Wednesday, July 28, 2010

Oman’s economic freedom

Oman’s economic freedom 

Score is 67.7, making its economy the 43rd freest in the 2010 Index. Its score has improved by 0.7 point since last year, reflecting improvements in freedom from corruption and business freedom. Oman is ranked 4th out of 17 countries in the Middle East/North Africa region, and its overall score is above the world and regional averages.

Oman is a small, open economy in which the oil sector has been the most important engine of growth. The government has pursued reforms to diversify the country’s productive base and stimulate broad-based economic development. There is no personal income tax, and corporate taxes are low. Foreign investment is welcome in many sectors, although the approval process can be burdensome. The impact of the global financial turmoil on the financial system has been slight.

Overall economic freedom in Oman remains constrained by the state’s considerable involvement in the economy through public enterprises. High government spending is funded by a large state-owned energy sector. The judiciary is vulnerable to political influence.
Background Back to the top

Oman, an Arab monarchy, has been trying to modernize its oil-dominated economy without diluting the ruling al-Said family’s power. It is a relatively small oil producer, and production has declined steadily since 2001, although this decline was offset by high oil prices in the mid-2000s. To promote economic diversification, the government seeks to expand exports of natural gas; to develop gas-based industries; and to encourage foreign investment in the petrochemical, electric power, telecommunications, and other industries. It also places a high priority on its policy of “Omanization” (the replacement of foreign workers with local staff) to reduce chronically high unemployment rates. Oman joined the World Trade Organization in 2000 and signed a free trade agreement with the United States in 2006.
Business Freedom66.9 Back to the top

The overall freedom to conduct a business is limited under Oman’s regulatory environment. Starting a business takes an average of 12 days, compared to the world average of 35 days. However, obtaining a business license takes more than the world average of 218 days, and costs are high. Bankruptcy proceedings are lengthy.
Trade Freedom83.4 Back to the top

Oman’s weighted average tariff rate was 3.3 percent in 2008. Some prohibitive tariffs, import bans and restrictions, import licensing requirements, non-transparent standards and regulations, local preference in government procurement, problems with protecting intellectual property rights, and subsidies add to the cost of trade. Ten points were deducted from Oman’s trade freedom score to account for non-tariff barriers.
Fiscal Freedom98.5 Back to the top

Oman has low tax rates. There is no income tax on individuals, and the top corporate tax rate for most enterprises is 12 percent; foreign or unregistered companies are subject to a top corporate tax rate of 30 percent but are scheduled to fall under the 12 percent rate for domestic companies as of January 2010. Oil sales are subject to a special tax scheme. There is no consumption tax or value-added tax (VAT). In the most recent year, overall tax revenue as a percentage of GDP was 3.3 percent.
Government Spending57.4 Back to the top

Total government expenditures, including consumption and transfer payments, are relatively high. In the most recent year, government spending equaled 37.7 percent of GDP. Authorities are looking to increase the role of the private sector in telecommunications, water, and electricity.
Monetary Freedom64.8 Back to the top

Inflation has been high, averaging 10.1 percent between 2006 and 2008. The government controls the prices of a range of core goods and services through an extensive subsidy system and influences prices through state-owned enterprises and utilities, including electricity and water. Fifteen points were deducted from Oman’s monetary freedom score to account for policies that distort domestic prices.
Investment Freedom55.0 Back to the top

Foreign investment is allowed in many sectors, subject to government approval. The level of foreign ownership that is permitted varies with the level of capital committed. The “Omanization” requirement that only Omanis may work in specified occupational categories is an impediment to foreign investment. Regulations can be non-transparent and contradictory, and bureaucracy can be burdensome and time-consuming. Residents may hold foreign exchange accounts. There are no restrictions on capital repatriation, currency exchange, or transfer of dividends. Land ownership for foreigners is generally prohibited except in designated tourist areas and in industrial estates.
Financial Freedom60.0 Back to the top

