Privatization Strategy in Oman
 

The Sultanate of Oman has embarked on a development experiment over the few preceding years which shows its ability to establish the cornerstones of economic and social transformation and to put in place the design for a proper framework of a modern state. Since the dawn of renaissance led by HM Sultan Qaboos, the Government of the Sultanate of Oman has played an active role in providing investments for the country's infrastructure and in the provision of basic services in meeting the requirements of a sustainable development program in all parts of the Sultanate of Oman .
 

With the development of the economic and social structure of the national economy being completed over a period of more than 30 years of renaissance , the future vision for the national economy - Oman 2020 formed in the light of local and international changes, has determined the features of a new strategic transformation in the path of development. Such transformation envisages that the role of the government in the coming years should be confined to the strategic direction and policy of an economy and the implementation and performance thereof depends on the private sector and such implementation is geared for competition locally and internationally. In the envisaged economy, the Government bears social and environmental responsibilities operating in a stable financial and economic environment. Such a vision depends on the private sector to be the principal driver of the economic development and the provider of employment opportunities. The private sector can, then achieve the objective of sustaining the economic and social development.
 

In this context, a new law of privatization has been issued by Royal Decree no. 77/2004 dated 14.7.2004 reflecting the privatization experience in the Fifth Five Year Plan, Oman's association with the WTO and the move towards liberalization of the local and foreign investment climate. It is also worth noting that since the commencement of the renaissance, Oman has adopted the policy of free economy where the practices of the economic activity is to be mainly assumed by the private sector. Many factors have led to the development and expansion of the role of the public sector in the economic activity, mainly due to the servicing of the growing needs to develop the basic structure of the economy, treatment of economic and social obstacles and reluctance of the private sector to invest in projects requiring large capital and high technology. Expansion of the role of the public sector was mainly in the infrastructure projects like communications, power, transportation, water, education, health and social care. However, that role also involved a partnership with the private sector to establish large production projects including cement factories and a number of smaller companies operating in the services, industrial and financial sectors.
 

Privatization in the Sultanate of Oman i.e. the transfer of ownership of establishments owned by the public sector to the private sector , was initiated in the year 1988 when the government sold some of its shares in Oman Flour Mills Company. Since then, and up to the year 1995,a number of privatization projects concerning government commercial divestments have been completed. The government is still acquiring or owning shares of more than 30 companies and establishments. Some of these are being restructured in preparation for privatization in future.
 

An institutional framework for privatization has been in place since the commencement of the Fifth Five Years plan (1996-2000) specifically with the issuance of Royal Decree no. 42/96 concerning policies and regulations of privatization. This was superseded with the Privatization Law promulgated vide RD 77/2004 in July 2004. The Sultanate of Oman is among the first countries in the Arab world and Middle East that adopted an ambitious program for the private sector to participate in the establishment of infrastructure projects , which started by the Manah Power project.