Oman’s Basic Statute of the State expresses in Article 11 that the “national economy is based on justice and the principles of a free economy.” By regional standards, Oman has a relatively diversified economy, but remains dependent on oil exports. Tourism is the fastest-growing industry in Oman. Other sources of income, agriculture and industry, are small in comparison and account for less than 1% of the country’s exports, but diversification is seen as a priority by the government. Agriculture, often subsistence in its character, produces dates, limes, grains, and vegetables, but with less than 1% of the country under cultivation, Oman is likely to remain a net importer of food.
Since a slump in oil prices in 1998, Oman has made active plans to diversify its economy and is placing a greater emphasis on other areas of industry, namely tourism and infrastructure. Metkore Alloys is due to build a world-class 1,650,000-tonnes-per-annum capacity ferro-chrome smelter in Oman with an envisaged investment of $80 million.
A free-trade agreement with the United States took effect 1 January 2009, eliminated tariff barriers on all consumer and industrial products, and also provided strong protections for foreign businesses investing in Oman. Tourism, another source of Oman’s revenue, is on the rise. A popular event is The Khareef Festival held in Salalah, Dhofar, which is 1,200 km from the capital city of Muscat, during the monsoon season (August) and is similar to Muscat Festival. During this latter event the mountains surrounding Salalah are popular with tourists as a result of the cool weather and lush greenery, rarely found anywhere else in Oman.
Oman’s foreign workers send an estimated US$30 billion annually to their home states in Asia and Africa, more than half of them earning a monthly wage of less than US$400. The largest foreign community is from the south Indian states of Kerala, Tamil Nadu and Karnataka and from Maharashtra, Gujarat and the Punjab, representing more than half of entire workforce in Oman. Salaries for overseas workers are known to be less than for Omani nationals, though still from two to five times higher than for the equivalent job in India.
The Oman Ferries Company maintains the two diesel-powered, high-speed, car ferries – Shinas and Hormouz. The ferries are used for travel between Muscat and Khasab. Khasab is strategically located in Musandam on the southern tip of the Strait of Hormuz and is controlled by Oman. Mainland Oman is separated by a small strip of UAE territory from Musandam.