[oman-l] Oman's economic future

[Abdulla Baabood]

I agree that Oman's economic future is somewhat worrying. But the Omani's
world view  is no doubt more complex : how do traders and merchants see
the
country, with all its advantages and disadvantages, as compared to the
Gulf
States ? After all, Dubai is the equivalent of yesterday's Beirut, an
important staging-post with an "open" society (ie controlled by Western
interests), but will last only as long as the World economy (ie Western
economy, again) needs that space. Once it's usefullness is over, it can be
disposed of (see Beirut). But Oman is somewhat more complex, and its
advantages will no doubt help it survive in the post-oil era. There is
also
the official world-view, which is different from that of the private
sector. What can be said about that point, and what are the major
differences between the various socio-economic actors of the country?

While the State is certainly doing its most to bring education (and higher
education) to the country, it is playing the game of the private sector.
This could be an advantage in the future survival strategies, but of
course
poses the question of future relations between the citizens and the State,
or between the current power structure and its future possible
redefenitions. This is a complex problem, especially considering the
history of the country, its composition and its frontiers.

Thanks for initiating the debate.
Regards
Michael Davie
(Professor, Geography)






So what is the future for Oman. Well, whatever it is we sure do talk about
it a lot in such optimistic terms when in fact the future is only
depressing. Our future is not in oil, it is not in LNG (and if that ain't
a
white elephant then i dunno what is), and it is not in the stock market.
The future is what we make of it, and we can't make anything of it unless
we are allowed to. We need to stop dreaming and we need officials that
aren't afraid of admiting the truth. We are in bad shape, people. The
first
step towards recovery is admission. If we can't see our problem we will
never get around to solve it.

muscati

http://members.tripod.com/~muscati

Perhaps we are geting to the core of a very interesting debate. Dubai, it
seems, has exacly the same role : export capital, or at least facilitate
the movement of capital, with marginally little investment in the country
itself. Would Oman be just part of a larger system whereas capital is
never
kept in the country (that inscludes all Gulf States : see the bill they
paid for the Gulf War), but returns to the industrialized countries. The
globalization of the conomy (a more polite word than "colonialism" ? ;-)
)  is boiliong down to a more organized and sophisticated use of  world
resources by the industrialized North, led by the US. Would Oman just be
part of that puzzle, leaving the country to face the consequences when
those resources dry up ?

Salamat
Michael Davie



The economic situation in  oil-dependent producing countries especially
the Gulf States has and is going through a rough ride. Adverse terms of
trade and oil glut has substantially reduced oil-producing states
earnings. The litmus test is how these countries are going to deal with
the situation. Wait for another oil boom or actually do something about
it. Oman is no exception but the economic situation in Oman is that more
acute.

International capital (including local private capital) seeks a balance
between risks and rewards and will go to where the later is maximised and
the former is minimised. In a globalised capital market, international
capital acts as a judge of the stability of economic basis of each
country. Investments laws and incentive can only be the icing on the cake.
If the risk/reward factor is unfavourable then no matter how much
incentives are offered to attract both local and international. Capital
will find a way out to better rewarding and safer places. This is
the challenge facing countries like Oman in an ever globalised capital
market.

The tendency for Gulf capital is to go to the west but that is due mainly
to the low absorbtions capacities of these economies, i.e.
limitation of investment opportunities and risk/reward factor.
Notwithstanding the structural imbalance in the world economy,  a large
local capital is returning home and with it some international capital
with improved investment opportunities and liberalisation of economies.
How can Oman best benefit from this? Let's be clear, Oman, similar to
other countries, cannot rely on its own resources. It needs international
investment and with it know-how. Active FDI is thus much preferred to
passive portfolio investment. Although both are welcome.

The economic conditions in Oman and other gulf states are not exactly
bright and so is their future outlook. And while what has been described
by Muscati of the business and financial difficulties may be to some
extent correct. I, for one, am a businessman/academic from Oman and
understand what he is talking about. But, I believe the situation is not
that gloomy...it's not that good and it could have been better.... There
are still many bottlenecks... and contradictions in deferent government
departments policies, stiffling the smooth functiooning of the
economy and infact the private sector...It's the scale of how bad that is
open to different interpretations... the crucial question is what is the
outlook and what is being done about it? 

Most business and investment decisions are based on expectations and the
outlook for all Gulf producing states is not bright. And more over there
is a deep fear among investors/business people that government's have not
yet woken up to the situation. The business community feels the crunch
first and therefore they are more sensitive and perhaps more vociferous.
But it's true that Governments in the region are just paying lip service
to economic liberalisation and diversification and are not expanding
enough resources or efforts to face the reality.

They (governments) are just waiting to see a turnaround in their fortunes
hoping for an increase in the oil price which is not likely to come soon.
Even if it does it may not be enough or it may even be too late to make
any real impact.

Dubai's apparent success is due to the fact that the emirate posses
precious all other resources and without the benefits of easy oil rent has
had a different attitude to its future. Most Gulf states/cities watch with
surpriseand jealously DubaiUs success and most predict it's failure. But
Dubai is not Beirut and the analogy while compelling is not necessarily
accurate.. yes, Dubai has some inherent difficulties and rises many
question marks... but there is so much vested interest to let the emirate
have the same fait as Beirut.
Dubai has seen a gap and has successfully exploited it. It has been
allowed to do that by countries like Oman that which with surprise and
disbelief the meteoric rise of Dubai. Dubai has snatched anything to be
snatched from Oman and is competing and beating Oman even in tourism,
Oman's strongest advantage!! It is no good saying that Oman enjoys the
geographical advantage or any other advantage to that extent. It's
what you can wedo with  that advantage. Oman has watched Dubai helplessly
taking trade, services and fiancee from all the Gulf states including
Oman. Airlines and other international companies have choosen Dubai as the
regional hub. It will be difficult to compete with that and the longer
this is allowed to take the more reluctant and lethargic Oman becomes
while Dubai success becomes more resilient benefiting from inertia and
momentum.
As an international busniess investor where would one locate his/her
business to serve the region? The answer I'm afraid Dubai. Business
senergy and services favours Dubai over any other location in the Gulf
region.

Yes Oman's future is not in oil or gas resources (although we wish we had
more of it). Oman's future I believe is in its people. The human resource
in Oman is the most viable resource to see the country past the oil-era.
However, this valuable human resource needs education and training far
beyond what is offered in Oman at the moment. Recognising this fact we
need to invest today's capital from oil and gas in developing this
resource that will see Oman through. Failure to do that could only lead to
disaster as there is no other magic formula. I agree that feeding economic
figures and statistcis can not hide or save the sitiuation but economic
figures in Oman are fairly accurate and I do not beleive that there is any
attempt to manuplate figures. It's interpretations of figures that could
be maniuplated. I agree that facing realities is a most but do the elites
see it this way?

Abdulla