OMAN COUNTRY REPORT MAR 2013
Descripción
OMAN COUNTRY REPORT MAR 2013
Bahla Fort, Nizwa
The information contained herewith is for general information only and not to be construed as advice of any kind. Accordingly BCA does not: Make any warranty, express or implied, regarding the accuracy, correctness, completeness or use of any of the information depicted within this report. BCA will also not assume legal liability for the use of any such information or acts or omissions committed as result of the use of this information.
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Table of Contents
1.
2.
3.
4.
5.
General Information ___________________________________________________ 3 1.1.
Government Structure _________________________________________________ 3
1.2.
Population __________________________________________________________ 4
1.3.
Economic Indicators ___________________________________________________ 5
1.4.
Economic Sectors _____________________________________________________ 5
Economic Forecast ____________________________________________________ 6 2.1.
GDP Growth _________________________________________________________ 6
2.2.
FDI Inflow ___________________________________________________________ 7
2.3.
Overview of the construction sector ______________________________________ 7
The Construction Industry ______________________________________________ 8 3.1.
National or Key Projects in Pipeline ______________________________________ 8
3.2.
SWOT ______________________________________________________________ 8
3.3.
Cost of Main Materials _________________________________________________ 9
3.4.
Labour Cost __________________________________________________________ 9
3.5.
Construction Cost and Trend ____________________________________________ 9
3.6.
Forms of Contracts and Payment Terms __________________________________ 10
3.7.
Types of Available Projects ____________________________________________ 10
3.8.
Business Cultures ____________________________________________________ 11
3.9.
Setting Up Business __________________________________________________ 11
3.10.
Sectors where Singapore construction companies can engage ______________ 12
3.11.
Forecast and Analysis _______________________________________________ 12
3.12.
Green Mark _______________________________________________________ 13
BCA, MND, Industry Engagements and Issues _____________________________ 13 4.1.
Visits to Singapore by Government, Private Companies, Mission ______________ 13
4.2.
BCA, MND Visits, Missions _____________________________________________ 13
4.3.
Seminars, Conferences and BCA Engagements _____________________________ 13
4.4.
Projects done by Singapore Companies __________________________________ 14
Assessment _________________________________________________________ 14 5.1.
Market Assessment __________________________________________________ 14
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6.
Travel and other information __________________________________________ 15 6.1.
IES office in Saudi ____________________________________________________ 15
6.2.
Flight connectivity ___________________________________________________ 16
6.3.
Currency ___________________________________________________________ 16
6.4.
Visa _______________________________________________________________ 16
1. General Information 1.1. Government Structure Chief of state and government is the hereditary sultan, Sultan Qaboos bin Sa‘id, who appoints a cabinet called the "Diwans" to assist him. There are 83 seats in the advisory council of which two women were elected to seats. The country today has two women ministers. The sultan functions as an absolute ruler The monarchy The sultan is a direct descendant of the 19th century ruler, Usman Sa'id bin Sultan, who first opened relations with the United States in 1833. The Sultanate has neither political parties nor legislature, although the bicameral representative bodies provide the government with advice. Legislative system Oman's judicial system traditionally has been based on the Shari'a--the Qur'anic laws and the oral teachings of the Islamic Prophet Muhammad. Traditionally, Shari'a courts fell under the jurisdiction of the Ministry of Justice, Awqaf, and Islamic Affairs. Oman's first criminal code was not enacted until 1974. The current structure of the criminal court system was established in 1984 and consists of a magistrate court in the capital and four additional magistrate courts in Sohar, Sur, Salalah, and Nizwa. In the less-populated areas and among the nomadic bedouin, tribal custom often is the law. Recent royal decrees have placed the entire court system--magistrates, commercial, shari'a and civil courts--under the control of the Ministry of Justice. An independent Office of the Public Prosecutor also has been created, and a supreme court is under formation. Regional court complexes are envisioned to house the various courts, including the courts of first instance for criminal cases and Shariah cases (family law and inheritance).
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Administrative divisions Administratively, the populated regions are divided into 59 districts (wilayats), presided over by governors (walis) responsible for settling local disputes, collecting taxes, and maintaining peace. Most wilayats are small; an exception is the wilayat of Dhofar, which comprises the whole province. The wali of Dhofar is an important government figure, holding cabinet rank, while other walis operate under the guidance of the Ministry of Interior. The Consultative Council In November 1991, Sultan Qaboos established the Consultative Assembly (Majlis alShura), which replaced the 10-year-old State Consultative Council, in an effort to systematize and broaden public participation in government. The Assembly has 83 elected members with only consultative tasks. Representatives were chosen in the following manner: Local caucuses in each of the 59 districts sent forward the names of three nominees, whose credentials were reviewed by a cabinet committee. These names were then forwarded to the Sultan, who made the final selection. The Consultative Assembly serves as a conduit of information between the people and the government ministries. It is empowered to review drafts of economic and social legislation prepared by service ministries, such as communications and housing, and to provide recommendations. Service ministers also may be summoned before the Majlis to respond to representatives' questions. It has no authority in the areas of foreign affairs, defense, security, and finances. The Council of State (Majlis alDawla) has 41 appointed members.