Oman’s financial sector, which is regulated by the Central Bank of Oman, has adopted new bank supervisory procedures in recent years. A 2000 banking law limited investments in foreign securities, raised capital requirements, and granted the central bank the authority to reject candidates for senior positions in commercial banks. Since then, several banks have merged. New regulations that focus on ensuring efficient management of banks were also promulgated. The banking sector has 17 commercial banks, 10 of which are foreign incorporated. Most credit is offered at market rates, but the government intervenes in credit markets through subsidized loans to promote investment. The Muscat Securities Market is very active and is open to foreign investors.
Property Rights50.0 Back to the top

The threat of expropriation is low, but the judiciary is subject to political influence. Foreigners may hold title to homes inside specified tourism projects. Non–Gulf Cooperation Council nationals cannot own commercial real estate. Intellectual property laws on patents, copyrights, trademarks, industrial secrets, geographical indications, and integrated circuits are WTO-consistent, and enforcement has improved. Only the sultan, through royal decree, can amend the laws.
Freedom From Corruption55.0 Back to the top

Corruption is perceived as present. Oman ranks 41st out of 179 countries in Transparency International’s Corruption Perceptions Index for 2008, a decline from 2007. Although corruption is not considered a significant problem, several high-ranking government officials, including a member of the State Council, have been sentenced to between three and five years in prison for bribery, misuse of public office, and breach of trust in recent years.
Labor Freedom86.4 Back to the top

Oman’s labor regulations are relatively flexible. The non-salary cost of employing a worker is low, and dismissing an employee is not difficult. The labor laws enforce the “Omanization” policy that requires private-sector firms to meet quotas for hiring native Omani workers.


Tuesday, February 2, 2010

Sultanate of Oman

Oman (Arabic: عمان‎ ‘Umān), officially the Sultanate of Oman (Arabic: سلطنة عمان‎ Salṭanat ‘Umān), is an Arab country in southwest Asia on the southeast coast of the Arabian Peninsula. It borders the United Arab Emirates on the northwest, Saudiar Abia on the west and Yemen on the southwest.

The coast is formed by the Arabian Sea on the south and east and the Gulf of Oman on the northeast. The country also contains Madha, an exclave enclosed by the United Arab Emirates, and Musandam, an exclave also separated by Emirati territory

History of Oman

Wattayah, located in the governorate of Muscat, is the oldest known human settlement in the area and dates back to the Stone Age, making it around 5,000 years old. Archaeological remains from different dates have been discovered here, the earliest representing the Stone Age, then the Heliocentric Age and finally, the Bronze Age. Findings have consisted of stone implements, animal bones, shells and fire hearths. The latter date back to 7615 BC and are the oldest signs of human settlement in the area.

Other discoveries include hand-moulded pottery bearing distinguishing pre-Bronze Age marks, heavy flint implements, pointed tools and scrapers.

On a mountain rock-face in the same district, animal drawings have been discovered. Similar drawings have also been found in the Wadi Sahtan and Wadi Bani Kharus areas of Rustaq. These drawings consist of human figures carrying weapons and being confronted by wild animals. Siwan in Haima is another Stone Age location and some of the archaeological finds have included arrowheads, knives, chisels and circular stones which may have been used to throw at animals

The arrival of Islam

The Omanis were among the first people to embrace Islam voluntarily. The conversion of the Omanis is usually ascribed to Amr ibn al-As, who was sent by the prophet Muhammad around 630 AD to invite Jaifar and ‘Abd, the joint rulers of Oman at that time, to accept the faith, in which he eventually succeeded.

In accepting Islam, Oman became an Ibadhi state which is named after alkhoarej, ruled by an elected leader, the Imam. During the early years of the Islamic mission Oman played a major role in the Wars of Apostasy that occurred after the death of Muhammad and also took part in the great Islamic conquests by land and sea in Iraq, Persia and beyond. However, its most prominent role in this respect was through its extensive trading and seafaring activities in East Africa, particularly during the19th century, when it propagated Islam in many of East Africa’s coastal regions, and certain areas of Central Africa.

