Overview
Oman’s diversification requires growth in both manufacturing and services, but resource allocation between these broad sectors involves strategic trade-offs. Each has different implications for employment, technology transfer, and economic resilience.
Manufacturing Sector in Oman
Manufacturing contributes roughly 10 percent of Oman’s GDP, concentrated in petrochemicals, metals (particularly aluminium at Sohar), building materials, and food processing. The sector benefits from competitive energy costs and proximity to Asian markets. Oman aims to grow manufacturing through industrial zones and in-country value (ICV) policies that require government contractors to source locally. Manufacturing is capital-intensive and creates moderate direct employment.
Services Sector in Oman
Services encompass financial services, telecommunications, retail, real estate, professional services, and government administration, collectively contributing over 50 percent of GDP. The sector is the largest employer of Omani nationals, particularly in banking, telecommunications, and government. Services growth is driven by urbanisation, digital adoption, and expanding consumer demand. The sector is more labour-intensive than manufacturing and offers more diverse career paths.
Key Differences
Manufacturing generates higher value-added per worker but employs fewer people. Services create more jobs and are more accessible to local entrepreneurs. Manufacturing requires significant capital investment and is exposed to global commodity cycles, while services are more resilient to external shocks. Manufacturing contributes to export diversification, whereas most services are domestically consumed.
Verdict / Bottom Line
Oman needs both sectors to grow, but the priority should reflect comparative advantages. Manufacturing should focus on sectors where Oman has competitive energy and location advantages. Services growth should emphasise exportable services like logistics management, financial services, and digital platforms rather than relying solely on domestic demand.