Sultan Qaboos bin Sa‘id
1.2. Population In Oman, about 50% of the population lives in Muscat and the Batinah coastal plain northwest of the capital; about 200,000 live in the Dhofar (southern) region; and 4
about 30,000 live in the remote Musandam Peninsula on the Strait of Hormuz. Some 600,000 expatriates live in Oman, most of whom are guest workers from India, Pakistan, Bangladesh, Morocco, Jordan, and the Philippines. The total population stood at 3,090,150 (July 2012 est.) includes 577,293 non-nationals.
1.3. Economic Indicators Indicators
2011
2012
GDP (US$ Bn)
72.7
80
GDP per capita (US$)
23,572
25,152
Real GDP growth (% change)
5.4
5.0
Goods & services exports (% 67.7 GDP)
Na
Inflation (% change)
3.2
4.0
1.4. Economic Sectors Oman is a middle-income economy that is heavily dependent on dwindling oil resources. Because of declining reserves and a rapidly growing labor force, 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 and creating more jobs to employ the rising numbers of Omanis entering the workforce. Tourism and gas-based industries are key components of the government's diversification strategy. However, increases in social welfare benefits, particularly since the Arab Spring, will challenge the government's ability to effectively balance its budget if oil revenues decline. Agriculture and fishing are the traditional way of life in Oman. Dates and limes, grown extensively in the Batinah coastal plain and the highlands, make up most of the country's agricultural exports. Coconut palms, wheat, and bananas also are grown, and cattle are raised in Dhofar. Other areas grow cereals and forage crops. 5
Poultry production is steadily rising. Fish and shellfish exports totaled $34 million in 2000.
2. Economic Forecast With oil prices set to remain high throughout the year, and room in the government's budget for a further ramping up of social spending, the economy will continue growing robustly in the near term.
Inflation is to remain broadly under control through 2013, with the continued presence of large-scale government subsidies helping to limit price fluctuations. Inflation is forecast to average 3.7% a year in 2013-17. Oil and gas development remains a priority, but the government will also push ahead with its economic diversification programme, especially as oil prices (and government revenue) are forecast to stay high between 2013-17.
2.1. GDP Growth
The Gross Domestic Product (GDP) in Oman expanded 8.30 percent in 2012 from the previous year. GDP Annual Growth Rate in Oman is reported by the National Center for Statistics & Information - Oman. Historically, from 2000 until 2012, Oman GDP Annual Growth Rate averaged 5.9 Percent reaching an all-time high of 13.1 Percent in December of 2008 and a record low of 2.0 Percent in December of 2003. 6
Oman's economy relies heavily on oil production. The petroleum sector accounts for around 87 percent of budget revenues, 45 percent of GDP and 60 percent of total exports. However, as oil reserved have been shrinking in recent years the government has embarked on a process of economic diversification focused on development of tourism and gas based industries. This page includes a chart with historical data for GDP Annual Growth Rate in Oman.
2.2. FDI Inflow Foreign direct investment (FDI) into the Sultanate aggregated to RO 6.2 billion (approximately US$16 billion) as of end-2011 and foreign investment inflows into Oman amounted to around RO 800 million (approximately US$2 billion) during 2011, almost double the preceding year’s volume of RO 413 million (approximately US$1 billion).
2.3.
Overview of the construction sector
Construction spending will continue on a wide array of infrastructure projects, notably roads, ports, airports, water supply schemes, sewerage treatment plants, real estate projects and dozens of schools and hospitals. Construction of the one-billion rial Batinah Expressway project will get underway as well, while private sector investment in tourism and leisure-related ventures is envisaged to gain traction and momentum. Solid economic performance and an expanding tourism sector have provided drivers for growth in this sector.
