Oman offers a wide range of business and trade opportunities, a subject that has been discussed at the latest virtual conference held by the Madrid Chamber of Commerce.
The entity has organised a virtual conference to explain the challenges and opportunities offered by Oman for companies in Madrid. The president of the Madrid Chamber of Commerce, Ángel Asensio, began by thanking the institutional support of the Community of Madrid and the City Council for the internationalisation of companies in the region. He also thanked Qatar Airways for its sponsorship and for its role in the pandemic, highlighting it as an example of adaptation in the face of difficulties.
Oman is strategically located in the Middle East and has a population of 5 million. Its economy is based primarily on oil and gas, but it is increasingly aware of the need to diversify. Sectors such as tourism and the agri-food industry, in which Spain has significant experience, can benefit from diversification.
The Spanish Ambassador to Oman, María Luisa Huidobro, encouraged the companies to get to know Oman at first hand and assured them of the Embassy's support. She also highlighted the reforms undertaken by the new Sultan to tackle the country's structural problems, as well as the opportunity that Oman represents by maintaining good relations with its neighbouring countries and therefore being a gateway to them. Oman's internal security in a conflictive regional context is another of the virtues that the ambassador highlighted.
The third speaker, Remedios Romeo, Spain's Economic and Commercial Counsellor in Oman, described Spain's experience in recent years as successful, although she added that it has not been without its faults.
Romeo commented that the country is currently going through a difficult situation, which has been going on for some time, but which has been aggravated by the pandemic. The need to rebuild its economy and social peace is a priority.
"The government has a responsibility to manage the risks to make the country sustainable and provide good opportunities for business," he said. Foreign investment and technology are now more than ever needed in Oman.
Oman is a member of the Gulf Cooperation Council, a regional organisation that brings together Saudi Arabia and the United Arab Emirates, among others. It accounts for 10 per cent of the organisation's population and 5 per cent of GDP. In terms of development and oil reserves, it lags behind its partners, although it does not score badly on business indicators such as the Doing Business index. In 2020, it ranked just one place behind Saudi Arabia (68th) (62nd).
Among the weaknesses of its economy are the aforementioned dependence on oil, the high deficit and the high debt that prevents it from obtaining a good rating from rating agencies and therefore makes it difficult to obtain external financing. In Oman, 80% of jobs are in the public sector and 20% in the private sector.
In recent years, due to the agony of the former sultan, the country was paralysed, no relevant decisions were taken and the necessary reforms were not addressed. Fiscal consolidation and the adjustment of public accounts were postponed until the arrival of the new sultan in January 2020, Haitham bin Tariq, who, in addition to the health crisis, had to face the collapse of oil prices. The creation of the Oman Investment Authority was one of the successes of the new sultan that Romeo pointed out. The agency is tasked with rationalising public spending.
Since reforms began last year, the country has rebuilt ties with the IMF, which after several years in which its reports were flatly rejected by the Omani authorities, is now once again being taken into account.
The gradual rise in oil prices suggests that Oman's economy is set to recover. However, they currently face the challenge of vaccinating a highly sceptical population, which could delay economic recovery.
It was in 2004 that Spain established its embassy in Oman. Later, in 2010, the first Investment Forum was opened, and four years later King Juan Carlos visited Oman. In 2019, a joint event was held with the Oman Chamber of Commerce and Industry, and in 2020, Felipe VI travelled to show his condolences for the death of the former Sultan.
The bilateral relationship is not as close as with other countries in the region, but it is still in good health and there are opportunities for further growth in the future.
Spanish companies are present in several sectors, especially in engineering, infrastructure, oil and gas, water, defence, construction, logistics, mining, ICT and tourism. In total, over the last 15 years, Spanish companies have been awarded contracts worth 5.5 billion euros.
Sectors with the greatest potential
Isabel Parra, market analyst at the Spanish Economic and Commercial Office in Oman, explained the sectors with the greatest potential.
Hydrocarbons, one of the country's main sectors, has received most of the foreign direct investment in recent years. There are new gas fields such as Khazaen-Gazheer and Mabrouk that could be of interest to Spanish companies in the sector.
The construction sector, which already has a significant Spanish participation, suffered an impact in 2020 with the halt in public and private investment, experiencing a 21% decrease. Even so, there are projects to develop transport infrastructures, such as the construction of new airports and the expansion of the Port of Sohar and Duqm.
Another of the sectors that could attract Spanish companies thanks to their long experience is tourism. Logically, COVID-19 has had a negative impact and plans to reach 12 million visitors and 6% of GDP by 2040 have been cut short. Before the pandemic, the sector was booming, doubling the number of visitors between 2013 and 2019. Nevertheless, the Omani authorities are determined to boost it.
Remedios Romeo has offered some advice to companies interested in entering Oman. Among them, she highlights the importance of verifying the client to avoid scams, avoiding non-payments and being clear that the courts are not usually impartial and that, in fact, there are sometimes commercial matters that are settled through criminal proceedings.