In the wake of the 2014 oil price collapse, Oman, like many Gulf Cooperation Council (GCC) countries, has been actively seeking ways to diversify its economy and reduce its reliance on oil revenue. At the forefront of this economic transformation is the innovative In-Country Value (ICV) program, a strategic initiative designed to boost local content and enhance the national economy. As we stand at the crossroads of economic transformation, guided by Vision 2040, it's crucial to reframe ICV not as an obligation, but as a catalyst for sustainable growth and foreign direct investment.
At its essence, In-Country Value represents a comprehensive strategy designed to maximize economic benefits within Oman. This approach aims to retain a greater portion of spending within the country, fostering business growth, enhancing human capital, and boosting overall economic productivity. The ICV framework encompasses several key components:
1. Promoting the use of locally sourced goods and services
2. Cultivating the skills and capabilities of Omani nationals
3. Encouraging investments in domestic infrastructure and assets
4. Nurturing the growth and competitiveness of local suppliers
5. Advancing training initiatives and research and development efforts
Initially spearheaded by the Ministry of Energy and Minerals, the ICV program has now been embraced across diverse sectors of the Omani economy. Its primary objective is to generate a ripple effect throughout the economic landscape. By emphasizing and prioritizing local resources, expertise, and capabilities, Oman aims to diminish its dependence on imports, spark innovation, and construct a more robust and adaptable economic framework.
The implementation of ICV has already shown promising results across Oman's economy. Key sectors such as oil and gas, manufacturing, and renewable energy have seen a significant uptick in local participation and value creation. For instance, in the oil and gas sector, which has been at the forefront of ICV implementation, the percentage of local content has risen substantially over the past decade. Specially , Petroleum Development Oman (PDO) has a long-standing commitment to ICV, with a target of increasing its ICV to 52% by 2030.
This increase in local content translates to several tangible benefits:
• Job Creation: As companies prioritize local sourcing and development, more opportunities are opening up for Omani nationals across various skill levels.
• SME Growth: The emphasis on developing local vendors has led to a flourishing small and medium enterprise (SME) sector, with many new businesses emerging to fill gaps in the supply chain.
• Knowledge Transfer: International companies operating in Oman are incentivized to transfer knowledge and technology, enhancing the local skill base.
• Economic Diversification: By developing capabilities across multiple sectors, Oman is gradually reducing its dependence on oil revenues and building a more diversified economy.
While the ICV program has shown great promise, it is not without its challenges. Ensuring that local companies can meet global quality and efficiency standards requires significant investment in training, technology, and infrastructure. Additionally, balancing the drive for local content with the need to remain attractive to foreign investment is a delicate task.
However, these challenges also present opportunities. The push for higher standards is driving innovation and efficiency improvements across the board. Moreover, the focus on developing local capabilities is making Oman an increasingly attractive destination for companies looking to establish regional hubs or manufacturing facilities.
Looking ahead, the ICV program is set to play a crucial role in Oman's economic vision for 2040. As the country seeks to diversify its economy and reduce its reliance on hydrocarbons, ICV will be a key tool in developing new industries and capabilities.
Several areas show particular opportunity:
1. Renewable Energy: With ambitious targets for solar and wind power, Oman is poised to become a regional leader in renewable energy. ICV policies are helping to develop local expertise and manufacturing capabilities in this growing sector.
2. Technology and Innovation: The emphasis on knowledge transfer and local R&D is fostering a burgeoning tech ecosystem in Oman, with the potential to create high-value jobs and exports.
3. Logistics and Supply Chain: Oman's strategic location makes it ideal as a logistics hub. ICV is helping to develop local capabilities in this sector, from port operations to last-mile delivery.
4. Tourism and Hospitality: As Oman continues to develop its tourism sector, ICV policies are ensuring that local communities benefit from this growth through job creation and business opportunities.
The In-Country Value program represents a transformative approach to economic development, transcending mere protectionism. Its success hinges on the collaborative efforts of various sectors. The government provides crucial incentives and develops workforce skills, while the private sector commits to local hiring and sourcing. Academia contributes through research and training, and civil society raises awareness and monitors progress.
As we implement ICV, Oman is positioning itself not just as a participant in the global economy, but as a leader in sustainable and inclusive development. By fostering local capabilities, driving innovation, and creating sustainable value chains, we're laying the groundwork for long-term prosperity. The journey ahead presents challenges, but the opportunities far outweigh the obstacles.
Oman's economic future. If thoughtfully implemented and adapted to evolving global conditions, the ICV program has the potential to transform Oman into a competitive, diversified, and resilient economy. As we navigate the delicate balance between local development and global competitiveness, Oman could serve as a model for other nations seeking to develop their economies while remaining open to global trade and investment.
Let us envision ICV not as a requirement, but as Oman's unique strength in the global marketplace. I urge all stakeholders to commit to this vision. Together, we can build an Oman where investors see unparalleled value, our people thrive, and our economy flourishes.
Oman Observer is now on the WhatsApp channel. Click here
