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Oman survived the precipitous fall in oil prices towards the end of 2008 because its budget was based on conservative estimates of $45 a barrel, a practice followed by most Gulf producers. Even in the days of windfall profits, prudent budgeting cut public debt from 16.3% of GDP in 2002 to 4.5% in 2007, with public investment programs also geared to withstand the volatility in revenue for which the oil industry is noted.
Difficult terrain and extraction conditions have placed Oman in the top tier of enhanced oil recovery technology and it will be able increasingly to export its know-how when the country’s own resources are depleted within the next two or three decades.
The state is following its neighbors in moving the entire economy away from oil dependence and using privatization in areas such as power, waste management and postal services to get the state out of direct business involvement, transferring its function to management and regulation. Major new industrial areas, such as Salalah, Sohar and Duqm, are part of a long-term move in this direction. These developments are supported by heavy infrastructure investments, especially on ports and airports.
The 12+% inflation that resulted from high energy and food prices in 2008 was fought with price controls on key foods such as rice, flour and oil, as well as a 7% ceiling on rent rises.
Free trade agreements with the US in 2006 and Singapore, supplemented by potential similar agreements with the European Union and India, should boost commercial ties and there are good prospects for a leap in tourism receipts with projects such as that at Mirbat Beach, which is a $30 billion development to be phased over 15 years. Together with other major schemes, this will increase hotel beds by 9,000 in a country noted for its scarcity of accommodation.
Strict attention to providing jobs for its own nationals has produced much higher ratios than much of the rest of the Gulf. Omanis account for around 95% of employees in in banking, education, health and government services. Even in telecoms, oil and gas, electricity and water sectors the level of local employment is almost two thirds of the total, while the workforce in tourism and transport is evenly split between Omanis and foreigners.
One reason for the high percentage of locals employed is that the education system has been geared towards private sector job placement for longer than most Gulf countries. Even so, the rapid expansion of the economy continues to identify skills shortages and present opportunities for importing trained labor to fill the gap.
Deloitte in Oman
Deloitte in Oman was established in the early 1970s and is part of a regional network of firms in the Middle East as well as a member of the global Deloitte Touche Tohmatsu firm. We recognize that the special requirements of small businesses are very different from those of multinational corporations and we have the experience and the understanding to meet the needs of both. With the strength of our global organization behind us, we offer small and large companies the best of both worlds. Our personal attention and specialized knowledge are combined with the global resources and expertise of a major international firm.
Deloitte Touche Tohmatsu has identified the Middle East as a priority market representing superior growth and share gain opportunities and as such, countries such as Oman are being targeted for substantial investment from Deloitte. This is being accompanied by a focused strategy of expansion in key business areas and a continued emphasis on recruiting and retaining the most talented professionals from the region and other countries to serve Middle East companies.