Al Bustan Palace, Muscat March 18th, 2014

Oman Economic Forum

Investing in Oman

2

Presentation Overview

Oman Overview

Global and Regional Investment Trends in the Omani Context

Investment Incentives in Oman

Sectors and Industries Driving Inward Investment

Where to Invest in Oman?

3 Deloitte PowerPoint timesaver – March 2011

Oman Overview

4

Geographic Advantages

• Located on the axis of the GCC, Asia and Africa on the Indian Ocean

• More centrally located than Persian Gulf, 2 days closer than UAE or KSA

• Direct trade routes to growing GCC market as well as India and Africa

• Resource abundant (oil, natural gas, copper, marble, limestone, gypsum, chromium)

Modern Infrastructure

Political & Economic Stability

Favorable Business

Environment

• Continued political stability since 1970- WEF rated

top 10 most secure countries • Total population of 3.7 million including approx. 1.5

million expatriate • Strong Economic Growth (GDP growth of 5% in

2012 and 2013) • National economy based on the principles of justice

and the free market • Large trends towards privatization, even in public

goods such as utilities • Low public debt (3% of GDP) and low inflation

• Ranked above regional average in Economic Freedom, Ease of Doing Business, Transparency and Economic Competitiveness

• 3 Free Zones and 9 Industrial Estates • WTO member, TRIPS (IP) • World Intellectual Property Organization (WIPO) • 7th out of 144 nations in Gov’t services for

improved business performance (WEF)

• $34bn allocated for infrastructure 2011-2016 • Project spending of $7bn per on average year over the

last decade • 4 new airports and 2 expansions (2014) • 5 large-scale modern ports with accompanying logistics

and industrial zones • $15bn rail project to connect 9 cities to GCC • Over $3bn will go into improving connectivity through

highways

Oman - Overview

Oman is the ideal location for businesses looking for a stable vantage point to access the booming

Middle East, African and Asian markets

5

Economic Freedom Index

59.6 60.6

61.8

68.1

545658606264666870

World Avg. Saudi Arabia Regional Avg. Oman

WEF Global Competitiveness Rankings 2012-2013

Indicator Rank/144

Macroeconomic Environment

5

Gov’t services for improved business performance

7

Protection of minority shareholders interest

14

Quality of infrastructure 20

Ease of access to loans 11

Indicator Oman MENA OECD

Procedures (number) 5 8 5

Time (days) 8 23 12

Cost (% of income per capita) 2.6 29.8 4.5

Starting a Business in Oman

Oman in International Rankings

Oman has earned top rankings in the international community on competitiveness, economic

freedom, and doing business indicators, while maintaining multiple cost advantages

6 Deloitte PowerPoint timesaver – March

2011

Global and Regional Investment

Trends in the Omani Context

7

Investing in Oman – The Regional Context

While the Middle East & Africa region has witnessed recent declines in foreign direct investment activity, Oman has been able to defy the trend, boasting notable growth in FDI activity

12%

43%

49%

23% 5%

Decline in the # of FDI projects into the region

Decline in capital investment

Decline in job creation

As a result of the economic and political turmoil caused by the global recession and the Arab Spring, the MEA region saw a marked decline in investment

Source: fDi Intelligence, Financial Times Limited

FDI in the MEA Region, 2012 FDI in Oman, 2012

Increase in the # of FDI projects into Oman

Oman’s regional market share of FDI, up from 3%

9% Compound annual growth

rate of FDI into Oman 2009-2012

Oman proved to be an exception, as it has attracted new investors and taken new market share in the region

Source: Oman National Centre for Statistics and Information

8

23.6 21.0 17.1

13.5

6.5 5.9

5.5

5.1

30.0 26.9

22.6

18.6

2012201120102009

Foreign Investment as a Growth Driver in Oman

Oman’s economy has exhibited high double digit annual growth since 2009, partially due to inflows of foreign investment. This trend will likely increase with the coming infrastructure and Free Zone expansions

