The Sultanate of Oman is positioned strategically on the Arabian Peninsula and has made fantastic progress over the last few decades in diversifying its economy. Oman is slowly moving away from being an oil economy and with this shift comes the new term – local content. Local content is defined as the inclusion of domestic goods and services, labor, and industries that ensure maximum value and social development to be achieved out of a country’s resources.

As Oman moves forward, local content is much more than a policy tool, it is crucial for a sustainable economy, employment opportunities, and citizen development. In conjunction with Oman Vision 2040, the government’s focus on local industry and capability development aims to strengthen economic sustainability and reduce dependence on external resources.

This article covers a wide range of economic importance of local content in Oman such as employment opportunities, industrial diversification, technology transfer, capacity building, and the economy as a whole.

UNDERSTANDING LOCAL CONTENT IN OMAN

In an Omani context, local content corresponds to the degree of domestic sourcing of goods, services, and labour. This includes: recruiting Omani citizens; utilizing Omani services and goods; establishing Omani businesses and supporting local training and skills development.

Policies for local content are directed towards ensuring that the economic output from key sectors such as oil and gas is not exported, but rather, is retained and reinvested in the country's economy.

Traditionally, the oil sector has been the mainstay of Oman’s economy. However, due to the volatility of oil prices along with other competing economic factors, the government has put into place policies geared towards economic expansion. One major part was the In-Country Value (ICV), initially focusing on the oil industry, but is now being embraced in different sectors.

LOCAL CONTENT IN ECONOMICAL STRUCTURE DIVERSIFICATION

Mitigating Overdependence on Oil Revenues: Oman Vision 2040 describes a strategy to lessen the reliance on hydrocarbons. Local content comes in fulfilling this strategy. Oman aims to start including:

- Domestic industries such as manufacturing, tourism, logistics

- Renewable energy

- Agriculture and fisheries

All these have the potential to be developed by Oman, which can reduce the economy’s susceptibility to external oil shocks.

STRENGTHENING SMALL AND MEDIUM ENTERPRISES

SMEs are the dominant players in Oman’s internal localization strategies. Oman under the Public Authority for SME Development (Riyadah) and other parastatals has put in place policies aimed at the growth of SMEs by: Guaranteeing tender contracts to local SMEs; Granting non-repayable financial aids and credits; and Establishing different Entrepreneur training and mentoring schemes.

The increased competition from the active SMEs should lead to more innovations and a stronger domestic market.

EMPLOYMENT OPPORTUNITIES AND NATIONAL WORKFORCE EMPLOYMENT

Omani Workforce Employment Policy: Local employment policies have as their focus the integration of Omani nationals into the workforce. The Omanization strategy requires that locals be hired into a set percentage of positions in different sectors. This is economically advantageous in several aspects:

Help in lowering unemployment levels, Augmenting household earnings, and Improvement of social harmony Upward Mobility of Employees: Investment in education and training is also an objective of local content policies. Firms are motivated to: Set up their own training facilities, Collaborate with other educational organizations, and Award grants along with employment and student candidate positions.

As a result, there is the formation of a skilled and globally competitive workforce able to respond to the challenges of a diverse economy.

BUILDING AND DEVELOPING NEW SKILLS AND TECHNOLOGIES

Promoting the Transfer of Skills and Technologies: Foreign firms with a base in Oman are encouraged to provide their local counterparts with specific skills and other related technical competencies. This: Improves capacity of local businesses, Fosters greater creativity, and Lessens reliance on outsider skills Developing New Infrastructure: Local content policies promote domestic investment in various locational research and development (R&D) activities. The establishment of innovation zones together with science and technology industrial parks enable the more efficient production of locally relevant innovations.

NURTURING THE DEVELOPMENT OF REGIONAL INDUSTRIES

Enhancing the Manufacturing Industry: Oman’s industrial policy considers the manufacturing sector as one of the drivers of economic development. The government achieves this through local content policies by ensuring: Locally produced goods are accepted as a priority in public purchases, The establishment of industrial parks and free ports, and Foreign investment is encouraged on the condition of local sponsorship.

Indigenization in the Petroleum and Gas Industry: This remains the largest contributor to Oman’s GDP. The government has, however, through ICV strategies been able to achieve: Sustaining local content in the supply chain, Higher numbers of Omani nationals being employed, and Growth of local companies providing services.

This model is now being adopted in other industries such as mining, renewable sources of energy, and construction.

ECONOMIC IMPACT AND CONTRIBUTION TO GDP

Retention of Wealth: Oman has more wealth kept within its borders by consuming local products, services, and workforce. This indicates Oman: Benefits from increased economic activities carried out within its borders which are not dependent on oil; economical growth through taxes received from the population and businesses; Better investment opportunities available in the national economy.

Mitigating Reliance on Imports: Strengthening local businesses leads to a decline in expensive imports, improving Oman’s foreign trade balance, foreign currency reserves, and overall making the country’s economy self-reliant.

SOCIAL AND REGIONAL EVOLUTION

Fostering Economic Stability in Different Regions: The local content policies plays a role in supporting the growth of economic and social activities in the different governorates of Oman. When industries are encouraged to set up outside Muscat: Job opportunities become available in the rural areas, Development of supporting services in backward areas, and Disparities in social development are minimized.

Inclusion of Women and Youth: The local content support programs are also directed towards the participation of some economically active but socially marginalized groups. The promotion of women in micro, small, and medium enterprises and the provision of training programmes for young people is aimed at inclusive growth.

SUCCESS STORIES IN OMAN

Petroleum Development Oman’s (PDO) ICV Strategy is a benchmark example. Key achievements include: ICV share on important contracts surpasses 35%, Local fabrication plants have been established, and Omanisation of technical positions has been achieved.

Duqm Special Economic Zone: The Duqm zone has attracted significant investments with local content requirements. It has: Hundreds of jobs for Omanis have been created, Collaboration between local SMEs and foreign investors has been boosted, and other related service industries, namely, logistics and construction have been fostered.

CONCLUSION

Oman benefits economically from local content, but for them it is more than that; it is a key strategic necessity. Oman is set to achieve the goals of Vision 2040 with working towards its human resources, developing local industries, and enhancing a diversified, resilient economy By Oman’s continued cooperation, innovation, and commitment to the development of local resources and manpower, it is possible to change local content from merely a policy initiative to a powerful catalyst for sustainable national growth.

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