1.
Introduction
1.1 Overview
Oman is a
country of the Gulf that is located in the south-eastern quarter of the Arabian
Peninsula and it tends to leverage its strategic location by many was such as
investing in its infrastructure aiming at being a global logistics center. The
country is trying to have a future plan that depends on privatization,
Omanization and diversification. Its future economic diversity depends on
mining, logistics, tourism and fisheries as basic drivers for future
development, vision 2040 focuses on supporting the country's infrastructure in
order to support the business climate that is always changing and developing. The
plan of the Sultanate to develop its infrastructure covers many areas and
production sectors such as water infrastructure, airports, physical improvements,
logistics and other services including communication, information technology
and telecommunications. Oman's drive to growth includes many areas such as its
social development, economic diversification and the best utilization for its
natural resources. This also considers the business climate and the business
needs locally and internationally and the relationship between them and how
this may affect the Omani growth plan. (Yarahamdi and Magd, 2016)
1.2 Problem statement
There is a
relationship between infrastructure and business climate and it depends on many
factors related to the country's economic growth and national and global
competitiveness. Infrastructure has a great influence on economy and national
competitiveness in the country. When there is effective infrastructure
management in the country, this can improve the industrial policy and in return
improve the national competitiveness. (Palei, 2014) Infrastructure according to O’Fallon, (2003) is referred to by
economists as infrastructure capital or physical infrastructure that has a role
in providing services and assets including transport, energy,
telecommunications, water services, sanitation, waste safe disposal and other
services that can support economic production and different society
activities.
Oman is a
country that has strong infrastructure that can support different activities
and business fields in the private and public sectors as the country has many
developing projects in its infrastructure including communication, electrical
system, road construction, telecommunication and other areas and this makes the
country maintain suitable business climate for investors. Oman airport system
has been completely modernized and developed to boast areas of duty-free
shopping and include great transit areas and lounges as a main infrastructure
that can support different business activities such as exporting and importing
and other logistic services. Oman also supports its infrastructure including
the improvements made in the harbors, telecommunication system and other
institutional and environmental infrastructure. ()
1.3 Statement of
Purpose
Infrastructure has a great influence on economy and national
competitiveness in the country. When there is effective infrastructure
management in the country, this can improve the industrial policy and in return
improve the national competitiveness. The current paper is evaluating the
relationship between infrastructure and business climate in Oman in each of the
public and private sectors and discussing the different business opportunities
related to this relationship through discussing and analyzing the impact of
infrastructure on the business climate on the public sector and private sector
companies in Oman and how these companies need infrastructure to be like in
order to reach competitiveness on both local and international levels.
This study
is chosen by the author for many reasons such as investigating how far
infrastructure is related to the business climate in Oman and if the public and
private sectors can make use of the level of infrastructure development in Oman
in order to improve their business in a supportive business climate. It is also
chosen to analyze the relationship between infrastructure and business climate
and the impact of this relationship on economic and business development in
Oman's companies in both public and private sectors.
1.1
Statement of Objectives
The
following are the research objectives
-To discuss
the relationship between infrastructure and business climate and its impact on
the public sector in Oman.
-To discuss
the relationship between infrastructure and business climate and its impact on
the private sector in Oman.
-To
investigate the different impacts of infrastructure development on the business
climate and how business organizations are affected by them.
1.5 Scope and limitations of the study
This study focuses
on discussing and analyzing the relationship between infrastructure and
business climate referring to the different scopes of infrastructure and how
governments develop their infrastructure in order to have strong economy. The
study sheds light on the business environment in Oman and how business
organizations can make use of the improvements that countries make in their
infrastructure and how such developments can support economy and business. The
study uses a survey questionnaire with 100 employees from public and private
business organizations in Oman.
The study
has some specific weaknesses and limitations such as it is made in Muscat
business organizations which may make the assessment of the relationship
between infrastructure and business climate depends on limited views from
Muscat. Results are also depending on the answers and opinions of the
participants which limits the study to some extent.
1.2
Significance of the study
The study is
relevant to the infrastructure and its relationship with business climate in
Oman and in the whole globe as well because competitive advantage depends on
coping with the local and global competitiveness and discussing several factors
that have effect on the effectiveness of the economy growth and the Omani
national competitiveness too that can include infrastructure and the business
environment with other factors.
This study
is necessary to business owners and business organizations in Oman and the
world and it is also important for governments and their economy that can be
developed according to the nature and growth of their infrastructure that is
directly related to the business climate where business can develop and grow.
2. Literature
Review
a. Infrastructure
profile in Oman
Oman is a
country that is investing in its infrastructure based upon its strategic
location locally and globally in order to be a global logistics center, this
investment includes focusing on mining, tourism, manufacturing, fisheries and
other economic drivers that can provide improvements to the country's economy
in its next plan for 2040 vision. Oman is a fast growing country that puts much
in its infrastructure investments as a result of its flourishing construction
and oil industries. The country has set 3.7 RO as allocation for its
infrastructure development in order to give a fillip to the country's
infrastructure sector, the Sultanate has allocated RO 3.7 bn for developing its
infrastructure, services projects and industries in the year 2019 from its budget
with total spent amount estimated with RO 3.7 bn in the year 2019 that includes
RO 1.2 bn for being allocated to the infrastructure projects that can be
regarded clearly in the different services and units of the government as well
as another amount of RO 2.5 bn for being used by public entities owned for the
government for implementing projects in different service and industrial
sectors. The country's development plan of 2016-2020 puts much interest and
importance on the construction development in the country through the utmost
utilization of the country's resources and opportunities for investment in the
different governorates of the Sultanate. The country has also private
investment that includes services activities (37%), commodities production activities
(32.6%) and infrastructure (29%). The construction industry in Oman accounts
for 9% of its GDP and it is a great employer in the Sultanate. The construction
market in Oman is supposed to register a CAGR of 6% over the 2019-2024 forecast
period. The government has stated that
development projects will be spent on for ensuring the ongoing projects
completion without any delaying plans. (businessliveme, 2019)
b.
The relationship between infrastructure and
business climate
Infrastructure
includes the different facilities that are capital-intensive and not of public
interest. Most of the infrastructure in a country is used by the public and
they are referred to as infrastructure capital or physical infrastructure.
Infrastructure has a role that can be evaluated by the services provided
through it and the assets it includes. Infrastructure is a long term asset and
it has a long life cycle and return on investment period that may face a market
failure time or even efficiency of the economy. Infrastructure includes
different types such as social, environment and institutional infrastructure.
Infrastructure refers to the different services' institutions and logistics
people need including water infrastructure, transport infrastructure, energy
infrastructure and telecommunication infrastructure and other services'
infrastructure such as schools, prisons, hospital and others. Such public
infrastructure provides service for a great number of people who can make
benefits from using them according to the level of development they have. In
Oman, there is a network of infrastructure channels and facilities in urban and
rural areas as well and the country is trying to develop them more in order to
support its economy and provide a suitable business climate for investors to
work in and achieve success. This is included within the country's development
strategy and this includes some infrastructural projects focusing on basics as
water, power, transportation and telecommunication. Infrastructure is very
necessary for any country that is developing its growth as services can make
different investment projects easier and more effective. Business development
mainly depends on having better infrastructure as this can improve the type of
service business owners can make benefit of and make transporting goods easier
and cheaper which raises the ability of mobilization and reduce any limitations
to the business.
