Muscat: Oil being the main source of public revenues and the mainstay of economy in the GCC countries, the drop in prices in the second half of 2014 had significant effect on the economies of this region.
The Sultanate is not insulated from such effects, therefore it sought on one hand to address the implications of the financial crisis on the national economy as far as possible and on the other hand to develop a roadmap that can make the Sultanate more capable of resisting and acclimatising with the fluctuation of world economy.
Taking into consideration its methodology, aims and objectives, it can be assumed that the 9th five-year plan is the outcome of the hard economic stage faced during the last two years of the 8th five-year plan. The 9th five-year plan reflected the hard implications of oil price slump and the pressure created on the state budget and the Sultanate’s economy while drafting this plan.
There are several strong factors that urged for developing a crystal clear development plan with measurable goals and clear time plans for implementation.
It also required developing a concentrated plan that can provide necessary means capable of protecting the national economy against the shocks resulting from oil market fluctuation.
Preparation of the estimates of the 9th five-year plan has taken into account the actual financial condition and performance during 2014 and 2015 especially the 67 per cent decline of oil prices compared to the prices at the first half in 2014.
It also took into consideration the financial liabilities resulting from the policies followed and the decisions made in the previous years. These elements were reflected in the budget estimates for 2015 (the base year for the 9th five-year development plan)
The 9th five-year development plan (2016-2020) attaches a great importance to construction development by ensuring optimum utilisation of resources and investment opportunities in the various governorates in the Sultanate.
It also attaches a special importance to the development of governorates in a bid to achieve balanced development and rolling over the fruits of development to all Omanis wherever they are. The plan provides policies that help the private sector to play a bigger role in enhancing economic growth and creating job opportunities for Omanis.
The statement issued by the Supreme Council for Planning (SCP) early 2016 after the issuance of the Royal Decree No. 1/2016 ratifying the 9th Five-Year Development Plan 2016-2020, said that the preparations for the 9th five-year development plan have taken into account the Royal Directives of His Majesty Sultan Qaboos bin Said.
On top of these directives come the necessity that the future government plans shall focus on the social development mainly in terms of further improvement of living conditions of citizens and creation of job opportunities, training programmes among other aspects.
The plan also took into consideration the economic changes on the global level, as well as the fluctuation of oil prices in the world market, the regional geopolitical conditions and their negative effects on the Sultanate’s financial condition. This requires taking necessary measures to ensure sustainability of the financial conditions and provide stable macroeconomic conditions and generate enough job opportunities for the Omani job seekers.
Further, the statement affirmed that the 9th plan (2016-2020) targets to achieve an average annual growth rate of 3 per cent and total investments of OMR8.2 billion annually with an average growth rate of per cent. Non-oil revenues are projected to grow by 4.3 per cent while the revenues from the hydrocarbon sector are estimated to grow by a meagre 0.2 per cent.
The plan aims at reducing the contribution of oil goes down in the GDP at current prices (which was 44 per cent during the 8th plan) to 26 per cent during the 9th plan. Additionally, the statement affirmed that the 9th five-year plan will include programmes for creating job opportunities for Omanis as the estimates point out that the number of jobseekers has been constantly increasing due to the fact that 65 per cent or two third of the Sultanate’s population are in the youth age coupled with the increase in the number of graduates and women at the labour market.
In this regard, the Government has made steady efforts to enhance doing business and encouraging private sector investments. The results pointed out that these measures are either unknown to the market or that more measures are needed to enhance Oman’s competitiveness at the regional and world markets. The 9th five-year plan targets about OMR41 billion worth investments compared to OMR38 billion in the 8th five-year plan.
In the field of manufacturing industries, the Sultanate focuses mainly on petrochemicals to benefit from the competitive edge of the local economy. The contribution of the manufacturing sector to economic diversification – away from oil and gas- is low.
The tourism sector in the Sultanate is one of the prioritised sectors in the 9th five-year plan (2016 - 2020) and aims to increase its contribution to the GDP and make it one of the main sources of national income. The Tourism Strategy 2016 - 2040, which serves as a roadmap for this promising sector, aims at enhancing the Sultanate’s position as a tourism hub and attracting investments to the sector.
This will enhance the economic diversification, generate job opportunities for Omanis and uplift the value of the natural and cultural potentials of the Sultanate.
Despite the efforts made to promote the tourism sector, still the Sultanate is not yet No. 1 destination in the GCC level. The low tourism rate is attributed to the limited air connection, its low capacity, the insufficiency of infrastructure for the development of the sector and the deficiency in the marketing process to attract tourists.
Mining sector plays not only a vital role in economic diversification, but it is also very important in meeting the needs of the construction development. The Omani mining sector produces several minerals and crusher products. The sector is still facing several challenges, such as poor systems and methodologies used in utilizing the mineral wealth. There is a need to regularize the sector and develop it to ensure optimum utilization of its resources.
The Sultanate is also making endeavors to develop the logistic sector in a sustainable way to meet the needs of the economic and construction activity in the Sultanate and to keep pace with the world developments in this field. Since the beginning of the Blessed Renaissance, the Omani Government sought to connect the governorates and the wilayats and to ensure easy movement of travelers and goods by constructing a paved road network. It also built several domestic and international airports, ports and economic zone that will surely have a great impact on the growth of the Omani national economy.
