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Country ProfileReforms to diversify economy promote investmentLegacy of seafaring history seen in today’s ports Focus on quality education for the young populationCultural diversity expanded with expatriate workforce

COUNTRY PROFILE

Oman’s rich history includes a number civilisations and rulers

The year 2010 marked the 40th anniversary of theaccession of His Majesty Sultan Qaboos bin Said Al Saidand the establishment of the Sultanate of Oman. As amember of the Gulf Cooperation Council, the Sultanatecontinues to play a fundamental role in promotingregional stability. It is also a country that strives toadopt economic reforms that are in line with global mar-ket expectations, while retaining and protecting allaspects of its traditional heritage and culture.

Today, the Sultanate is considered one of the top eco-nomic reformers in the world, and it is poised to con-tinue on this path. As outlined in Vision 2020, Oman’s25-year development plan, the country seeks to achieveeconomic diversification and reduce its dependency onhydrocarbons. The country aims to stand out from itsneighbours and strives to become one of the top region-al and global destinations for foreign investment.HISTORY:Since ancient times Oman has benefitted fromcontacts with many of the world’s major civilisations,as it occupies a very advantageous position in the Gulf.Between the 6th century BC and the arrival of Islam inthe 7th century AD, Oman was controlled by threedynasties: the Achaemenids, Parthians and Sassanids.In the 7th century AD, during the lifetime of the ProphetMuhammad, Oman adopted Islam.

About a decade after explorer Vasco da Gama dis-covered the sea route to India in 1498, the Portugueseoccupied Muscat. They fortified the city and held ituntil the Ottomans arrived in 1660. The Ottomans ruledintermittently for just over 100 years until a tribal leader,from whom the current line of Omani sultans is descend-ed, took over in 1741. Oman’s emergence as a seafar-ing economic power began in the 1600s. As the Oma-nis sailed down the coasts of Persia, India, Zanzibarand Kenya, they built a trading empire – one in whichthe East African coast became increasingly central asOman’s empire developed into an economic force. FORMATION: When Sultan Said bin Sultan Al Busaididied in 1856, his sons quarrelled over succession. TheBritish government intervened and two principalities

were formed, Zanzibar and the Sultanate of Muscat andOman. Throughout the late 19th century and early 20thcentury, the Sultanate’s territories and influence beganto slip away as the country lost its trading competitive-ness against the more technologically advanced Euro-pean powers. The Omani interior started becomingalienated from the more secular coastal Muscat.

With the discovery of oil in the 1960s, the British,under pressure from European oil companies, helpedthe Sultanate to consolidate power. In 1970 SultanQaboos came to power and renamed the country theSultanate of Oman. Under the reign of Sultan Qaboos,the internal disputes originating in the Dhofar regionwere quelled with the help of the British and peace haslong since prevailed. The reign of Sultan Qaboos haswidely been acknowledged as being characterised bysocial and economic progress. GEOGRAPHY: Located in the south-east corner of theArabian Peninsula, Oman occupies a total area of309,500 sq km – roughly the same size as Italy - includ-ing coastal islands such as Masirah, Halanyat and Sala-ma, and the exclaves of Musandam and Madha, whichare completely surrounded by the UAE. The country has1374 km of land borders, which it shares with theRepublic of Yemen to the south-west, the Kingdom ofSaudi Arabia to the north-west and the UAE to thenorth. Oman has 2092 km of coastline on the Gulf, Ara-bian Sea and the Gulf of Oman. The interior is coveredby a vast expanse of desert. The imposing Hajjar moun-tain range forms an arc extending from the north-westof the country to the south-east. The highest peak inOman is Jabal Shams, at about 2980 metres. Approxi-mately 82% of the land mass is occupied by deserts andvalleys, with mountain ranges and coastal plains mak-ing up the remaining 15% and 3%, respectively. CLIMATE: The country’s climatic conditions are as var-ied as its geography. The coastal areas are hot andhumid during the summer, while the interior general-ly remains hot and dry. The southern Dhofar regionfeatures unique weather conditions between May and

