Sultan Qaboos bin Said Al Said, on the importance of economic diversification: Viewpoint

Viewpoint: Sultan Qaboos bin Said Al Said

The global economy is passing through an unhealthy period which, it is feared, may get worse. Due to the economic recession which is being felt by energy-consuming countries, the demand for energy from these countries has declined. Oil, in addition to being a finite resource, is exposed to the fluctuations and instability of the market. It is not wise, nor good policy, to be dependent on oil as a sole resource to finance our development. Today, we are witnessing a retreat and decline in oil prices, which certainly has an impact on state income because oil is the major source of that income, although it is less so than before.

We have always called in past years for the diversification of the economy to protect us from the dangers of being dependent on one product and its fluctuations. We have noted this situation from the beginning and have adopted coordinated policies in order to establish our development on a strong, firm basis that will ensure that the national economy is fully diversified with balanced growth. On this basis, the state has subsidised other industries, encouraged investment in these fields and stimulated their development, creating an appropriate atmosphere for their progress. This has had an obvious effect on what has been achieved.

This diversification is more necessary now than ever before in the light of the global situation. Thus, before us is the challenge which faces the private sector and the government in pressing on with our national development without pause. The private sector now, more than at any time in the past, is required to redouble and accelerate its efforts with confidence, utilising all opportunities in promisingly productive avenues. This will lead to positive, tangible effects in economic and social life in the coming years. This necessitates that our economic enterprises be on the highest level of efficient administration, productivity and marketing in order to have the strength to compete.

The private sector must play a greater role in supporting and diversifying the national economy. This should be done in concert and harmony with the efforts exerted by the government to stimulate domestic and foreign investment. It is to be done by establishing a new infrastructure; continuing to maintain the existing foundations upon which we have built; providing a wide range of services; improving the atmosphere of general investments; and instituting a programme of privatisation. This programme will help the continuation of economic growth, increase the efficiency of productivity and avoid monopolisation.

In addition, there should be a continual review of relevant legislation in order to protect private economic businesses, ensuring their freedom and diversifying the ways by which they are supported and encouraged. This will apply especially to facilitating and simplifying bureaucratic procedures, and eliminating unnecessary elements of those procedures.

Moreover, policies for education and vocational training plans should be kept under constant review to enable them to produce the technical and vocational skills needed by the private sector, especially in the field of industry. We are determined that the industrial sector shall become the major source of national income, or at least generate the equivalent of that of oil. This will result in reducing dependence on oil revenues to a reasonable level, thus lessening the vulnerability of the state’s budget to the fluctuations of oil prices. Legal procedures should also be reduced to the minimum necessary to ensure investors are encouraged to enter the sectors we aim to develop. These conditions avoid investments being directed to speculative ventures that would result in financial and economic instability.

We want positive investments that will yield attractive returns to the investor while, at the same time, contributing to the development of the country, and enabling its citizens to acquire technical expertise and skills in all fields. These investments should be characterised by stability; they must not be vulnerable to market sensitivity, either domestically or overseas.