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3. The Construction Industry
3.1. National or Key Projects in Pipeline Project Name
Value (US$mn)
Contractor/Consultant
Expected Completion
Status
Muscat Airport Expansion
1670
TAV,CCC
2013
construction delayed
Muscat Airport New Terminal
1800
Bechtel, Bahwan, Enka
2014
construction
Salalah Port Expansion
525
AP Moller Maersk
2030
planning
Sohar Port City
Na
Sohar Industrial Port Company
2015
planning
Duqm Port
2000
Duqm Port Authority
2015
contracting
GCC Railway
14000
Systra, Canarail and Khatib
2020
planning
Al Batinah Coastal Rd
387
Nagarjuna
2015
contract awarded
South Batinah Expressway
389
Parsons, Bosporus
2015
bidding
Wilayat Rustaq carriageway
83
National United E&C
2015
contract awarded
Oman Conference Centre
1000
Omran
2014
construction
3.2. SWOT Strengths
Stable government with a favourable position on private sector investment in the country. The government’s strategy to diversify away from oil is well under way and is helping to drive infrastructure and tourism development. The government is keen to attract the private sector, including foreign companies, and has a strong market orientation. The planned US$1 bn medical city will cater to the growing population. 8
Weaknesses
The country does not yet have a rail network, and has therefore become over-reliant on roads. Large amount of government bureaucracy involved which may hinder projects. Public protests have eased; however, continued uncertainty across the border (most notably Yemen) could potentially spill over into Oman.
Opportunities
Growing tourism and transport infrastructure offer opportunities for developers and new business in the country. Diversification of the economy will lead to a number of construction contracts and investment into accompanying infrastructure.
Threats
Royal succession is a potential threat to Oman's political future. Demographic change and regional instability could pose challenges.
3.3. Cost of Main Materials Refer annex A
3.4. Labour Cost Refer annex B
3.5. Construction Cost and Trend
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3.6. Forms of Contracts and Payment Terms Public works in Oman are undertaken using a bespoke government contract known as the Standard Documents for Building and Civil Engineering Works, 4th edition, 1999. The document is based on early FIDIC contracts with the 4th edition containing only minor changes from the previous 3rd edition, 1981. The most important change is that the contract is now printed in Arabic. The Ministry of Legal Affairs is in the process of preparing a new edition but its launch date is yet to be published. The Standard Document facilitates both a re-measurement and lump sum contract dependant on choice of clauses, and is based upon a fully completed design, specification and bill of quantities. The RICS Principles of Measurement (International) are the most widely used method of measurement. Infrastructure projects have their own method of measurement, as detailed within the Ministry of Transport and Communications document, Highway Design Standards. Oman Tender Board laws require all government projects to utilise the Standard Documents on every project, without amendment. The only current exception to this law is the new Muscat International Airport project which has been let on a series of heavily amended FIDIC “yellow book” design and builds contracts. In addition, the Tender Board facilitates all government tenders, centrally, through the tender board process. Only Royal Office and Royal Court of Affairs projects are exempt from this process although they do go through a similar internal tender process. Standard Documents are commonly used by private sector clients in the local market, particularly for small-to- medium sized contracts. Private clients tend to prefer the 3rd edition, as this is written in English, but vary only in a minor way from the Arabic 4th edition — preferred by the government ministries. International and private sector clients with large project contracts, US$150 million-plus, commonly use an amended version of the FIDIC “red book.” Whilst some of the larger integrated tourism developments have used a design build form of contract, design and build as a procurement route is not routinely used.
3.7. Types of Available Projects Infrastructure, healthcare, rail transport and tourism/hospitality.
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3.8. Business Cultures Oman is the only Muslim country to have a majority of Ibadhi sect followers which contributes to their conservative culture. Islam governs every aspect of a Muslim’s life, from holidays to the food they eat to how they dress and do business. Generosity, modesty and respect for others are key concepts which are present in both social and professional spheres of life. Through the use of compromise, patience and self-control, Omanis avoid embarrassing or putting others down so as prevent them from losing face. Public criticisms are therefore rare and are instead given in private where there is less risk of losing face. When doing business with Omanis it is important to remember this and avoid doing anything which might offend them or make them look bad in front of others. Omani attitudes to time are much more relaxed than in many Western cultures. People and relationships are more important than schedules and punctuality. It is not uncommon, therefore, for your Omani counterparts to arrive late but foreigners are expected to arrive on time. Meetings should be scheduled in advance and confirmed a few days prior. Meetings are often cancelled or rescheduled however with little notice so always come prepared with a business card or letter to leave to let them know you were there.
The hierarchy present in Omani society is often seen in the use of titles and formal greetings. When first entering a room or greeting your Omani counterparts for the first time, for example, you should shake hands with the most senior person first using their appropriate titles.
3.9. Setting Up Business The five procedures that must be followed are: Deposit the legally required initial capital investment into an Omani bank account Register as the Commercial Registry at the Ministry of Commerce and Industry (MOCI). This costs OMR 40 for business registration (good for a period of five years), plus OMR 128 that must be paid to the Chamber of Commerce, plus OMR 12.50 for registration with the Municipality of Muscat
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Notify the Department of Taxation at the Ministry of Finance. You will be required to fill in a Form of Declaration of Business Particulars Register employees with the Public Authority for Social Insurance (provide copies of employment contracts) The registered authorised signatory of the company can then apply for a company seal (costing OMR 50)
3.10. Sectors where Singapore construction companies can engage Master planning, sub-contracting, material/service supply, facility management, airport expansion, hospitality, training and quality assurance.