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Progress through reformDiversifying the economy while conserving heritage and culture

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COUNTRY PROFILE

September, called the khareef, when it catches theIndian Ocean’s monsoon season, and temperatures canbe 10-15 degrees lower than the rest of the country.Precipitation falls almost exclusively in the wintermonths. Other than in the Dhofar region, it is rare tosee any rain between May and November. The coastalareas and the interior plains average 20-100mm ofrainfall annually, but this can increase to around 900mm in the mountainous regions. In winter, it is notuncommon to see snow on the highest mountain peaks.POLITICS: Since the accession of Sultan Qaboos binSaid Al Said in 1970, Oman has gone through a sub-stantial political reform process. The sultan is the headof state and head of government and is advised by theCouncil of Ministers, which acts as a cabinet. Two bod-ies act in a consultative role for the government. TheConsultative Council is an 83-seat body with popular-ly elected members serving three-year terms. In early2011 Sultan Qaboos granted the council increased leg-islative and regulatory powers. The more senior StateCouncil has 48 members who are appointed by the sul-tan. All Omanis over the age of 21 are eligible to vote.The last Consultative Council elections were held in2007 and around 390,000 Omanis voted in them, anincrease of around 100,000 voters from the previouselections, which were held in 2003.ADMINISTRATIVE AREAS: Royal decree No. 114/2011,issued in late 2011, reorganised Oman’s administrativedivision, streamlining governance. For administrative pur-poses the Sultanate is now divided into nine gover-norates: Muscat, Dhofar, Musandam, Al Buraimi, Al Bati-nah, Al Dakhiliyah, Al Sharqiyah, Al Dhahira and Al Wusta.Each governorate is further subdivided into wilayats,or provinces. There are 61 wilayats in total. INFRASTRUCTURE: Oman has approximately 11,071km of paved roads and 16,667 km of unpaved roads.The road network covers most parts of the country andpaved roads are generally of high quality. With such along seafaring history, it is no surprise that ports playan important economic role in Oman. There are cur-rently five active ports in the country: Sultan QaboosPort, the Port of Salalah, the Port of Sohar, the Port ofKhasab and the Port of Shinas. Each port is located ina different part of the country and serves a differentfunction. The Port of Duqm, which is currently underconstruction, will be one of the country’s largest portsupon completion. There are currently two airports inthe country, in Muscat and Salalah. Both are undergo-ing major upgrades to accommodate expected growthin domestic as well as international passengers andtourist traffic. Another four additional regional airportsare also under construction in Duqm, Sohar, Ras AlHadd and Adam. In terms of communication networks,the Sultanate is connected to the UAE, Yemen and Pak-istan via fibre-optic cables. Work is ongoing to estab-lish a fibre-optic connection with Saudi Arabia.MINING: Archaeological evidence shows that copperwas both extracted and smelted up to 4000 years agoin Oman. Much of these copper reserves have since beenexhausted. However, new mineral finds continue to bemade, including reserves of gold, silver and chromite.

Non-metallic industrial minerals, such as limestone andsilica sand, which are used in the steel and glass-man-ufacturing industries, respectively, are in abundance.Large, commercially viable deposits of other minerals,such as dolomite, gypsum, zinc and cobalt, are regu-larly being found as well, and new ventures are beingformed to exploit this wealth of industrial minerals ina sustainable, economical way.NATURAL RESOURCES: Unlike most of its neighbours,Oman does not have bountiful supplies of oil and itsgeography and geologic composition make extractiondifficult. It is not an OPEC member country. For 2010,the government sustained oil production above 800,000barrels per day (bpd). The government has a goal ofincreasing this to 1m bpd by 2012 with the aid ofenhanced oil recovery techniques and further explo-ration. However, the increasingly complex methodsrequired to extract the remaining reserves have result-ed in a steadily rising cost per barrel. Petroleum Devel-opment Oman (PDO) made headlines in 2009 when itmade several oil discoveries, including joint heavy oilin a PDO acreage called Al Ghubar South, which isbelieved to hold around 1bn barrels of oil. Oman alsohas a significant amount of natural gas, estimated at795.2bn cu metres of reserves. To try and reduce itseconomic reliance on oil, Oman has invested heavily inliquefied natural gas facilities. The availability of cheapnatural gas has also been the engine behind big indus-trial developments, mainly in the northern city of Sohar.POPULATION: The Sultanate has a population ofapproximately 2.9m, according to the most recent gov-ernment estimates, of which roughly 900,000 are expa-triates who come mostly from the Indian subcontinentand other countries in the Middle East.

