Country Brief: Oman

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January 11, 2007

The Sultanate of Oman, commonly known as Oman, is strategically located in the Middle East bordering the Arabian Sea, the Gulf of Oman, Saudi Arabia, UAE and Yemen.[1]  Throughout most of its history, Oman has been a very powerful nation in Arabia and has had a major presence on the East African Coast.[2]  In the 1970’s, Oman implemented extensive modernization programs that have opened the country to the outside world and has preserved a longstanding political and military relationship with the U.S. and the UK.[3]

 

Oman is a hereditary monarchy[4] that has been ruled by Sultan Qaboos bin Said al-Said since 1970.[5]  Arabic is the official language of Oman, but different ethnic groups residing there also speak English, Baluchi, Urdu, Swahili, Hindi and other Indian dialects.[6]  During the 1970’s educational reform was given high priority by the government.  As a result, literacy rates steadily increased to 75.8%.[7]  By 1986, Oman's first university, Sultan Qaboos University, opened.[8]  Since that time, over 19 universities and postgraduate schools focusing on law, health care, technology, finance and education, have been built.[9] 

Oman is a middle income economy with large oil and gas resources, a substantial trade surplus and relatively low inflation.[10]  Within 35 years, oil and gas exports and petroleum products have transformed Oman from a predominately poor agricultural economy to a technologically advanced economy.[11] The development of liquefied natural gas facilities has contributed to an increase in the 2006 oil and gas exports.  Despite achievements in economic development, Oman’s unemployment rate remains at 15%.[12]  To reduce its unemployment levels and limit dependence on foreign labor, the government is encouraging the replacement of foreign expatriate workers with local workers.[13] 

Oman spends $8.709 billion on importing products from Germany, Japan, the U.A.E., U.K. and U.S.  Import commodities include machinery and transport equipment, manufactured goods, food, livestock and lubricants.[14]  Oman earns $19.01 billion from exporting products to China, Japan, South Korea, Thailand and the U.A.E.  Export commodities include petroleum, re-exports, fish, metals and textiles.[15]  Oman has also continued to liberalize its trade policy by joining the World Trade Organization in November 2000[16] and engaging in a bilateral free trade agreement with the U.S.[17]  Upon ratification of the FTA, 100% of trade in industrial and consumer products will become duty-free, and a phase-out of agricultural tariffs will occur over a 10 year period.[18]  These steps will expand trade between both countries, contribute to economic growth and will advance economic reforms in the Middle East.[19] 

Telecommunications in Oman has improved through the use of new technology.[20]  Oman expands its systems by using foreign investments to create a second mobile phone network.[21]  Sultan Qaboos has also emphasized the improvement in transportation systems through the building of airports, roadways including expressways, and ports. By 2005, Oman developed 137 airports, 34,965 km of roadways and a heliport.[22]

There are some concerns the international community should be aware of.  Although Oman enjoys a high degree of internal stability, regional tensions in the aftermath of multiple wars continue to impact regional stability.[23]  Oman has supported the U.S. in its endeavors to fight terrorism, and yet has struggled to maintain peace with Middle Eastern nations.  Furthermore, U.S. firms face a small and highly competitive market dominated by trade with Japan and Britain and re-exports from the United Arab Emirates. The sale of U.S. products is also hampered by higher transportation costs and the lack of familiarity with Oman on the part of U.S. exporters.[24]