Source: Oman National Centre for Statistics and Information, Foreign Investment Report (June 2013)

Contribution of Foreign Direct Investment to GDP, OMR

21% 22% 24% 27% FDI as % of GDP

GDP from FDI

GDP excluding FDI

9 Deloitte PowerPoint timesaver – March 2011

Investment Incentives in Oman

10

Recent Improvements in the Omani Landscape

Strong government spending and an improved business climate are both factors driving investors to Oman

Political & Economic Stability

• Top-10 most secure countries (WEF – 2013/2014) • Top-5 favorable macroeconomic conditions (WEF – 2013/2014) • 5% economic growth in 2012 • Strong government spending and privatization efforts

Improvements in the Business Environment

• 7th in Gov’t services for improved business performance (WEF – 2013/2014) • Rated by the World Bank above regional average in:

- Economic Freedom and Economic Competitiveness - Ease of Doing Business and Transparency

Government Incentives

• 9 industrial estates with fully developed plots available at nominal charges • Subsidized utility charges for manufacturing facilities • 5-year tax holiday on profits • 5-year import duty holiday on machinery, spare parts and raw materials

11

The Changing Landscape – Key Infrastructure Investments

Roads: Highway access to GCC markets $1.1 billion worth of contracts

awarded in 2011 in Oman for the road sector to develop modern transport infrastructure

Rail: $15bn investment program to

develop a national railway ‘Oman Rail’: A 2,244-km rail

network being built to link major ports, industrial areas, free zones at Sohar, Salalah, Duqm & GCC

Airports: Expansions (passenger capacity/yr): Muscat: 12 Mn Salalah: 2 Mn Airports in construction (passenger capacity/ yr): Sohar: 500K Duqm:500K Ras al Hadd: 500K Adam: 250K

Major developments in shipping, air transport, rail connectivity and road transit is turning Oman into a transport and logistical hub for the region

6182

3207

1305

0

2000

4000

6000

8000

Airports Roads Ports

Planned & Projected Transport Spending (USD Mn) 2011-2015* (Total spending for 2011-2015 is estimated at USD 78bn)

12

Oman has 7 ports in total, taking advantage of its coastline along the Strait of Hormuz, Arabian Sea and Greater Indian Ocean

The Changing Landscape – Port Infrastructure

Port of Khasab: A small harbor in the Musandam area for tourism and trade

Port of Sohar: A growing port servicing the Metals, Agro-bulk, Food Processing, Logistics and Petrochemicals industries

Port of Mina Al Fahal: Operated by PDO; it has an oil processing facility

Port Sultan Qaboos: Muscat’s main port currently being re-outfitted to focus mainly on tourism

Port Qalhat: This port and LNG terminal near Sur is owned by Oman LNG

Port of Duqm: Oman’s newest port city will serve the oil and gas industry as well as fisheries, logistics and industry

Port of Salalah: Handles processing, warehousing, re-export and logistics; fasted transit times to Europe and Asia

Iran

Qatar

Saudi Arabia

Egypt

UAE

Oman

Iraq

Turkey

Syria Cyprus

Lebanon

Bahrain

13

Connecting to the World through Oman

Located on the strategic axis of the Indian Ocean and Persian Gulf, Oman boasts accessible trade routes and fast transport times to the worlds most attractive emerging markets

• Regional Market worth more than 5 trillion USD and global reach to 1.2 trillion of imports

• On main international shipping routes within 2 weeks of major ports

• Modern infrastructure transport facilities and business environment connected to key markets in India and East Africa

• Abundant and competitive access to natural resources, energy, financing and labor

14

49

618

220 210

372

54

653

241 228

427

58

684

260 245

485

GCC SE. Asia W. Asia N.Africa E. Africa

2013 2018 2023

Investing in Growing Regional Markets Within close proximity to Oman, neighboring regions account for 21% of the world’s population 15% of total world imports, both of which continue to grow above global averages

Combined account

for c.21% of the world

population

Population forecasts at Oman’s neighboring regions, millions (2013-2023)

318

727 557

159 52

350

953

644

179 61

427

1,153

787

195 74

488

1,220

849

218 83

GCC SE. Asia W. Asia N.Africa E. Africa

2009 2010 2011 2012Combined

account for c.15%

of the world

imports

Imports by Oman’s neighboring regions, USD billion (2009-2012)

15

Deloitte PowerPoint timesaver – March 2011

Which Sectors are Driving Inward Investment?

