Exec President of CBO Expects Growth in Omani Non Oil Sector
Recent statements from CBO executive president Hamoud Sangour Al Zadjali noted that Oman’s non oil sector will continue expanding, shrinking the oil sector’s share of GDP. From the Oman Investment Forum 2012, Al Zadjali noted that Oman’s developmental strategies target economic growth until 2020 and contain “substantial transformation” in the sultanate’s economic structure with the development of several revenue sources, rather than relying on oil to maintain balance and drive growth in the economy.
These strategies are expected to increase foreign investment as well, according to Al Zadjali.
Oman remains committed to open market economic policies to encourage competition and private sector involvement. These policies should attract foreign investors, enhancing nationwide development and supplementing local investments to utilize untapped resources, aid in the transfer of knowledge, skills and technology. They will benefit the entire economy.
Al Zadjali noted that Oman taxes are investor-friendly and flexible, designed with transparency in mind. Laws regarding foreign capital in Oman have seen liberalisation, with 70 percent participation by foreign investors allowed in most projects and up to 100 percent foreign involvement in those projects deemed to be nationally important.
Profits are taxed at low levels in Oman and personal income is not taxed at all. Oman also places no restrictions on profit and capital repatriation, creating a very flexible tax system that allows for a five-year exemption with extensions available in certain sectors.
Foreign investors also have access to various other incentives, including lower leases, utility charge reductions and tax exemptions. Both foreign and domestic investors can go to the Ministry of Commerce and Industry to quickly obtain all of the necessary clearances. Specific tourism complexes have also been made available for foreign investor ownership.
A free economy and the rial’s fixed exchange rate creates a positive investment climate in Oman. The sultanate’s banking system is also sound and profitable, with regulations and policies in place to cushion the banks from adverse effects of global crises.
Six Percent Growth Expected for Saudi GDP
Saudi’s GDP should grow by around 6 percent this year and the Kingdom’s banking system should remain stable, based on statements by Moody’s Investor Service.
Real GDP in Saudi’s non oil private sector is forecasted to expand by 5.2 percent this year and 5.5 percent next year, after recording 6.4 percent expansion last year. Overall growth for the kingdom’s real GDP is expected to reach 6 percent this year, one of the top rates in the region.
Riyad Capital vice president Asim Bukhtiar noted that after achieving 4.2 percent growth in GDP during the downturn of 2010, Saudi Arabia should have little difficulty achieving 6.0 percent this year. High levels of demand for commercial credit indicate that the kingdom’s economic engine is running well, despite challenges in 2013, such as declining growth prospects and trade partner responses to those conditions.
Substantial government spending and higher levels of business activity in the private sector will support growth in the economy and banking sectors of Saudi Arabia.
Several key factors support this positive outlook, such as a positive operating environment, lower levels of problem loans, high levels of liquidity and a low-cost deposit base. The outlook for the next year to year-and-a-half contains structural weaknesses that may counterbalance these positive factors.
Economist Jarmo T. Kotilaine noted that 6 percent growth in Saudi GDP is possible, though ambitious given the data from intermediate national accounts. Saudi’s GDP grew by 5.9 percent in the opening quarter and recorded 5.5 percent growth in the second quarter. A drop in oil prices and declines in the production momentum caused the slight drop in GDP growth.
Kotilaine noted that sharp growth in 2011 would have a base effect on this year’s growth. Real GDP grew by 9.6 percent in the second quarter of 2011, with Q3 growth recorded at 7.5 percent and growth in the final quarter reaching 7.4 percent. Climbing oil prices and increased production, as well as government spending hikes and priority placed on key sectors like social welfare, job creation and housing, were credited.
Kotilaine stated that growth drivers are not increasing as fast this year in general, despite the drop in risk aversion over the last few weeks. Private sector growth will not increase enough to make up the gap, according to Kotilaine. Although the outlook for Saudi Arabia’s economy is positive, headline growth figures will be fairly normal when compared to last year.
UAE and Saudi Arabian Trade Hits AED 9.9 Billion
The UAE’s non oil trade continued to increase over the opening four months of this year, increasing from AED 303bn to AED 320.3bn, based on recent statements from FCA. Initial data indicates that exports have risen by 10 percent between January and April 2012, boosting non oil exports in the UAE from AED 190.6bn last year to AED 209bn in the same period of 2012.
FCA statements outline how exports rose by 33 percent , while re-exports reached AED 64.4bn over this period. Total foreign trade for the UAE reached 31.8mn tonnes from January to April 2012, with imports totalling 17.5mn tonnes, exports at 11.2mn tonnes and re-exports at 3.1mn tonnes. Various custom outlets reported a daily average of 132,000 tonnes in consignments, including exports, re-exports and imports.
Foreign trade for the UAE hit AED 81.8bn in April, which included exports of AED 12.5bn, re-exports of AED 16.6bn and imports of AED 52.7bn, according to the FCA.
Asia-Pacific remains the UAE’s leading trade partner, with a total of AED 145.6bn, or 46 percent of the total traded within the first four months of 2012. Europe nabbed second spot with 25 percent of the total trade or AED 80.2bn. The MENA region accounted for AED 43.4bn or 14 percent, with the US and Caribbean coming in at 9 percent or AED 28bn.
Total non oil foreign trade between the UAE and the balance of the GCC reached AED 26bn from January to April, including imports of AED 9.3bn, exports of AED 7bn and re-exports of AED 9.7bn.
Saudi Arabia remains the UAE’s largest trade partner in the GCC, with a total of AED 9.9bn in trade flowing between January and April of 2012. Oman trade totalled AED 6.4bn and trade with Kuwait reached AED 3.5bn. Qatar traded AED 3.2bn with the UAE, and trade with Bahrain hit AED 3bn.Paul Holdsworth, Staff Writer, Gulf Jobs Market News