Objectives of logistics strategy announced by the Sultanate recently represented in increasing the contribution of the logistics sector in the GDP growth, raising the Omani market share of goods that flow into the region, increasing employment opportunities provided by the sector, improving the ranking of the Sultanate in the classification of global logistics and industrial indicators, and raising its reputation globally regarding logistics services, as the mechanisms of applying this strategy rely on the sectors of markets, technology, trade facilitation, and human capital.
The fisheries sector in the Sultanate is one of the key supporting sectors to the national economy and an important source of income. It provides job opportunities for a large segment of citizens. At the same time, it plays a pivotal role in enhancing food security system by virtue of the Sultanate location on three seas, and its coastline stretching over (3165) km, as a result the Sultanate enjoys an abundant and varied stock of fisheries
During the past years, the fisheries sector achieved an increase in the quantity of production, due to the efforts to strengthen and develop the role of this sector. The Ministry of Agriculture and Fisheries has been racing ahead for the development of the fisheries sector. In this context, the fisheries sector strategy preparation (2013 - 2020), and the strategy of fisheries sector (2020 -2040) were developed that sketch the landmarks of the roadmap to continue the efforts for the advancement of the sector. Through these two strategies, many laws and policies are being issued, along with the implementation of projects and measures to develop performance. These policies and plans are summarized in four main objectives concerned with enhancing the quality of fishing fleet, infrastructure development, the development of value-added fishery projects, and developing fish farming in order to increase production, in addition to the development of fish marketing and export of value-added products.
The fishing ports are one of the most important pillars of infrastructure for the development of activities related to the fisheries sector and improving the returns of fish. Therefore, the ministry began activating the existing 22 ports during the previous five-year plans in terms of the establishment of management buildings, fish markets, fuel stations, ice factories, maritime workshops, shades for the fishermen, fish stores, fish tool and equipment shops. Currently 4 new ports are under construction, in addition to the rehabilitation of 9 existing fishing ports. The ministry has sought to develop the system of marketing through rehabilitation and development of wholesale and retail markets and outlets.
Finally, the economic performance is generally linked to a direct manner to the standard of living in the Sultanate, the level of advancement of the national economy, the ambitious plans to create jobs, improving the services sector with all its facilities. It is an integrated process within the framework of the comprehensive development process in the governorates of the Sultanate, and associated with the development plans, the national economy and funding, to be able to find solutions and possible alternatives to overcome all challenges.
The Sultanate, after extensive studies, started developing the national economy through the launch of the national program to promote economic diversification, (execution), which came with the blessing of His Majesty the Sultan, and preparations for it began last May.
Execution comes as a mechanism of action for achieving the goals of the 9th Five-Year Plan, and through the correction of the most highlighted shortcomings in the economic environment, overcoming the obstacles to achieving the goals of economic diversification and the growth of the size of the Omani economy that include making necessary amendments to the laws and regulations, identifying the priorities, providing the necessary project financing, agreement on the tasks and responsibilities and delivery dates, leading to an increase in the GDP, promoting of capital investment, providing job opportunities for citizens, and making the targeted sectors in the 9th Five-Year plan an active substitute of near-total rely on oil. Execution is working on the formulation of a clear mechanism of action and according to a specific timetable, and indicators to measure performance, to be effective at the beginning of next year.
For more guarantees for the success of the program, it was drafted through benefitting from international experiences, especially the Malaysian model, which after implementation, succeeded in increasing the GDP per capita by more than threefold at the end of 2015 compared to 2010 at the start of implementation of the program.
The 9th Five Year Plan of the Sultanate is distinguished as being the first plan that is accompanied by an operational action plan. It will start with the national program to promote economic diversification “execution,” which will hopefully result in a package of decisions whose implementation will start in January 2017. The program is summarized into eight steps represented in starting with identifying the scope of work by defining the strategic areas of focus, workshops (labs) attended by all relevant those concerned with the domain or sector to develop it and find appropriate solutions to it, on the condition that the government agencies are represented in no more than 40% in the laboratory, compared with 60% to private sector, academics, civil society and youth.
The third step is to share the results of workshops with the public and get their opinions towards it. The fourth step is to share the roadmap with the public, and what will be done through various media. The fifth step identifies the main measurement of performance indicators to follow up the application for the duration of the five-year plan. The sixth step is the application of the taken decisions, followed by a step to verify the results of decisions through the use of external parties. In steps eight and nine, all achievements of one year should be published in the annual reports and make them available to the public.
The action in the program will be done in accordance with a scheduled operation plan, based on the collection and analysis of data and information, follow-up and evaluation of key performance indicators, identification of implementation and project management authorities, through working groups of Omani cadres and experts specialized from both inside and outside the Sultanate, in specific sectors in the first stage that represented in (tourism, manufacturing and logistics), in addition to supporting sectors, namely (employment and the labour market, the innovative financial and funding sector). The second stage will cover (fisheries and mining sectors).
The importance of execution is highlighted in the facts that its key elements are inspired by the Malaysian experience and is based on several pillars, namely commitment, direct follow up from the Government, all the details, plans and programs and follow-up reports will be published and made available to the public, the operational flexibility of the implementation follow-up unit, independence in attracting the best competencies with a highly skilled organization.