16

World Economy Total FDI

Which Sectors are Driving Regional and Global Investment?

Globally manufacturing, business and finance are driving FDI, which is true in developed and developing economies

23% 23% 20%

9% 9%

4% 4% 3% 3% 1%

3%

Man

ufa

ctu

rin

g

Bu

sin

ess

Act

ivit

es

Fin

anci

al In

t.

Oil

& G

asEx

plo

rati

on

Trad

e

Uti

litie

s

Un

spec

ifie

d

Re

al E

stat

e &

Co

nst

ruct

ion

Tran

spo

rt

Ho

tels

&R

est

aura

nts

Oth

er (

less

than

1%

)

Developed 22% 21% 27% 6% 8% 4% 5% 2% 2% 0% 2%

Developing 25% 24% 13% 11% 8% 3% 2% 4% 4% 1% 4%

Transition 18% 22% 11% 17% 17% 2% 0% 4% 5% 0% 4%

Oman (2012) 21% >1% 14% 48% 3% >1% N/A 6% 3% 3% 2%

Source: UN conference on trade and development, Estimated world inward FDI flows, by sector and industry 2009-2011, (2013); Oman National Centre for Statistics and Information, Foreign Investment Report (June 2013)

Global FDI contribution by sector, % (2009-2011)

17

Foreign Investment into Omani Industries

While Oil & Gas still accounts for the highest percentage of foreign direct investment, the fastest growing sectors are manufacturing, transport and tourism

0

500

1,000

1,500

2,000

2,500

3,000

Oil

& G

asEx

plo

rati

on

Man

ufa

ctu

rin

g

Fin

anci

al In

t.

Re

al E

stat

e &

Co

nst

ruct

ion

Trad

e

Tran

spo

rt

Ho

tels

&R

est

aura

nts

Oth

er

2009 2010 2011 2012

1.3% 9.4%

9.4% 8.9%

4.9%

13.4%

Source: Oman National Centre for Statistics and Information, Foreign Investment Report (June 2013)

2% 3% 14% 48% % of FDI 2012

21% 6% 3% 3%

FDI growth and Contribution by Sector

11.7%

18.5%

High growth sectors

18

4.85

5.08

5.19

5.32

5.4

4.5

4.75

5

5.25

5.5

2007 2008 2009 2010 2011

Growing Sectors for Investment: Logistics

The country’s vision is to become the main logistics gateway in the region, capitalizing on its strategic location on the Indian Ocean and numerous ports and airports

Oil & Gas, Infrastructure and Trading industry segments are the leading contributors for the logistics sector in the region

Note: WEF (1-Extremely underdeveloped to 7- Well developed and efficient by international standards )

Quality of Port Infrastructure in Oman

As a result of Oman’s ongoing port upgrades, the World Bank annual Port Infrastructure survey has consistently increased Oman’s rating between 2007 and 2011, a trend which is likely to continue

Source: Datamonitor

Government policy has stressed the desire for more Public Private Partnerships (PPP) with foreign firms with expertise and technology

This has prompted major multinational logistics players such as DHL, TNT and Agility to establish freight forwarding and international transport operations in the GCC

Oman, Saudi Arabia and the UAE account for around 85% of the GCC Logistics sector, estimated to be worth around USD35 bn (~6% of the global logistics market)

19

In Oman, various tourism expansion plans include increased in hotel capacity, a conference center and plans to transform Muscat's port as a hub for tourists and cruise liners

