Oman Economic Forum
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Oman Economic Forum Investing in Oman Al Bustan Palace, Muscat March 18th, 2014 Presentation Overview Oman Overview Global and Regional Investment Trends in the Omani Context Investment Incentives in Oman Sectors and Industries Driving Inward Investment Where to Invest in Oman? 2 Oman Overview 3 Deloitte PowerPoint timesaver – March 2011 Oman - Overview Oman is the ideal location for businesses looking for a stable vantage point to access the booming Middle East, African and Asian markets • Continued political stability since 1970- WEF rated top 10 most secure countries • Located on the axis of the GCC, Asia and Africa • Total population of 3.7 million including approx. 1.5 on the Indian Ocean million expatriate • More centrally located than Persian Gulf, 2 days • Strong Economic Growth (GDP growth of 5% in closer than UAE or KSA 2012 and 2013) • Direct trade routes to growing GCC market as • National economy based on the principles of justice well as India and Africa and the free market • Resource abundant (oil, natural gas, copper, Geographic marble, limestone, gypsum, chromium) Political & • Large trends towards privatization, even in public Advantages Economic Stability goods such as utilities • Low public debt (3% of GDP) and low inflation • Ranked above regional average in Economic • $34bn allocated for infrastructure 2011-2016 Freedom, Ease of Doing Business, Transparency • Project spending of $7bn per on average year over the and Economic Competitiveness last decade • 3 Free Zones and 9 Industrial Estates • 4 new airports and 2 expansions (2014) • WTO member, TRIPS (IP) • 5 large-scale modern ports with accompanying logistics • World Intellectual Property Organization (WIPO) and industrial zones • 7th out of 144 nations in Gov’t services for • $15bn rail project to connect 9 cities to GCC improved business performance (WEF) • Over $3bn will go into improving connectivity through Favorable Modern highways Business Infrastructure Environment 4 Oman in International Rankings Oman has earned top rankings in the international community on competitiveness, economic freedom, and doing business indicators, while maintaining multiple cost advantages WEF Global Competitiveness Rankings 2012- Economic Freedom Index 2013 70 68.1 68 66 64 61.8 Indicator Rank/144 60.6 62 59.6 60 Macroeconomic 5 58 56 Environment 54 World Avg. Saudi Arabia Regional Avg. Oman Gov’t services for 7 improved business performance Starting a Business in Oman Protection of minority 14 shareholders interest Indicator Oman MENA OECD Quality of infrastructure 20 Procedures (number) 5 8 5 Time (days) 8 23 12 Ease of access to loans 11 Cost (% of income per capita) 2.6 29.8 4.5 5 Global and Regional Investment Trends in the Omani Context 6 Deloitte PowerPoint timesaver – March 2011 Investing in Oman – The Regional Context While the Middle East & Africa region has witnessed recent declines in foreign direct investment activity, Oman has been able to defy the trend, boasting notable growth in FDI activity FDI in the MEA Region, 2012 FDI in Oman, 2012 Decline in the # of FDI Increase in the # of FDI 12% projects into the region 49% projects into Oman Oman’s regional market Decline in job creation 5% 23% share of FDI, up from 3% Compound annual growth Decline in capital 43% 9% rate of FDI into Oman investment 2009-2012 Source: Oman National Centre for Statistics and Information As a result of the economic and political Oman proved to be an exception, as it has turmoil caused by the global recession and attracted new investors and taken new the Arab Spring, the MEA region saw a market share in the region marked decline in investment Source: fDi Intelligence, Financial Times Limited 7 Foreign Investment as a Growth Driver in Oman Oman’s economy has exhibited high double digit annual growth since 2009, partially due to inflows of foreign investment. This trend will likely increase with the coming infrastructure and Free Zone expansions Contribution of Foreign Direct Investment to GDP, OMR 30.0 26.9 6.5 22.6 5.9 18.6 5.5 5.1 21.0 23.6 17.1 13.5 2009 2010 2011 2012 FDI as % 24% 22% 21% of GDP 27% GDP from FDI Source: Oman National Centre for Statistics and Information, Foreign Investment Report (June 2013) GDP excluding FDI 8 Investment Incentives in Oman 9 Deloitte PowerPoint timesaver – March 2011 Recent Improvements in the Omani Landscape Strong government spending and an improved business climate are both factors driving investors to Oman • Top-10 most secure countries (WEF – 2013/2014) Political & • Top-5 favorable macroeconomic conditions (WEF – 2013/2014) Economic • 5% economic growth in 2012 Stability • Strong government spending and privatization efforts • 7th in Gov’t services for improved business performance (WEF – 2013/2014) Improvements • Rated by the World Bank above regional average in: in the Business - Economic Freedom and Economic Competitiveness Environment - Ease of Doing Business and Transparency • 9 industrial estates with fully developed plots available at nominal charges Government • Subsidized utility charges for manufacturing facilities Incentives • 5-year tax holiday on profits • 5-year import duty holiday on machinery, spare parts and raw materials 10 The Changing Landscape – Key Infrastructure Investments Major developments in shipping, air transport, rail connectivity and road transit is turning Oman into a transport and logistical hub for the region Airports: Roads: Rail: Expansions . Highway access to GCC markets . $15bn investment program to (passenger capacity/yr): . $1.1 billion worth of contracts develop a national railway . Muscat: 12 Mn awarded in 2011 in Oman for the . ‘Oman Rail’: A 2,244-km rail . Salalah: 2 Mn road sector to develop modern network being built to link major Airports in construction transport infrastructure ports, industrial areas, free zones (passenger capacity/ yr): at Sohar, Salalah, Duqm & GCC . Sohar: 500K . Duqm:500K . Ras al Hadd: 500K Planned & Projected Transport Spending (USD Mn) 2011-2015* . Adam: 250K (Total spending for 2011-2015 is estimated at USD 78bn) 8000 6000 6182 4000 3207 2000 1305 0 Airports Roads Ports 11 The Changing Landscape – Port Infrastructure Oman has 7 ports in total, taking advantage of its coastline along the Strait of Hormuz, Arabian Sea and Greater Indian Ocean Port of Khasab: A small harbor in the Musandam area for tourism and trade Port of Sohar: A growing port servicing the Turkey Metals, Agro-bulk, Food Processing, Logistics and Petrochemicals industries Syria Iran Cyprus Port of Mina Al Fahal: Operated by PDO; it Lebanon Iraq has an oil processing facility Port Sultan Qaboos: Muscat’s main port currently being re-outfitted to focus mainly Bahrain on tourism Qatar Egypt Saudi Arabia Port Qalhat: This port and LNG terminal near UAE Sur is owned by Oman LNG Oman Port of Duqm: Oman’s newest port city will serve the oil and gas industry as well as fisheries, logistics and industry Port of Salalah: Handles processing, warehousing, re-export and logistics; fasted transit times to Europe and Asia 12 Connecting to the World through Oman Located on the strategic axis of the Indian Ocean and Persian Gulf, Oman boasts accessible trade routes and fast transport times to the worlds most attractive emerging markets • Regional Market worth more than 5 trillion USD and global reach to 1.2 trillion of imports • On main international shipping routes within 2 weeks of major ports • Modern infrastructure transport facilities and business environment connected to key markets in India and East Africa • Abundant and competitive access to natural resources, energy, financing and labor 13 Investing in Growing Regional Markets Within close proximity to Oman, neighboring regions account for 21% of the world’s population 15% of total world imports, both of which continue to grow above global averages Population forecasts at Oman’s neighboring regions, millions (2013-2023) 2013 2018 2023 684 Combined 618 653 485 account 372 427 for c.21% 220 241 260 210 228 245 of the 49 54 58 world population GCC SE. Asia W. Asia N.Africa E. Africa Imports by Oman’s neighboring regions, USD billion (2009-2012) 2009 2010 2011 2012 Combined 1,153 1,220 953 account 787 849 727 644 for c.15% 488 557 318 350 427 of the 159 179 195 218 52 61 74 83 world imports GCC SE. Asia W. Asia N.Africa E. Africa 14 Which Sectors are Driving Inward Investment? 1 Deloitte PowerPoint timesaver – March 2011 5 Which Sectors are Driving Regional and Global Investment? Globally manufacturing, business and finance are driving FDI, which is true in developed and developing economies 23% 23% Global FDI contribution by sector, % (2009-2011) 20% 9% 9% World Economy 4% 4% 3% 3% 3% 1% Total FDI Trade Utilities Activites Business than1%) Transport Hotels & Oil & Gas Other (less Exploration Unspecified Restaurants Financial Int. Construction Real Estate & Manufacturing Developed 22% 21% 27% 6% 8% 4% 5% 2% 2% 0% 2% Developing 25% 24% 13% 11% 8% 3% 2% 4% 4% 1% 4% Transition 18% 22% 11% 17% 17% 2% 0% 4% 5% 0% 4% Oman (2012) 21% >1% 14% 48% 3% >1% N/A 6% 3% 3% 2% Source: UN conference on trade and development, Estimated world inward FDI flows, by sector and industry 2009-2011, (2013); Oman National Centre for Statistics and Information, Foreign Investment16 Report (June 2013) Foreign Investment into Omani Industries While Oil & Gas still accounts for the highest percentage of foreign direct investment, the fastest growing sectors are manufacturing, transport and tourism FDI growth and Contribution by Sector 4.9% 3,000 High growth sectors 2,500 2009