Oman is a very young country: 55% of the popula-tion is under 20 years of age, while 83% is under theage of 35. The gender ratio of males to females is 1.26:1and life expectancy currently stands at approximately73 years. Some 78% of the population lives in urbancentres. The largest city – and the administrative and

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THE REPORT Oman 2012

The majority of the Sultanate’s land mass is covered by deserts and valleys, with some mountains

COUNTRY PROFILE

business capital – is Muscat, with a metropolitan areapopulation of more than 1m. The other large popula-tion cluster is the Batinah coastline, which stretchesbetween Muscat and the city of Sohar. Around half ofthe country’s population is concentrated in this stretchof land. The second most populous city is Salalah, inthe Dhofar region by the Yemeni border, which is hometo around 210,000 people. A large proportion of therural population still works in agriculture and fishing.

Many employers have in recent years come to dependon foreign workers from South Asia and the Philip-pines. The largest foreign community comes from thesouthern Indian states of Kerala, Tamil Nadu and Kar-nataka, and represents more than half of Oman’s labour.The government has developed a policy called Oman-isation to encourage private sector companies toincrease the numbers of nationals they employ. LANGUAGE: Although Arabic is the official language,English is also widely spoken, and almost all signs andpostings are written in both. Many nationals also speaklocal dialects of Arabic, such as Baluchi, derived fromOld Persian. Semitic dialects are found in the Dhofarregion and Kumzari, a sub-branch of Persian, is spokenin northern Musandam. Other languages spoken in theSultanate include Hindi, due to the widespread influ-ence of Indian immigrants, as well as French and Swahili,due to historical links with Zanzibar and East Africa.RELIGION AND CULTURE: Oman is the only countryin the world where the Ibadi strand of Islam is the dom-inant religion; it is practised by approximately 60% ofthe population. The Sultanate is religiously tolerant andis also home to sizeable Shia and Sunni populations,while the largest minority religion, accounting for around13% of the population, is Hinduism, primarily due to thelarge proportion of the expatriate population comingfrom the Indian subcontinent. Due to Oman’s locationand its long seafaring heritage, the population is aunique product of various waves of immigration, whileits culture is a compelling combination of diverse influ-ences. African, Persian, Arabic, Zanzibari and even

Baluchi elements all intermingle, resulting in very open-minded and hospitable people. EDUCATION: In 2010, about 12% of the government’sexpenditure budget was allocated to education. Thereare more than 1000 public schools throughout thecountry and Omanis enjoy free public schooling throughthe secondary level. The government also funds schol-arships at the tertiary level. The adult literacy rate is86.7%. Higher education in Oman is still relatively youngbut developing steadily. Sultan Qaboos University, thefirst university in the country, was opened in 1986 andis now the premier tertiary institution and home tosome 17,000 students in colleges covering agriculture,art, commerce and economics, education, engineer-ing, law, Islamic studies, medicine, nursing and science.It also offers graduate studies, including a doctoraldegree, for certain disciplines. The private sector hasbeen increasingly involved in tertiary education. Indeed,there are now 24 private colleges and universities.

