The Sultanate of Oman shares borders with Saudi Arabia, United Arab
Emirates and Yemen; the country also shares marine borders with Iran and
Pakistan. Geographically, it is held on the mouth of Persian Gulf; besides, the
Sultanate is also the second largest territory in the Arabian Peninsula. Thus, its
physical location and peaceful political situation attract to invest in Oman
and offer a convenient place to enhance trade and business relations.
It contrast to the excellent opportunities in trade and business. Oman
is an oil rich monarchy, which heavy rely on its hydrocarbon resources, mainly oil
and gas. Historically, the first ever oil discovery was made in 1956. Later,
the first commercial oil discovery was achieved in 1962 and thus, the first
ever export of oil cargo was made in 1967. It was accounted that by 2009, in
Oman there were more than 135 oil producing fields, which rapidly reached the
mark of 162 by 2013. According to the Ministry of Finance, Oman, in the year of
2012, hydrocarbon sector generated 86% of Government revenue.
Parallel to that, for last several years it is also of the
great concern that Oman is going short of the oil resource drastically. Even though
the country is the biggest Middle Eastern oil producer, without being the
member of Organization of the Petroleum Exporting Countries (OPEC). Its modest
oil output make it hard to compete with its neighbor in the region.
According to Platts, one of the leading
global energy provider, from last seven years the country has reversed a
declining oil production trend. Furthermore, it states that while on the verge
of decline in the oil resources, Oman has won recognition as the regional
leader in development of unconventional oil and gas resources.
Similarly, more recently, in March 2015, the International Monetary Fund (IMF) stated that Oman has been hit hard struggling with the oil prices. For
example, according to
the Ministry of Finance, Oman, in 2014, the country
recorded a budget deficit of 600 million Rials Omani ($1.56 billion).[1]
Therefore, stability of the economy is
a concern which is imminent to focus. According to IMF, there is a need to introduce a direct
and indirect taxation, limiting growth to
public sector wages and reformation of the system of subsidies for fuels,
electricity and water. Most importantly, there is a need to diversify its approach from over-relying on single commodity
and boost the economy by promoting other industries.
[1]
Besides that the IMF also pointed out the
unrest of ‘Arab Spring’ in the Middle East some years back. To that Oman responded by increasing huge wages and creating tens of
thousands of new jobs. It was quoted that the Government spending was increased
by 35 percent in 2011.
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