Crude oil, refined petroleum, and natural gas account for most exports, while imports consist mainly of machinery and transport equipment, basic manufactured goods, and foodstuffs. Some manufactured products are also exported. Among the country’s major trading partners are the United Arab Emirates, China, Japan, Saudi Arabia, and India. Its trade relationship with Qatar increased significantly after 2017, when the latter came under blockade by its neighbours and sought new trade partners. Oman has been a member of the World Trade Organization since 2000, and it enjoys duty-free trade with the other members of the GCC and with the United States.

Services

Services, including public administration and defense, account for roughly half of the value of GDP and employ more than two-fifths of the workforce. Despite the country’s frequent balance-of-payment deficits, defense spending consistently constitutes a significant portion of the total budget. The tourist trade contributes only a small fraction of Oman’s GDP; however, the government has been promoting the sector more aggressively in an attempt to further diversify the economy.

Labour and taxation

Before 1970 thousands of Omanis left the country to find work in nearby oil-producing states; later foreigners came to work in Oman as oil production increased. Non-Omanis comprise about four-fifths of the labour force. Women constitute a small but growing portion of the workforce. There are no trade unions or associations in Oman, though the government has created consultative committees to mediate grievances. Strikes are forbidden. As in most countries of the region, the workweek is Saturday through Wednesday.

Personal income and property are not taxed in Oman. Corporate tax rates are determined by the level of Omani ownership; the greater the percentage of Omani ownership, the lower the rate of taxation. In the late 1990s, however, the government lowered rates on foreign-owned firms to encourage investment. Oil companies are taxed separately by the Ministry of Petroleum and Minerals. In coordination with the GCC, Oman imposed hefty excise taxes on carbonated drinks, tobacco products, energy drinks, alcohol, and pork in 2019 and implemented a value-added tax of 5 percent in 2021.

Transportation and telecommunication

Oman has several ports, most notably Port Qaboos in Maṭraḥ, Ṣalālah (formerly known as Port Raysūt), and Al-Faḥl, all of which were built after 1970; in the late 1990s work was begun to upgrade and expand the industrial port at Ṣuḥār. Ṣalālah underwent major renovations and in 1998 opened as one of the world’s largest container terminals; the port is considered by international shippers to be the preferred off-loading site in the Persian Gulf. Significant intercoastal trade is carried on by traditional wooden dhows. The two principal airports are located at Al-Sīb, about 19 miles (30 km) from Muscat, and at Ṣalālah. Oman Air serves as the government’s flagship airline and operates both domestically and internationally. Since 1970 a modern network of asphalt and gravel roads has been built up from virtually nothing to link all the country’s main settlements; about one-fourth of this network is paved. The country has no railroads, though plans have been underway since 2008 to build a nationwide rail network slated to connect to a regional rail network among GCC member states.

Government-owned Omantel (formerly known as General Telecommunications Organization) is Oman’s primary telecommunications provider. During the 1990s it instituted plans that increased the number of phone lines, expanded the fibre-optic network, and introduced digital technology. The Internet became available in 1997, with Omantel as the official provider. The use of cell phones increased dramatically after Omantel lost its monopoly on the mobile phone market in 2004. Satellite links provide much of the country’s international communications.

Constitutional framework

Oman is governed by a monarchy (sultanate) with two advisory bodies. The sultan is the head of state, and, although he also acts as the prime minister, he may appoint one if he chooses. The sultan is assisted by a Council of Ministers (Majlis al-Wuzarāʾ), the members of which he typically appoints from among Muscat merchants, informal representatives of interior tribes, and Dhofaris.

The Consultative Assembly, formed by the sultan in 1981, was replaced in 1991 by a Consultative Council (Majlis al-Shūrā), members of which were at first appointed and later elected from several dozen districts (wilāyāt); women from a few constituencies were given the right to serve on the council. In 1996 the sultan announced the establishment of the Basic Law of the State, the country’s first written constitution, which outlined a new system of government that included a bicameral legislature, the Council of Oman. In addition, it clarified the succession process and extended the right to serve to all Omani women. The Council of Oman consists of the Consultative Council as its lower chamber and, as the upper chamber, a new Council of State (Majlis al-Dawlah).

Local government

The country is divided administratively into regions (minṭaqāt) and governorates (muḥāfaẓat), each of which contains a number of districts (wilāyāt). Local governance is carried out by a combination of traditional wālīs (representatives of the sultan) and by more recently established municipal councils.

Justice

Oman has Islamic courts, based on the Ibāḍī interpretation of the Sharīʿah (Islamic law), which handle personal status cases. There are also civil, criminal, and commercial courts that are organized into courts of first instance, appeals courts, and a Supreme Court, which is chaired by the sultan. In addition, there are some specialized courts.

Political process

There are no political parties. Elections to the Consultative Council have been held since 1994. At first, voting was limited to individuals chosen by the government; the pool of eligible voters was 50,000 in 1994 and 175,000 in 2000. Universal suffrage for citizens at least 21 years old was implemented in 2003. Members of the Council of State are appointed by the sultan.

Security

The Sultan’s Armed Forces, formed in 1958 from several smaller regiments, has grown since 1970 to more than 40,000 personnel, spurred in part by a rebellion in Dhofar in 1964–75. Most personnel are in the army, but Oman also maintains a small air force and navy and fields some of the most sophisticated military equipment available. The sultan is the commander in chief of the armed forces. The military has traditionally relied heavily on foreign advisers and officers, mostly British, and the United States and the United Kingdom have occasionally maintained a small military presence in the country.

Health and welfare

The post-1970 government improved health care throughout the country and instituted a free national health service. The new regime built hospitals, health centres, and dispensaries and equipped mobile medical teams to serve remote areas. Government spending has increased for health services, social security, and welfare.

Housing

The move to towns and the return of Omanis abroad in the 1970s led to a severe housing shortage. In 1973 the government established a program that built homes for those on limited incomes. The Oman Housing Bank was established in 1998 to finance the purchase, construction, or renovation of residential property for those with lower incomes. Traditional housing in Al-Bāṭinah often consists of palm-frond huts, in contrast to the mud-brick structures of the interior. More recently, however, such homes have largely been replaced by more modern dwellings of concrete, though elements of traditional regional architecture have been retained.

Education

Education has expanded dramatically since 1970, when only three primary schools existed and few girls received any schooling. Some three-fourths of elementary-school-age and more than two-thirds of secondary-school-age children are now enrolled, and nearly half of all these are female. Education is provided free to all Omanis but is still not mandatory. About three-fourths of Oman’s adult population is literate; there has been a substantial increase in the number of literate women (although female literacy lags behind that of men). The country’s national university, Sultan Qaboos University, was opened in Muscat in 1986. Oman also has several private colleges.