Other BriefingsOman’s Launches its Eleventh Five-Year Development Plan (2026-2030) Prioritizes Manufacturing and Tourism
Oman’s Eleventh Five-Year Development Plan (2026–2030) prioritizes manufacturing and tourism as key engines of economic diversification under Oman Vision 2040. The strategy aims to boost non-oil growth, attract investment, and create large-scale private-sector employment while reducing dependence on hydrocarbons in Oman.
Oman has unveiled its Eleventh Five-Year Development Plan (2026–2030) as a critical implementation phase of Oman Vision 2040, reinforcing the Sultanate’s long-term commitment to economic diversification and sustainable growth. Within this framework, manufacturing and tourism have been identified as priority sectors, reflecting their strategic importance in expanding non-oil economic activity, attracting foreign and domestic investment, and generating private-sector employment.
Building on lessons from previous development cycles, the new plan adopts a more targeted and performance-driven approach, aligning sectoral development with fiscal sustainability, productivity gains, and global competitiveness. By strengthening value-added manufacturing and accelerating the development of tourism as a high-potential services industry, Oman aims to reduce its reliance on hydrocarbons while positioning itself as a diversified economic hub in the Gulf region.
Strategic goals of the Oman’s Five-Year Plan
At the macroeconomic level, Oman’s Eleventh Five-Year Development Plan sets a target of achieving average annual GDP growth of around 4 percent over the 2026–2030 period, signalling a shift from consolidation toward expansion following recent fiscal stabilisation efforts. This growth objective is explicitly anchored in non-oil sector performance, reflecting the government’s intention to insulate the economy from hydrocarbons price volatility while maintaining fiscal discipline.
Beyond headline growth, the Plan defines a set of interlinked economic and developmental pathways. These include:
- Accelerating economic diversification;
- Strengthening export-oriented productive capacity; and
- Raising household incomes through private-sector-led job creation.
Manufacturing and tourism are positioned as core transmission channels for these objectives:
- Manufacturing through higher value-added production and integration into global value chains; and
- Tourism through services exports, SME participation, and employment intensity.
Together, these sectors are expected to increase non-oil GDP contribution, improve the current account balance, and broaden the domestic tax base over the medium term.
Crucially, the Eleventh Plan is not framed as a standalone policy cycle but as an execution mechanism for the long-term objectives outlined in Oman Vision 2040. Its priorities align with Vision 2040’s emphasis on productivity, competitiveness, and human capital development, translating strategic aspirations into sector-specific targets and measurable outcomes.
In this sense, the Five-Year Plan functions as a bridge between long-term structural transformation and near-term economic delivery, reinforcing Oman’s transition toward a more diversified, resilient, and income-generating economic model.
Manufacturing as a core priority
Oman’s new Five-Year Plan elevates manufacturing to a central role in driving non-oil economic growth, reflecting a policy shift toward sectors with higher productivity, export potential, and capital intensity. The sector is explicitly identified by the government as a leading driver of diversification, rather than a supporting industry.
From a business and policy standpoint, manufacturing matters to Oman for several structural reasons:
- Value-added growth: Manufacturing allows Oman to move up the value chain, reducing reliance on basic extraction and low-margin trading activities while increasing domestic value creation.
- Productivity gains: Industrial activity supports technology transfer, process optimisation, and skills upgrading, all of which are essential to raising economy-wide productivity.
- Integration into global value chains: Export-oriented manufacturing strengthens Oman’s position in regional and international supply chains, leveraging its logistics infrastructure and geographic location.
- Employment creation: Compared with capital-intensive hydrocarbons, manufacturing offers broader job creation across technical, operational, and managerial roles.
Importantly, the Plan assigns clear growth expectations to the sector. Manufacturing industries are targeted to grow at around 5.9 percent over the plan period, well above the headline GDP growth target of approximately 4 percent annually.
Tourism: Expanding economic and cultural footprint
Tourism is positioned alongside manufacturing as a strategic non-oil growth pillar, reflecting its capacity to generate services exports, attract foreign direct investment, and stimulate private-sector activity across a wide range of downstream industries. Under the 11th Plan, tourism is treated as a commercial sector with scalable economic returns rather than a purely social or cultural initiative.