Many Omanis take advantage of government-fund-ed scholarships to study both at home and abroad,regardless of their financial situation. Total tertiaryenrolment stands at around 80,000 students, represent-ing about 19% of the population between the ages of18 and 24. The government aims to increase that fig-ure to 50% by 2020. Due to Oman’s young population,the demand for higher education is growing quickly and,as new private universities are accredited, there is agreater emphasis placed on improving quality. ARCHITECTURE: Forts are probably the most visible andcharacteristic architectural features of Oman. Practi-cally every city and every village has one, and of thoseyou can find, Muscat’s Mutrah or the city of Nizwa areprobably the most famous examples.

Oman’s capital has successfully resisted the region-al trend of erecting high-rise buildings. However, thedesign of many buildings is often quite imaginative andmakes up for the lack of skyscrapers. Even outside ofthe cities, the architectural diversity is quite large, withmodern houses made of expensive materials and moremodest dwellings constructed using less sophisticat-ed mediums. Housing made of palm-wood is still com-mon along the coast from Duqm to Shuwaymiyah. Inthe Sharqiya Sands, Bedu use goat-hair tents, and manypeople in the mountains live in caves with an impro-vised front door. Most interesting of all are the roundhouses made from constructed, interlocking sticks thatcling to Dhofar’s hills. They were once thatched but noware more likely to be covered in stronger material.WILDLIFE: Oman has one of the richest wildlife habi-tats of the Arab world, and while the authorities encour-age eco- and nature tourism the emphasis is very muchon protection, with the animal welfare considered para-mount. Indeed, the largest confirmed population ofthe rare Arabian leopard inhabits the Dhofar region.

Other endangered species that live in Oman includefox, wolf, hyena, hare and oryx. Avian fauna includesvulture, eagle, stork, falcon, sunbird, bustard and Ara-bian partridge. The Sultanate’s warm waters are alsohome to an array of rich sea life, with dolphins, turtlesand hundreds of varied fish species present in its waters.

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Forts are a key feature of the Sultanate’s architecture, which is known for its diversity and imagination

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COUNTRY PROFILE VIEWPOINT

Sultan Qaboos bin Said Al Said

I have spoken before about Oman’s shura (consulta-tion) experiment and about the gradual path we choseto build it on. These firm foundations will ensure its nat-ural growth, enabling it to meet the requirements ofeach phase of national development and respond tothe community’s needs. By applying wisdom in its visionand in the implementation of its procedures, the shu-ra will fulfil its aspirations of contributing more effec-tively to the decision-making process for the higherinterest of the country and citizens.

Many notable achievements were made along thepath of this blessed experience during the past phase,and as we express our thanks for the efforts exertedin this regard. We are looking forward to a qualitativeshift in national work which will be carried out by theCouncil of Oman during the upcoming period in the lightof the expanded powers given to it in the legislativeand auditing fields. There is no doubt that the challengesahead are enormous, but we are quite confident thatall members of the council will play their role effective-ly and exert their utmost efforts for the sake of lead-ing their country onwards to greater honour, glory,progress and prosperity, security and stability, whileputting before their eyes the enormous responsibili-ties incurred by their council as a body which takes partin the decision-making process.

The council members, as citizens seeking their coun-try’s prominence, should also work continuously andrelentlessly to ensure the success of plans aimed at con-solidating the Sultanate’s economic, social and scien-tific potential to serve the common interest, and raisethe country’s regional and international status to helpit achieve its commitments at both local and foreignlevels without slowness or delay. It is obvious that thisrequires more cooperation and coordination betweengovernment departments and the Council of Oman inparticular, and between these two and the private sec-tor, the civil societies and corporations in general.

The building of a modern state which we pledged toestablish since the first moment of the dawn of the

blessed renaissance, required us to exert major effortsin the field of establishing the infrastructure which isthe pillar and first cornerstone of comprehensive devel-opment. The provision of this infrastructure – in allparts of the Sultanate – has given us major opportu-nities for construction development in various cities andvillages throughout Oman and paved the way for theestablishment of economic, commercial and industri-al projects as well as different educational, cultural,health and social institutions.