Omanis also carried the message of Islam with them to China and the Asian ports. Oman was ruled by Umayyads between 661-750, Abbasids between 750-931, 932-933 and 934-967, Qarmatians between 931-932 and between 933-934, Buyids between 967-1053, Seljuks of Kirman between 1053-1154.

Tourism in Oman

Oman is known for its popular tourist attractions. Wadis, deserts, beaches, and mountains are areas which make Oman unique to its neighboring GCC nations (Wadis in particular). With a coastline of 1700 km, Oman offers some of the cleanest, most stunning beaches a visitor could hope to see. Few beaches are private, except some attached to the beach resort hotels, or those adjoining military or official property.

Wadis are green, lush oases of palm trees, grasses, and flowering. Some wadis have year-round running water, with deep, cool pools in which it is quite safe to swim if the currents are slow.Falaj (pl. aflaaj) means a system for the distribution of water and is commonly used to describe the irrigation channel system downstream of the water's source.Some aflaaj in Oman were built more than 1,500 years ago, whilst others were built at the beginning of the 20th century. In many cases, the only water has had to be attained by drilling into the ground to a depth of dozens of meters.

Numerous forts and castles are included among Oman's cultural landmarks and, together with its towers and city walls, they have historically been used as defensive bastions or look-out points. Forts were often the seats of administrative and judicial authority. There are over 500 forts, castles and towers in Oman which has a coastline of 1,700 km, so they were needed to protect it from potential invaders. The architectural styles vary, being determined by the architects who built them or the periods in which they were built.

The traditional Arabic market place is called the souq and these are found in many of the towns throughout the country. One of the oldest preserved souqs in Oman is in Muttrah, on the Corniche. Gold and silver jewellery is found in abundance as well as numerous wooden carvings, ornaments and spices. Muttrah souq is a maze of pathways leading in and out of each other. Household goods make up the bulk of the souq, but browsing through some of the smaller shops may result in a lucky find. G Today,the Capital area has a number of shopping malls, mainly situated in Qurum, but in recent times, spreading to the Al Khuwair area, which house a variety of shops, ranging from boutiques to chain stores. The largest mall in the country is the Muscat City Centre.

Other popular tourist activities include sand skiing in the desert, scuba diving, rock climbing, trekking, surfing & sailing, cave exploration, bull fighting and camel races. The Muscat Festival is usually held at the beginning of every year. During this event, traditional dances are held, temporary theme parks open, and concerts take place. Another popular event is The Khareef Festival, which is similar to Muscat Festival; however it is held in August in Salalah, Dhofar. During this latter event, mountains are packed as a result of the cool breeze weather during that period of time which rarely occurs in Muscat.

Introduction Oman

The inhabitants of the area of Oman have long prospered on Indian Ocean trade. In the late 18th century, a newly established sultanate in Muscat signed the first in a series of friendship treaties with Britain. Over time, Oman's dependence on British political and military advisors increased, but it never became a British colony. In 1970, QABOOS bin Said al-Said overthrew the restrictive rule of his father; he has ruled as sultan ever since. His extensive modernization program has opened the country to the outside world while preserving the longstanding close ties with the UK. Oman's moderate, independent foreign policy has sought to maintain good relations with all Middle Eastern countries.

Oman Economy

Oman is a middle-income economy that is heavily dependent on dwindling oil resources. Because of declining reserves, Muscat has actively pursued a development plan that focuses on diversification, industrialization, and privatization, with the objective of reducing the oil sector's contribution to GDP to 9% by 2020. Tourism and gas-based industries are key components of the government's diversification strategy. By using enhanced oil recovery techniques, Oman succeeded in increasing oil production in 2009, giving the country more time to diversify. The drop in oil prices in 2008 and the global financial crisis reduced Oman's budget surplus in 2009 and slowed the pace of investment and development projects, but GDP growth still was positive, in part because Muscat implemented an expansionary fiscal policy