3.11. Forecast and Analysis Construction activity in Oman remains robust driven by major expansion of infrastructure projects along with many tourism projects as well as construction of private & commercial buildings. The government's five-year spending plan (2011-2015) foresees OMR30bn (US$78bn) of expenditure, the majority of which will be allocated to social and transport infrastructure. Real estate sector has registered a massive growth riding on high demand for housing units. The growth in construction sector is likely to continue which is supported by rising revenue of the government. With oil price remaining high, the growth is likely to continue in near future. However, the current steep growth could be hampered by the high inflation. Massive oil revenues propelled by high oil price have resulted in increased government spending, excess liquidity and increase in demand. The high growth has created vacuum in resource availability and construction companies are facing problem in delivering the projects on target. The weak US dollar has made imports costly and with general increase in commodity prices, contractors are feeling the burnt. However, with many mega projects being announced periodically in Government and Private Sector, the construction industry can still expect to remain at the crest. Furthermore many integrated tourism projects are either under construction or beginning very soon. The construction sector in Oman with all its challenges will have busy days ahead.
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3.12. Green Mark Oman Green Buildings Center (OGBC) was launched under the patronage of H.E. Eng. Salim bin Nasser Al Aufi, Chairman of the General Authority for Civil Aviation, the OGBC, is a non-government, non-profit organization on a mission to promote and apply green building principles in Oman. The OGBC is a chapter of the Oman Society of Engineers and aims to raise awareness on the importance of going green. The center and its partners will contribute to green building governance as well as provide professional advice to other companies in the industry. Currently, Leadership in Energy and Environmental Design (LEED) provides third-party verification of green buildings.
4. BCA, MND, Industry Engagements and Issues 4.1. Visits to Singapore by Government, Private Companies, Mission Oman Tender Board visit (Dr Rasheed, Chairman) – Feb 2012
4.2. BCA, MND Visits, Missions BCA GCC Business mission – Sep 2012
4.3. Seminars, Conferences and BCA Engagements Oman Investment Forum (SBF) – Nov 2012.
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4.4. Projects done by Singapore Companies
Company
Activities
Top Great Engineering & Marine Pte Ltd (JV with WJ Towell)
Dock gates at Port of Duqm
Sky Holding ( JV with Al Lawami International LLC)
Oman cable manufacturing plant
Ascendas Pte Ltd
Industrial infrastructure
Boustead Salcon Limited
Water solutions
Mini Environment Services
Facility Management
SembCorp Industries
IWPP
Jurong Consultants
Master/Industrial Planing (Duqm SEZ)
Seven Seas Victory Knights
Medical tourism / Marine Services
Mencast Holdings
Offshore & Marine
5. Assessment 5.1. Market Assessment Singapore has in its favour is expertise in infrastructure, services and telecommunications which Oman requires as it diversifies its economy, away from oil. The smaller scale of projects available in Oman is also an advantage for medium-sized Singapore companies hoping to enter the Middle East. Projects in Oman are smaller in scale compared with those in the larger Gulf 14
Cooperation Council economies, and hence more manageable for our companies in terms of financial and manpower resources that need to be committed. The willingness of many Omanis to work means that labour costs can be cheaper than in other Gulf economies that rely on foreign workers. Minimum pay at 150-300 Omani rial for the private sector and 250-300 rial for the public sector are much lower than in the rest of the Gulf states. In terms of local recruitment, Omanis are also known to be hardworking and open to taking on jobs at all levels of seniority and commitment. Oman also offers the most cost-effective base for Singapore's industrial and manufacturing companies serving the Middle East, Africa or European markets.
Oman has fjords, deserts, pristine reefs and rugged mountains which attract the well-heeled, adventurous eco-tourism traveller. Singapore companies with a track record in resort tourism development, especially in Asia-Pacific, will find strong interest in Oman. These hotels development would also require architects, construction companies, building consultants, furniture and interior design vendors and spa operators. In environmental technologies, Singapore can offer their expertise in clean water and sanitation for Oman's cities, towns and villages.
6. Travel and other information 6.1. IES office in Dubai (covering) International Enterprise Singapore, c/o Consulate-General of the Republic of Singapore - United Arab Emirates (Dubai), Sultan Business Centre, Unit 209 (Next to Lamcy Plaza) OUD Metha Road P.O. Box 14970 Dubai, United Arab Emirates Tel: 9714-335 3770 Fax: 9714-335 3771 Centre Director: Lester Lu
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6.2. Flight connectivity No direct flight to Oman, connect via Oman Air in Dubai.
6.3. Currency Currency exchange - 1 SGD equivalent to 0.31 OMR
6.4. Visa Visa application is processed upon arrival for 5 OMR (less than 10 days) and 20 OMR (>10 days)
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