And no wonder. Omanis have been, from ancienttimes, makers of civilisation with their great historicalheritage, their openness to other civilisations acrossthe seas and oceans, and their ability to communicateand exchange mutual benefits with others. This is whyOmanis are well-qualified to be an example and mod-el for others to follow in this age of rapid developmentand progress. They are also capable of coping with thechallenges of the modern age, adopting new ideas,and benefitting from science and technology, but atthe same time preserving the values and principlesthat they believe in, and the traditions and authenticcustoms with which they were brought up.

We all know that progress is part of the reality of theuniverse we live in. However, many ways and means arerequired in order to achieve it. The first of these is astrong will and determination, along with a readinessto face challenges and persist in one’s endeavours toovercome difficulties and obstacles.

Every nation that desires to live – in the full mean-ing of the word – needs to work tirelessly, and diligent-ly with dedication to give generously so as to utilise itscapacities and skills and invest in its resources andpotential. In this way it can build a great and illustriouspresent and prepare for a decent and prosperous future.Through God’s grace, the Omani people have beengranted many of these qualities, and over the past fourdecades they were able to realise achievements whichstill stand as clear evidence that cannot be denied byanybody who has the power of vision and insight. We

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Serving the common interestSultan Qaboos bin Said Al Said on past achievements and nationaldevelopment goals for the future

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COUNTRY PROFILE VIEWPOINT

have always affirmed our attention to the develop-ment of human potential and this resource takes toppriority in our plans. The human being is a pivotal com-ponent around which all types of development revolve.The ultimate goal is the happiness of the individual; pro-viding him with means of a decent living and guaran-teeing his security and safety.

As youth are the present and future of the nation wegave them the attention they deserve throughout theyears of the blessed Renaissance as the governmentendeavoured to provide them with education, training,qualifications and employment opportunities. The forth-coming stages will witness, with God’s permission,greater attention and greater care to provide moreopportunities for the youth in order to consolidatetheir gain in knowledge, strengthen their talents in cre-ation and production, and increase their participationin the country’s comprehensive development march.

As education is the basic pillar of development, andin order to produce a responsibly aware generationwith expertise and skills that aspires to a higher levelof knowledge, it is necessary to conduct a comprehen-sive assessment of the educational system to achievethese aspirations and ensure that graduates can ben-efit from all of the available job opportunities in boththe public and private sectors.

The construction, economic, commercial and indus-trial projects established in the Sultanate have absorbedmany national workers, and the private sector hasproved its cooperation in shouldering the responsibil-ity as it assumed a tangible role in cooperating with thegovernment and boosting sustainable developmentefforts. We are looking forward to a greater role to beplayed by the private sector, particularly in the field ofthe development of human resources.

Government work, as is well-known, is a matter oftrust and responsibility. It should be carried out withtotal disregard for personal interests and with completehonesty for the service of the community, and it shouldnever countenance corruption. Corruption must not be

allowed in any shape or form; we instruct our govern-ment to take all necessary measures to prevent it andwe direct all the audit authorities to fulfil their dutiesresolutely in this regard with the full force of the law.Justice must take its course and become our goal. Oursupport for the judiciary and its independence is a dutyto which we have committed ourselves, and we recog-nise that it is imperative to respect its decisions with-out favouritism, as all are equal before the law.

We are living in a world that has witnessed rapiddevelopments at regional and international levels, whichhave had a range of different impacts and opposingreactions. As the world is characterised by overlappinginterests and policies we cannot be detached fromwhat is happening around us. We in the Sultanate,despite the crises swarming the world and the difficul-ties in predicting their limits, timescale and repercus-sions on the economy, endeavour to lessen these effectsby adopting balanced economic policies to preserve ourgains and boost our economic plans in various spheres.

