Other BriefingsOman Launches New Investment Fund to Boost FDI and Investment in SMEs
To promote investments in the private sector and in small and medium-sized businesses (SME), Oman Investment Authority, the country’s sovereign wealth fund, has established a fund worth two billion Omani rials (US$5.2 billion).
By Abhishek Dey
The Future Fund Oman shall allocate 90 percent of its capital to directly invest in new or existing investment projects demonstrating commercial and economic viability. It divides the remaining 10 percent, allocating 7 percent to SMEs and 3 percent to startups over a period of five years.
Announced last May, the fund aims to strengthen the Sultanate’s economy by encouraging diversification and drawing in more international investment. The Fund targets eight key industries: manufacturing, renewable energy, ports and logistics, tourism, mining, fisheries, and agriculture.
The Future Fund Oman is joining a list of other existing government financing and investment ecosystems, including institutions such as the Development Bank, SMEs Development Fund, Rakiza Fund, and Oman Technology Fund.
Beyond oil: Oman’s future after hydrocarbons
Oman’s economy depends significantly on hydrocarbons, constituting approximately 35 percent of GDP, 75 percent of total fiscal revenue, and 58 percent of total merchandise exports. Besides the central government, the public sector encompasses more than 170 state-owned enterprises (SOEs) that are involved in virtually every economic sector.
Fitch reports that Oman is actively working to transition away from hydrocarbons and favor alternative sources like hydrogen-based energy. Such initiatives seek to diminish the state’s heavy reliance on fossil fuels and its vulnerability to the global energy transition.
Oman has set an ambitious target, aiming to produce one million metric tons of renewable energy-based hydrogen annually by 2030, with plans to increase production to 3.25 million metric tons by 2040 and further to 7.5 million metric tons by 2050.
The country is also promoting its tourism industry, expecting to earn more than nine billion rials (US$23 billion) a year from the industry by 2040. The results have been quite promising, with Oman welcoming about 2.9 million tourists in 2022 – up 348 percent from the previous year.
All these efforts by the state to diversify its economy are taken under the aegis of ‘Oman Vision 2040’– a vision document outlining the plan to propel Oman towards a prosperous and sustainable future.
These positive steps have also allowed Oman to get an upgrade in its investment rating from all the major credit rating agencies, with Standard Chartered forecasting that the country could regain its investment-grade credit rating in 2024.
GCC strategic investments drive
Oman is joining other Gulf Cooperation Council (GCC) countries in establishing an investment fund to diversify the economy and attract investors.
In December 2023, the United Arab Emirates (UAE) passed a new law establishing the Dubai Investment Fund as an autonomous public entity operating commercially.
The UAE fund will be investing Dubai’s government funds, surpluses, and the general reserve domestically and abroad, with the goal of generating returns for current and future generations while reinforcing the financial stability of the Dubai government.
The law designates the fund as the Dubai government’s vested authority for owning shares in various companies such as the Dubai Electricity and Water Authority, Salik Co., Dubai Taxi Co., and other companies either directly owned or identified by Dubai’s Supreme Fiscal Committee.
Kuwait similarly launched its own state-owned sovereign fund to grow its local economy, finance megaprojects, and diversify its investment spectrum from foreign investors as well as the private sector.
Meanwhile, according to Global SWF’s preliminary annual report, Saudi Arabia’s Public Investment Fund spent US$31.5 billion in 2023, compared to US$123.8 billion for all sovereign wealth funds.
While the report does not break down individual investments by PIF, it highlights the fund’s major investments in sports, including the acquisition of leading soccer clubs and involvement in a golf circuit merger, the LIV Golf. PIF’s diverse investments also span sectors like gaming, steelmaking, and aircraft leasing, contributing to Saudi Arabia’s economic transformation plan, ‘Vision 2030’.
