, while commercial vehicle sales actually fell by 7.8% y-o-y, to 22,531 units.

However, looking at early sales trends for 2015, it is clear that the current year will prove considerably more challenging for the new vehicle sales market in Oman. Total new vehicle sales were down by 19.7% y-o-y, to 26,133 units, over Q115. Passenger car sales were down by 25% y-o-y, at 20,390 units, while CV sales rose, by 8%, to reach 5,743 units.

As such, BMI has scaled back its 2015 new vehicle sales forecast considerably. We are now anticipating a 24.3% fall in new vehicle sales over...

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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 slow down 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: USD247.0mn in 2015 to USD263.0mn in 2019. Tablet sales are reshaping the market as they...

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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 maintain our construction industry growth forecast for Oman in 2015 at 4.4% in light of weak oil prices and their 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 6.0% in the next five years , compared to the 7.9% in the last five years. This difference reflects our more moderate construction industry growth forecast in the short term, on the back of weak oil prices.

  • In addition to...

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Insurance

Oman Insurance

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BMI View: Oman's insurance sector will record strong single-digit growth over 2015 and across the forecast period, reflecting its status as a significant market opportunity, albeit from a low base. 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.

Over 2015, 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 motor, which accounts...

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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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The outlook for Oman's shipping sector remains mixed and reflects its main ports' specialisation. The port of Salalah is expected to post another year of strong growth and historic highs in total tonnage helped by increased demand for the 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, however, will enjoy growth both in terms of total and container throughput, 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 at the port of Sohar and total throughput growth at the port of Salalah, while container volumes at Salalah will continue declining. However, despite the at-times challenging outlook, Oman continues to invest...

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Telecommunications

Oman Telecommunications

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BMI View: Additional competition will help maintain positive subscription growth momentum in Oman's wireline and mobile telecommunications markets through to 2019. Although Oman Broadband Company (OBC) and the yet-to-be-licensed third mobile network operator will provide greater consumer choice and lower prices, their contributions will largely be inorganic; rather, they will mostly cannibalise the existing user bases of their target markets. The broadband market offers the greatest opportunities for growth, owing to a lack of wireline local access infrastructure, but Omantel will be hard to dislodge owing to its entrenched position and ability to leverage its networks in terms of content, services and solutions distribution. The most potent threat to the sector now lies in the services arena, with third party over-the-...

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Tourism

Oman Tourism

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BMI View: Tourism plays a key role in the economics of Oman. Through our five-year forecast to 2019we expect strong growth in all areas. Inbound tourist numbers are set to rise, including those from key markets such as Europe. The hotel sector is expected to see significant developments and the country's travel infrastructure is to receive substantial improvements. Overall, the tourism sector holds good opportunities for investment.

In line with the trend of its Middle Eastern neighbours, Oman has seen a lot of growth in its tourism sector. Although links with the Asia-Pacific region have always been strong due to good travel infrastructure, important markets...

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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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