Going forward, we will continue to show our deter-mination to complete the establishment of the mod-ern state based on solid foundations that guaranteethe continuation of the development of our country’snatural and human resources, spreading education,culture and knowledge, providing security and stabili-ty, and consolidating the basis of institutional work thatleads, with God’s assistance, to more progress, pros-perity and a decent living for all citizens.

We would like to salute and express our apprecia-tion to all dedicated workers from our Omani sons anddaughters, wherever they are and whatever responsi-bilities they bear, and to all those who have helped tocreate a better future for the Sultanate and raise itsstatus to new heights, while protecting its gains andsafeguarding its achievements, security and stability.In particular, we salute our armed forces and securityservices for their sacrifice and selflessness. To themwe reaffirm that we shall continue to extend our careand support for the development of their potential.

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THE REPORT Oman 2012

COUNTRY PROFILE DIALOGUE

Martin Ferguson, Australian Minister for Resources & Energy RPN Singh, Indian Minister of State for Petroleum & Gas

What should the ideal fuel mix be in the next 5-10years? What role should renewables play in this?FERGUSON: Australia’s current mix is about 82% coal,10% gas and 8% renewables. With our renewable tar-get of 20% by 2020, I see growth in gas as base loadenergy as well as an increase in wind and solar.

Our job as a government is to invest in technology.We have a clean energy programme to facilitate thebreakthrough of technology in geothermal, solar, bio-mass and ocean power. We are not about picking win-ners. It is a mechanism to find appropriate energy types. SINGH: Currently we are primarily dependent on hydro-carbons for our energy. Coal accounts for 53.5%, oil 33%,gas 9.35%, renewables 3.10% and nuclear 1.05%. Overthe coming decade coal will contribute about 50%, butgas, renewables and nuclear energy will each rise steadi-ly. We have adopted a solar mission which aims to gen-erate 20,000 MW by 2020, up from 18 MW today. Indiais the world’s fourth-largest producer of wind energy.Our current production is 13,000 MW, and we hope toincrease that to 38,000 MW by 2022.

How pressing an issue is climate change? What isbeing done to cut carbon emissions?SINGH: About 70% of our population derives employ-ment from agriculture-related sectors. Hence, climatechange has major implications for a country like India.However, India’s carbon footprint is very small. Per capi-ta emissions are 1.2 tonnes compared to over 10 tonnesfor most OECD countries. India, with 17% of the world’spopulation, contributes only 4% of global greenhouseemissions. The dilemma before a country like India ishow to meet the developmental aspirations of its cit-izens while catering to the imperatives of climate changemitigation. India is determined not to exceed the percapita emissions of the developed countries whilemeeting its development goals. FERGUSON: We are taking it very seriously, puttingourselves through a lot of political pain to affect a car-bon market pricing mechanism. We are taking action

to make meaningful contributions internationally. Agri-culture will be excluded from the system so the carbonprice does not apply to that sector. Instead, we arefacilitating carbon offsetting through agriculture andthrough our timber industry. The biggest offset we canachieve, however, is a breakthrough in clean technol-ogy. You can have all the offsetting mechanisms in theworld, but if you cannot make the breakthrough intechnology, then you do not solve the problem. We area major exported of coal and liquefied natural gas (LNG)to energy-hungry countries, and meeting their energysecurity aspirations means higher emissions out of Aus-tralia. Alternately, for every tonne of CO2 produced outof Australia via LNG, we reduce emissions in a place likeChina or India by about 4 tonnes.

What strategies and priorities can exist at an inter-national level to prevent excessive oil price volatil-ity in global energy markets?FERGUSON: It is about transparency and the opera-tion of the market. Getting back to political normalcyin Libya is going to be the solution. Unfortunately, wehave all had to ride it out during the first 10 months of2011. Hopefully now with Libya moving towards a set-tlement things will improve. We need to see what occursin the OPEC countries, and also see what the impactof interruptions in places like Yemen and Oman will be.There is no short-term political fix to the price of oil. Itis determined by the market, and when you try and inter-fere with the market you come off second best. SINGH:The lack of stability and transparency in the inter-national oil markets is a key concern for oil importingcountries like India. We need resolute action to reducethe role of speculation in commodity markets.

