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Bolstered by steady investment from a government cognisant of its potential, Oman’s transport and logistics sector has continued to expand even as the impact of lower oil prices continues to be felt. The sector’s real growth rate registered at 1.1% in 2015 after rising 9.4% in 2014, giving it a value of OR1.7bn ($4.4bn), according to the latest available figures from Central Bank of Oman. It has been sustained by robust growth in passenger arrivals by air, and of cargo by land and sea. With a coastline of 2100 km at the mouth of the Gulf, and a history of friendly relations with its neighbours, Oman has a unique opportunity to become the logistics gateway to the GCC’s more than 50m consumers, as well as a key trans-shipment centre between Europe and Asia.

Oman boasts an extensive and largely untapped mineral resource base that includes large deposits of metallic minerals, such as copper and chromite, and industrial minerals, namely limestone and marble. The country is the first GCC producer and exporter of ferrochrome, and produces large quantities of non-metallic minerals, including limestone, gypsum and marble, that support construction and infrastructure development projects around the world. Mining activities and the contribution of the sector to the economy are set to increase over the coming years, buoyed by government efforts to attract investment in mineral exploration, production, value addition and export activities from both foreign and local operators.

Growth in Oman’s industrial and retail sectors has been affected by both commodity prices and weaker consumer sentiment, which have lowered spending and forced some companies in heavy industry to delay investment programmes. However, the impact of the costs borne by the sultanate’s manufacturers was offset somewhat in 2017 by the rise in exports to Qatar following the blockade of that country’s trade. The government is investing heavily in combatting hydrocarbons dependence and facilitating the development of a more diversified economic base. Manufacturing has been prioritised as one of the pillars of this strategy under the Tanfeedh programme for national economic diversification.

Market pressures have continued to weigh on Oman’s real estate sector since oil prices fell from their historic highs, driving the sultanate to adjust to lower revenue by trimming budgets and paring back some investment. Growth in public payrolls and jobs – a key driver of real estate demand – slowed in 2016 as the government reduced spending by 7.5% to tackle a fiscal deficit surpassing 20% of GDP; weaker economic conditions have likewise constrained job creation in the private sector. This deceleration has put pressure on both demand and property prices. While residential rents in Muscat, normally a sector bellwether, were 20-25% below their 2014 peak in September 2017, there are hopes they are beginning to stabilise.

Despite public investment cuts and a broad economic slowdown in the wake of lower oil prices, Oman’s construction sector continues to grow at a relatively brisk pace, bolstered by state-led diversification efforts, high income levels and relatively low labour costs. The building industry grew by a robust 10.4% in 2016, up markedly on the two previous years, according to the latest official full- year data, with sector investment staying buoyant at 5.5% growth. As the largest chunk of the non-oil economy, at roughly 45%, construction remains a pillar of government efforts to steer the country’s productive industries away from hydrocarbons under its medium-term ninth five-year plan, which covers the 2016-20 period, and its longer-term blueprint, Vision 2040.

The utilities industry in Oman is going through a transitional period in anticipation of major restructuring and renewal in the water and electricity segments. While large-scale retail competition in electricity is not yet feasible, changes in technology, such as the introduction of cost-reflective tariffs (CRT), are making distributed provision more cost-effective. The most significant development in the electricity sphere is the planned introduction of a spot market to allow generators without long-term contracts to sell power on a half-hourly basis at a market-clearing price. Meanwhile, in terms of water provision, the sultanate’s procurement agency has worked hard to bring considerable new capacity on-line across Oman’s five water zones to address supply shortages during peak demand periods in 2017, particularly in the Muscat region. Oman is also on the verge of a major shift towards renewable energy as the government rolls out regulations and projects to harness power supply from solar plants and wind farms. This chapter contains an interview with Tariq Ali Al Amri, CEO, be’ah; and Omar Al Wahaibi, CEO, Nama Group.