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OMAN - Economy

Abdulsalam Al Murshidi

President, Oman Investment Authority (OIA)

Bio

In addition to being President of OIA, Abdulsalam Al Murshidi is a board member of the Gulf Investment Corporation and represents the Sultanate on the board of governors of the Asian Investment Infrastructure Bank (AIIB). He previously held other positions and founded various industrial, commercial, and investment companies in the region. Al Murshidi graduated with distinction from the University of Aberdeen in the UK with a master’s of science in petroleum geology. He also holds a bachelor of science degree in geophysics from the University of Arizona in the US.

"I have one simple message: Oman is open for business 24/7."

Abdulsalam Al Murshidi, President of the Oman Investment Authority (OIA), talks to TBY about building a sustainable and diversified economy.

OIA is instrumental in the drive toward a sustainable and diversified economy. Where do you see the greatest investment opportunities in the non-oil economy going forward?

I would rank the top industries to be tourism, green hydrogen, and food and fisheries. Green hydrogen is presently first on our agenda given that it is new, and we need to be ahead of the game. There is a great deal of competition, but Oman plans to be the hydrogen capital of the world, similar to Houston with regard to oil and gas. We do not yet have the full value chain, though we are seeking partnerships globally to bring it to Oman. However, in terms of resources, we have the right ingredients to be at the top when it comes to investment potential in renewable energy. We believe Oman should be among the top three in the world when it comes to competitiveness in green hydrogen. Other areas with significant investment potential are dairy, poultry and meat, food supply chain, and fish waste management (including protein and fish feed). There is also potential to establish a fish trading company. In addition, new economic zones, such as A’Dhahira and Mehadha, as well as the Muscat Airport Free Zone, all present significant opportunities to investors. As for the tourism sector, it is considered as one of the main industries that will contribute to the diversification of Oman’s economy. Previously, our investment within the tourism sector mainly involved hospitality related and Integrated Tourism Complexes (ITCs) projects, and were mainly focused in the governorates of Muscat and Dhofar. We continue to have such projects available for investment opportunities. However, we are now looking to further expand our offerings in tourism and be represented in other governorates in Oman in order to benefit from our rich cultural heritage and un-spoilt landscape. We aim to achieve this by having key strategic tourism investments projects focused on developing new destinations, experiences, entertainment activities, events, niche tourism such as meetings, incentives, conferences, and exhibitions (MICE), adventure tourism, agrotourism, and so on. We are doing this to be in line with Oman Tourism Strategy 2040 and to increase the competitiveness of Oman as a tourist destination. We already have a wide range of executed projects and attractive pipeline investment projects that are being rolled out, and we invite investors to consider these opportunities

What factors make hydrogen and alternative energy in Oman ripe for investment?

In addition to the country’s solar and wind resources, it was a pioneer in establishing clear and transparent laws and guidelines on the development of these resources, which is not always the case for every country when dealing with a new sector. We run everything through open auctions and global participation and have received higher interest than expected. The Omani government, including the Ministry of Energy and Minerals and OIA, has set an ambitious strategy for this goal. Indeed, Oman has already begun the journey of transition through solar and wind projects for the grid, with around 1.7 GW already installed. Oman is now also working with international partners to kickstart the green hydrogen industry and leverage its natural renewable resources. Hydrom, the government’s hydrogen development company, has already awarded six blocks to developers amounting to close to 1 MMTPA of GH2 production. OIA and its companies are also working on projects across the H2 industry value chain, such as electrolyzers, storage, and shipping. The aim is to localize the technologies and industries needed to produce, store, utilize, and export hydrogen. There are challenges, of course, as is the case with any new industry, including scaling up the technologies needed, building the infrastructure for GH2, and bringing the cost of H2 to a competitive level compared to other energy sources.

How is Oman performing against its green energy targets?

The country has set up a net zero roadmap drafted out by the Environment Authority and key sector entities in 2022 in alignment with the Paris Climate Accords. The targeted sectors include electricity, real estate, construction, transport, industry, and oil and gas. The decarbonization efforts include short-term initiatives such as efficiency projects; medium-term projects such as renewable projects for utilities and oil and gas, green mobility, and green hydrogen developments; and long-term projects currently being evaluated, such as carbon capture, utilization, and storage (CCUS), CO2 export, and nature-based carbon capture solutions. Oman continues to be active in the discussion on the global stage and is looking at an orderly transition to reach net zero by 2050. Its current emissions level is around 105 MTCO2/annum, and the priority is to cut emissions by 50%; however, further initiatives are needed to reach lower levels to address more challenging sectors such as oil and gas.

What progress has been made on your divestment strategy, and what will it mean for the country’s investment climate?

There has been significant progress. This program is not just about selling assets but about strategic and optimal resource allocation, which will help reshape the national economic landscape. We have achieved key milestones in our divestment process particularly in energy, logistics, and infrastructure, with three successful IPOs (Pearl REIF, Abraj, and OQGN) and direct sales. By transitioning these assets to the public through IPOs, there has been an infusion of fresh capital and a diversification of investment portfolios. This not only increases liquidity in the market but also democratizes ownership, allowing a wider section of the populace to partake in the nation’s economic growth. Furthermore, the divestment program has extended its reach to industries such as technology, agriculture, fisheries, and hospitality. This move signals a strategic shift from traditional, mature industries to more dynamic and growth-oriented sectors. The inclusion of early and growth-stage companies in the divestment program is particularly noteworthy, positioning the country as a hub for innovation and investment. The program aims to boost investor confidence, portraying the country as a progressive and stable environment for investment. The structured approach of our evergreen five-year divestment plan offers predictability and clarity, which are key factors in attracting long-term investors. Moreover, by divesting in a range of sectors, OIA is fostering a diversified economy less susceptible to sector-specific downturns. This risk mitigation is crucial in attracting a broader spectrum of investors. Finally, by unlocking the potential of various sectors and enabling the inflow of private investment, the drive is expected to spur job creation, technological advancement, and overall economic development.

In which regions do you intend to grow your investments?

OIA consistently invests globally, both in public and private markets, focusing on North America, Europe, and Asia through its Future Generation Fund (FGF). Growth and diversification are paramount in expanding the fund. In private markets, OIA invests in funds and direct opportunities. Over the past 30 years, fund investments have grown, directing capital to top-tier managers in approximately 50% of North America and the rest in Europe, Asia, and other regions for buyouts, growth, venture capital, infrastructure, and real estate. Public market investments are diversified globally, and the portfolio will maintain its global footprint. Additionally, the fund strategically directs investments into global direct deals that align with Oman Vision 2040, targeting sectors like energy transition, logistics, healthcare, mining, and more. OIA also structures joint ventures to forge partnerships with governments and corporations, driving capital growth and establishing strategic alliances. All investment decisions consider global macro changes, trends, and potential growth in various regions and sectors. However, our bottom line is that Oman will always be our focus and end goal when it comes to our investment. Whether directly or indirectly.

What message would you send to the global investor community about doing business in Oman?

I have one simple message: Oman is open for business 24/7; one just needs to knock on the door and visit us to find out. As for our economic outlook, I am extremely positive. The rating adjustment every six months by rating agencies reflects the developments taking place. His Majesty Sultan Haitham makes state visits to other countries to promote investment and economic collaboration. Economic relationships are always prioritized, in addition to clear directives to our embassies abroad to act as or to activate what we call economic diplomacy. We want them to ultimately promote Oman as an investment destination.

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