We are clear that the price of oil cannot be left entire-ly unregulated, and that we need to improve our under-standing of the inter-linkages between the physicaland financial markets. In the future, consumers, tradersand the financial markets will need to work together tostrike a balance between market dynamics and stability.

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Renewable driveOBG talks to Martin Ferguson, Australia’s Minister for Resources andEnergy and RPN Singh, India’s Minister of State for Petroleum and Gas

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COUNTRY PROFILE INTERVIEW

Shri S M Krishna, External Affairs Minister of India

What can Oman learn from India’s increasingly devel-oped economy, particularly in regard to becomingan innovation-driven economy?KRISHNA: In recent years, the Indian economy hasproved its resilience, successfully withstanding theadverse effects of the global financial crisis. The econ-omy has grown close to 8-9% for the past several years,rising 7.6% in 2010-11, and expectations are close to9% in 2011-12. India’s economic reforms in the lastcouple of decades have gradually opened its markets.Liberalised markets have led to new business modelsthat encourage and facilitate innovation in the indus-try and service sectors. The Indian business communi-ty, growing more confident and successful, is ready andwilling to share this experience with Oman.

In Oman too, we have observed steady progress anda determined effort by the government to reduce itsdependence on the energy sector and diversify theeconomy. India and Oman, therefore, have a lot to learnfrom each other. At this juncture, we need to jointlyexploit opportunities in sectors such as food security,medicine, agriculture, petrochemicals, pharmaceuti-cals, technical and vocational training, higher educa-tion, and science and technology.

The two countries must also expand cooperationbetween their small and medium-sized enterprises,which is an area offering many opportunities to gainfrom each other’s strengths. India already offers tech-nical training to Omani participants under its Techni-cal and Economic Cooperation Programme, which hasreceived an overwhelming response from Oman.

How would you rate the success to date of theIndia-Oman Joint Investment Fund (JIF)?KRISHNA: The JIF was launched in February 2011 withan investible corpus of $100m to be contributed equal-ly by the State General Reserve Fund of Oman (SGRF)and the State Bank of India (SBI). It is currently oper-ated by a Mumbai-based joint management companywith 50:50 equity for SBI and SGRF. While the JIF is

exploring opportunities in all sectors, for the moment,it is limiting itself to investment opportunities in Indiain sectors in which foreign investment is permitted bythe government. Provision exists for the JIF to enhanceits corpus of $100m to $1.5bn in the future, depend-ing upon its experience in the initial period. The mainpurpose of this collaboration is to attract capital intoIndia from Oman and, at a later stage, to encourage Indi-an investment in Oman. The JIF has opened a new chap-ter in relations between the two countries.

What are some examples of bilateral investmentbetween the two countries? What are the benefits?KRISHNA: Investments from India in Oman create theirown dynamic of mutual benefits. Such investments canhelp Oman enhance its capacity for non-oil exports andthereby reduce its reliance on hydrocarbons. ThroughOman, Indian industries can access the GCC market. Thepotential for bilateral cooperation between our coun-tries has remained unexplored and unexploited for along time in the area of manufacturing. For instance,with easy access to naphtha, Oman could be a primarymanufacturer of fertilisers for the Indian market. TheOman India Fertiliser Company in Sur is a shining exam-ple of bilateral investment for the mutual benefit to bothcountries. Simultaneously, India wishes to develop crudeoil storage hubs to serve the South Asian and East Asianmarkets and Oman could invest in India to support thisendeavour. The recent commissioning of Bharat OmanRefinery in Bina in India is another example of a suc-cessful Omani investment into India.

