MUSCAT -- Foreign direct investment (FDI) into the Sultanate aggregated to RO 6.2 billion by the end of last year, a senior official of the erstwhile National Economy Ministry announced here yesterday. Saber al Harbi, Director-General of the Economic Statistics Department, told delegates on Day 1 of the Oman Economic Forum that foreign investment inflows into Oman amounted to around RO 800 million during 2011, almost double the previous year's volume of RO 413 million.
FDI not only supports economic diversification and employment generation, but also attracts technology transfers. Equally, it provides a strong incentive for economic growth and development, the official said during a presentation on FDI trends in the Sultanate. Investment inflows, although modest by Gulf and international standards, were sustained over the past years, Al Harbi said, rising from an aggregate of RO 1.6 billion in 2005 to touch RO 5.5 billion in 2010.
Of the RO 6.2 billion in FDI received by Oman as of end-2011, around 36 per cent came from the UK (amounting to $2 billion), while the United States came second with 16 per cent of the total. In third place was the United Arab Emirates with 15 per cent of the total. Significantly, the oil and gas sector, along with industry and manufacturing, attracted 82 per cent of the total investment.
The balance 18 per cent was spread across a number of economic and non-economic sectors. However, as a percentage of Gross Domestic Product (GDP), FDI volumes were relatively small, representing for example, a mere 1.7 per cent of GDP in 2010, he stated. Of a total of 55 countries that had invested in the Sultanate, the UK and US were the largest investors by far, with the lion's share of their capital ploughed into the mainstay oil sector, Al Harbi said.
Other notable investing countries included the UAE, India, Kuwait, Qatar and Bahrain, which had invested in industry, banking services, insurance, tourism, real estate, transportation, and communications, among other sectors. Inflows into Oman were minuscule in comparison with other Gulf states, the official explained.
Against an FDI of RO 413 million (approximately $1 billion) received by Oman in 2010, Saudi Arabia pulled in a whopping $28 billion, Qatar $5.5 billion, and the UAE $4 billion.
Significantly, private Omani companies and individuals also continued to invest in overseas markets, said Al Harbi. Overseas investment climbed from a cumulative $500 million in 2004 to an aggregate of $1.5 billion in 2010. The figure does not include overseas investment by Oman Oil Company and other sovereign wealth funds, he said.
China and South Korea pulled in a sizable share of Omani private investment, representing 28 per cent of the total. Much of this outflow ended up in the hydrocarbon sectors of these countries. Telcos in Pakistan and the UAE attracted 21 per cent of the total, while the manufacturing sectors in India and the UAE received an 8 per cent share. Another 20 per cent share went into banking and financial services in Saudi Arabia, Kuwait, South Africa and India, among other countries, he said.
Around 30 per cent of Omani private overseas investments were funneled into the economies of the UAE, Pakistan, Bahrain and Egypt. At least 33 other countries also received a share, he said. "It is important for the private sector to weigh the social implications when they choose to invest in Oman, rather than be guided by purely economic considerations when investing overseas," he stated.
© Oman Daily Observer 2012