The business case for tourism prioritisation is built around several factors:
- FDI attraction: Tourism projects, particularly in hospitality, destination development, and entertainment, are well suited to foreign investment and joint ventures.
- Export diversification: Tourism generates foreign exchange earnings through services exports, improving the balance of payments.
- SME development: Growth in tourism demand creates opportunities for small and medium-sized enterprises across accommodation, transport, food and beverage, events, and experience-based services.
- Employment intensity: Tourism is one of the most labour-absorptive sectors, supporting job creation across skill levels.
The Plan also sets ambitious growth targets for tourism, with sectoral growth projected at around 5.7 percent, again exceeding the overall GDP growth target. This reinforces the government’s expectation that tourism will be a fast-growing contributor to non-oil GDP over the medium term.
To reduce vulnerability to cyclical demand, the Plan emphasises diversification within tourism, including:
- Leisure and resort tourism;
- Cultural and heritage tourism;
- Eco- and nature-based tourism; and
- Events, exhibitions, and business tourism.
Supporting and enabling sectors
Beyond manufacturing and tourism, Oman’s 11th Five-Year Development Plan identifies a set of enabling sectors designed to strengthen the overall business ecosystem and improve the scalability and competitiveness of priority industries. At the centre of this framework is the digital economy, positioned as the third core pillar of growth.
Key priorities include:
| Oman’s Five-Year Plan (2026–2030) | |
| Area | Key priorities |
| Digital economy |
|
| Renewable energy |
|
| Transport and logistics |
|
| Mining and food security |
|
| Education and health |
|
Taken together, these sectors are intended to create a self-reinforcing ecosystem in which infrastructure, skills, energy, and digital capabilities lower operational risks and improve returns for investors in manufacturing and tourism.
Employment and economic development
Employment generation is a central economic outcome of the 11th Plan, with the government projecting around 300,000 new jobs to be created between 2026 and 2030. This target underscores the Plan’s strong emphasis on private-sector-led growth, as public employment expansion remains structurally constrained.
The employment strategy is built around several pillars:
- Private-sector job creation, through:
- Growth sectors such as manufacturing and tourism are expected to absorb a significant share of new labour demand.
- Policy support is oriented toward incentivising firms to expand operations and local hiring.
- Upskilling and workforce localisation, via:
- Increased focus on training Omani nationals for technical, operational, and managerial roles.
- Alignment of education outcomes with labour market needs in industry, logistics, hospitality, and digital services.
- Labour market reforms, including:
- Continued adjustment of employment regulations to improve flexibility, productivity, and competitiveness.
- Greater emphasis on matching skills supply with private-sector demand rather than public-sector absorption.
From a structural perspective, manufacturing and tourism play complementary roles in delivering inclusive growth. Manufacturing supports higher-productivity, skill-intensive employment and wage growth, while tourism provides large-scale labour absorption across a wide range of skill levels and supports SME participation. Together, these sectors are designed to anchor income growth, expand household earnings, and reinforce the transition toward a more diversified and resilient economic model aligned with Oman Vision 2040.
Challenges and opportunities
The implementation of Oman’s 11th Five-Year Development Plan will take place against a complex global backdrop. Key challenges include global economic volatility, which may affect trade flows and investment appetite; skills gaps, particularly in advanced manufacturing and high-value services; and intensifying competition for foreign direct investment across the Gulf and wider emerging markets. Addressing these constraints will be critical to sustaining momentum in priority sectors.
At the same time, Oman benefits from clear structural advantages. Its strategic geographic location along major trade routes, combined with well-developed ports and logistics infrastructure, supports manufacturing and export-oriented activity. In tourism, the Sultanate’s natural landscapes and cultural heritage offer differentiated appeal, while the emergence of industrial and manufacturing clusters strengthens its value proposition for long-term investors.
Conclusion
By prioritising manufacturing and tourism, Oman is signalling a decisive shift toward a more diversified and resilient economic model, anchored in non-oil growth, private-sector expansion, and employment creation.
As the country continues to implement Oman Vision 2040 through successive Five-Year Plans, the next decade will be critical in determining how effectively these strategic ambitions translate into sustained economic performance and long-term competitiveness.
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