What potential for cooperation exists in energy?KRISHNA: The Indian Minister for New and RenewableEnergy visited Muscat in January 2010 to explore thepotential for bilateral cooperation with Oman in thisfield. Since Oman holds immense potential for solar andwind power and is currently in the process of framingits policies to tap these sources of energy, India is keento share with Oman its own experience in this field.

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THE REPORT Oman 2012

Cooperative potentialOBG talks to Shri S M Krishna, External Affairs Minister of India

COUNTRY PROFILE INTERVIEW

Lord Astor of Hever, Parliamentary Under-Secretary of State

Have UK-Oman ties changed since the coalitiongovernment came into power in the UK?ASTOR: Relations are as good as we can hope for. TheQueen had a successful state visit in November 2010and there have been 10 ministerial visits since the gen-eral election in 2010. I myself have been to the Sultanatefour times. This shows how seriously Oman is being tak-en as a focus for British relations. After the state visit,we set up a joint working group to look at a range ofcultural, educational, health and business areas. Wealso discussed a visa waiver for diplomatic and specialpassport holders, an issue which had been brought tomy attention a number of times. We have made signif-icant progress on this and many other areas.

There is a concerted effort to work with our part-ners in Oman as well as in the wider region, a commit-ment we made in opposition. The cross-departmentalGulf Initiative is the product of that. Chaired by the For-eign and Commonwealth Office, the programme hasinput from the Ministry of Defence, Ministry of Cultureand Sport, Department for International Development,Ministry of Health and a number of others.

To what extent does the UK defence relationshipwith Oman underpin other areas of collaboration? ASTOR: Defence is perhaps one of the most importantaspects of our collaboration with Oman. We have anhistoric relationship with the Sultanate, which, as withall effective relationships, has to be mutually benefi-cial. It is and both countries are happy with it. We havemany Omani cadets at Sandhurst, Cranwell and Dart-mouth officer training colleges, as well as on othercareer courses. Oman provides regular opportunitiesfor our own forces to train in testing and relevant envi-ronments and conditions. The UK still provides about90 loan service personnel across all three services totrain or assist in a broad cross section of areas. So, themilitary connection remains very strong.

The British Council in the GCC has a strategy to cre-ate research partnerships between universities in the

region and the UK. The first was developed in Omanabout water issues. In total, 35 academics took part andcame up with six research proposals on sustainabilityand water. Further symposia will address diabetes,renewable energy and carbon capture and storage.

Will the focus on high-end tourism produce thedesired 3% sector contribution to GDP by 2020?ASTOR: Oman’s oil and gas reserves are finite anddiversification plans are in place to develop new rev-enue streams. Tourism was identified in the EconomicVision as an area in which Oman has natural advantages– beautiful coasts, stunning deserts and exceptionalhotels. If this is further developed in the Sultanate’s char-acteristically moderate way, there is every reason tobelieve it will be a success. Many areas present oppor-tunities for development, and plans are being made withsustainability and environmental concerns at the fore.

What do you think the possible expansion of theGCC will mean for regional politics?ASTOR: I was recently in Jordan and it is clear to methere is a lot the kingdom can bring to the GCC. Thecountry has a very well educated and qualified work-force. At the same time, GCC states have the capacityto invest not only in accelerating the diversification oftheir own countries but also that of their neighbours.

How can Oman’s traditionally moderate foreign pol-icy help diffuse regional instability? ASTOR: The Sultan’s great dictum has been that Omanis a friend to everyone. Historically, ties with Iran havebeen very strong. Indeed, the Shah’s forces assisted withunification of the modern Sultanate in the Dhofar cam-paign. The West can learn from listening to what theOmanis have to say on issues regarding Iran from theirunique position. More recently, Yemen has become agreat concern to the world and we will similarly listenrespectfully and very carefully to what Oman has to sayon this situation and indeed any other in the region.

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An effective relationshipOBG talks to Lord Astor of Hever, Parliamentary Under-Secretary ofState and Government Spokesperson, UK Ministry of Defence

www.oxfordbusinessgroup.com/country/Oman