Download The development of the Omani economy and implications on the

The development of the Omani economy and
implications on the performance of MSM
The Omani economy has, over the past four
decades, managed to achieve a qualitative
and quantitative leap. It has deployed its
physical potential and human resources to
realize continuous growth by diversifying
sources of income to achieve balanced
development during two stages:The First Stage (1970-1995)
The Sultanate of Oman has, during this
stage, managed to lay the essencial
foundation
of
economic
and
social
transformation. These pillars include the
establishment of Muscat Securities Market in
1988 which started operation in 1989 to
contribute in the economic development
process in the next stages.
The Second Stage (1996- onwards)
This stage represent starting point towards
the sultanate’s future prospects through the
presentation of long-term development
strategy (1996-2020), with the objective being
to explore the future vision for the Omani
economy, better known as VISION 2020
targeting to achieve the following objects :
1-To achieve comprehensive economic
development. And sustainable in stable
economic framework.
2-To diversify sources of income in order
to reduce dependence on oil revenues.
3-To develop human resources, diversify
production lines in a dynamic way while
taking into account the developments in
the global economy.
4-To achieve an efficient private sector that
is able to contribute to the economic
development and to compete globally.
During the abovementioned stages, the
Sultanate has adopted five-year development
plans and managed to achieve the
following:-
- The Gross Domestic Product has
doubled to about 60 billion dollars in
2010.
- Increasing the oil production from about
300,000 barrels per day in 1970 to 896000
bpd in 2010. However, there are ongoing
plans to increase the production capacity
of the Sultanate in order to enhance the
growth of the national economy.
Despite the main role of the oil sector, the
government has, in the previous period,
introduced structural changes in its national
economy, diversified its production base and
reduced dependence on oil. Accordingly, the
contribution of non-oil sectors to the Gross
Domestic Production increased to 59% in
2010 compared to 31. % in 1970.
As part of economic diversification policy,
the Sultanate has established several
industrial areas, which have increased the
contribution of the industrial sector to the
GDP. Moreover, the Sultanate’s monetary
policy has achieved monetary stability and
reduced inflation rates over the last few
years.
Meanwhile,
the
recent
economic
developments have positive impact on the
performance of Muscat Securities Market.
Despite the short period since its inception
MSM has managed to:
- Keep pace with the recent developments
in the securities industry in terms of the
legislative, regulatory and technical
aspects based on international standards
in order to encourage local savings and
attract foreign investments.
- Play a crucial role in the implementation
of
the
government
privatization
strategies.
- Contribute to the improvement of the
investment environment in the Sultanate.
It is noticeable that local and foreign
investment figures are on the rise.
- Provide an efficient and transparent
investment climate, encourages saving,
increase investment awareness and
create an investment culture that is
supportive to the national economy.
- Encourage family businesses to shift to
public joint stock companies through
introducing legislations in such a way to
achieve this objective. The plan is to
reduce the percentage of the capital to be
placed for public subscription in family
and closed businesses from 40% to 25%.
All the above developments contributed to
the development of the Market`s activities
and led to the following:
- An increase in the number of the listed
companies to 119 public joint stock
companies.
This
enabled
Muscat
Securities Market to occupy the third
position among the Gulf Exchanges and
the seventh among the Arabs in terms of
number of listed companies.
- The growth of MSM Index over the past
10 years to reach 6754.92 points at the
end of 2010, with an average annual
growth of 523 points or the equivalent of
22 %.
- A marked rise in the number of traded
shares to 3.01 billion at the end of 2010,
registering an annual increase of 143.34
million points.
- An increase in the trading value to reach
3.4 billion dollars, thus registering an
average annual growth of 163 million
dollars. This is a clear indication of the
development
of
the
investment
awareness in the Market.
- A marked rise in the market capitalization
of the listed companies to reach 28
billion dollars at the end of 2010, which
shows the significant role of MSM in
strengthening the Omani economy.
Meanwhile, the Muscat Securities Market
encouraged foreign investment which
reached
24%
of
the
total
market
capitalization at the end of 2010. It should be
noted that there are no restrictions imposed
on foreign investment in the Sultanate of
Oman. Foreign ownership of public joint
stock companies can reach 70%. Moreover,
no taxes on investment profits.
On the other hand, there has been
remarkable development in quantity and
diversity of the traded bonds in Muscat
Securities Market. They include government
bonds, and other bonds issued by the banks
and other public joint stock companies.
This quantitative development in the
performance of MSM coincided with
qualitative advancement covered legislative,
administrative and technical aspects. MSM
has updated laws and legislations to regulate
the work of the market to keep pace with the
development of the securities industry.
In terms of the technological and technical
aspect, MSM has been working to remain upto-date with the technological developments.
In 2006, MSM has implemented an advanced
electronic trading system from the NYSE /
EURONEXT Co. The MSM is currently
working to install a more developed version
of this electronic trading system, hoping to
start operation in the second half of this
year.
The MSM launched the MSM-30 Free Float
Index to replace the previous one. The new
index includes the top traded highest market
capitalization companies.
In the area of regional and international
cooperation with financial markets and
securities institutions, Muscat Securities
Market enjoys close relationships with
several regional and international stock
exchanges enabled MSM to benefit from their
experiences
Muscat Securities Market is a member in
specialized international organizations like
FEAS, IOSCO, WFE and AFES dedicated to
reach standard of securities industries
Finally, MSM is committed to continue its
efforts to achieve more improvement in order
to keep pace with the recent developments in
the securities industry.