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CONTENTS Oman  Economic AnalysisLegal Information Info-Prod Country Guide
CHARACTERISTICS   INDICATORS   THE ECONOMY   INVESTMENT ISSUES   PROJECTS   PROSPECTS

Principal Commercial and Political Characteristics

General
Since 1970 Oman has used its modest oil revenue to make impressive economic progress and to improve public access to health care, education and social services. Oman has a mixed economy with significant government participation in industry, transportation and communications. In recent years the Omani government has sought to diversify the economy and to stimulate private investment.

According to results of the first national census carried out in December 1993, Oman's total population is 2,017,591. Of this, 537,060 (26 percent) are expatriates, mostly of South Asian origin. As a result of the large number of foreign workers, the government is attempting a policy of "Omanization" to introduce more Omanis into the work force.

Estimates of the population growth rate vary, but most fall within the range of an increase of 4.9 percent each year. Virtually all Omanis are Muslim. Half are adherents of the Ibadhi sect, the others are Sunni with a small number of Shi'ites in the country as well. The Shi'ites are particularly prominent in commerce. Expatriates follow a variety of Indian and Western religions, and there are places of worship for their faiths in Oman.

Commercial Outlook
The Sultanate of Oman controls one side of the strategic strait of Hormuz, at the mouth of the Persian Gulf. Although the economy is driven by Oman's oil resources, these resources are modest. The oil revenues provide a comfortable cushion but yields a per capita income of only US$ 5,000 to 6,000. It is due to these modest oil resources as well as Oman's dependency on oil revenues and the volatile price of oil that in recent years Oman required foreign financial assistance.

The government, which operates under five-year development plans, is trying to diversify its economy away from oil. To achieve this, the government has opened the country to foreign participation in the economy, particularly in the form of joint ventures and, especially, in the industrial field. Although bureaucratic processing of commercial licenses can be cumbersome and time-consuming, the government does promote a free market economy. There are no restrictions on the flow of capital, whether in terms of salaries or the repatriation of corporate profits.

Nationalization of foreign enterprises is unknown in Oman and the government is beginning to privatize some of its state-owned companies. In addition to the oil and gas sectors, the areas with the greatest commercial opportunities, there are other sectors in Oman that offer significant potential. These include water saving technologies for agriculture, equipment for the treatment of wastewater, medical equipment, telecommunications, joint ventures in light industry, training and vocational education and development of an infrastructure for increasing tourism to the Sultanate.

The major obstacle to doing business in Oman is the country's small population and resulting small domestic market. Exacerbating this problem is the lack of a modern, high value consumer market, particularly beyond the capital area. In addition, other Gulf state producers typically offer higher subsidies for industry than Oman, creating similar industries and making competition difficult. Oman's trade and investment regime reflects fiscal, social and other priorities which sometimes conflict with industrialization.

Political Outlook
The Sultanate of Oman is a monarchy which has been ruled by the Al Bu Sa'id family since the middle of the eighteenth century. It has no political parties or directly elected representative institutions. The current Sultan is Qaboos Bin Sa'id Al Sa'id who acceded to the throne in 1970. Although the Sultan retains firm control over all important policy issues, he has brought tribal leaders and other notables into the Government. In accordance with tradition and cultural norms, much decision-making is by consensus among these leaders. In 1991, the Sultan established a fifty-nine seat Consultative Council, or Majlis Ash-Shura, which replaced an older advisory body. The Government selects council members from lists of nominees proposed by each of the fifty-nine wilayats (regions). After the country's first national census in 1993, the Sultan expanded the membership of the new Council to eighty seats. The Council has no formal legislative powers, but may question government ministers and recommend changes to new laws on economic and social policy.


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