Growing Sectors for Investment: Tourism

0.97 1.04 1.05

1.10 1.18

1.26

1.36

1.46

0.0

0.5

1.0

1.5

2010 2011 2012 2013 2014 2015 2016 2017

Business Monitor International estimates that Oman’s tourist arrivals is expected to reach 1.5 million by 2017, a 36% increase over 2013 tourist arrivals

Visitors’ spend in Oman is expected to grow by 6.5% annually until 2023 to reach USD 3.2bn, from 2012’s USD 1.6bn

Tourist Arrivals in Oman 2010 – 2017 (millions)

The World Economic Forum (WEF), estimates that Oman's Travel & Tourism market is projected to exhibit 5.2% average growth between 2013-22

Travel & Tourism contribution to GDP is estimated to nearly double over the next decade to 10bn by 2022

Oman has consistently improved its ranking in Travel and Tourism Competitiveness Report , jumping 11 spots from 2009-2012

20

Opportunities for Investment: Food Processing

Rising income together with a growing population in in the GCC will contribute to increased food consumption for the region, making food processing an attractive investment opportunity

Sources: Alpen Capital, GCC Food Industry, 2013; WESGRO, Oman Food & Beverages Sector Fact Sheet

• Imports account for ~80% of Oman’s total food needs

• Food imports to Oman and the GCC are expected to double over the next decade

• The region has made food production and security a strategic priority

Agro-processing developments in Oman:

42.1 43.6

46.3 49.1

2012E 2013E 2015E 2017E

GCC Food Consumption

28.4 36.3

53.1

2011E 2015E 2020E

GCC food import estimates (US $ bn)

$200mn sugar processing plant in Sohar, scheduled to open in 2016, using unprocessed sugar from Brazil, Thailand, India and Australia

$250mn to develop an integrated fisheries center at Duqm’s Special Economic Zone

Development of an agro-bulk terminal to facilitate exports and handle grains, agro-commodities, sugar and other food-related cargo

21

Opportunities for Investment: Construction Equipment

2.9%

4.7%

4.8%

5.1%

6%

8.3%

North America

Central & South America

Eastern Europe

Western Europe

Africa/Middle East

Asia/Pacific

Construction equipment demand – growth rates (2012-2017F)

0

1

2

3

4

5

6

7

0

1

2

3

4

5

6

7

2011 2012e 2013f 2014f 2015f 2016f

Co

nst

ruct

ion

ind

ust

ry %

of

GD

P

Co

nst

ruct

ion

ind

ust

ry v

alu

e

USD

bn

Estimated construction growth – Oman

Construction industry value, USD bn Construction industry, % of GDP

Source: Deloitte Construction Report; Alpen Capital

Increased spending on construction and infrastructure projects in the GCC is driving demand for construction equipment in the region

The Global Construction Equipment market is expected to grow at a 6% over the next few years, reaching nearly USD 200 bn by 2017

Global manufacturers can supply the growing GCC and African construction markets from industrial and free zones in Oman

The heavy construction equipment segment accounts for the majority of the market share

Material handling equipment is the fastest growing segment and is estimated to grow at 7% over the next 3 years

22

Foreign Investment Overview - Foreign Investors who have Chosen Oman A host of international companies that are leaders in their industries have already selected Oman as a premiere location for their businesses

Transport

Tourism

Foreign Investors in Oman

Manufacturing

Agriculture & Fisheries

Healthcare

Retail

Utilities & Env.Technol.

ICT &Telecoms Education

Construction

Insurance & Financial Services

Energy

Note: MOU for a future project

GE has been active in Oman for 4 decades

SMI Steelmor

23

Deloitte PowerPoint timesaver – March 2011

Where to Invest in Oman?

24

Investment Opportunities – Free Zones

Strategic Location: Fastest transit times to Europe and Asia Incentives: Free Zone benefits with 100% foreign ownership, 0% customs, 0% taxes Opportunities: Chemical and Material Processing, Manufacturing and Assembly, Logistics and Distribution

Duqm Special Economic Zone: Largest free economic zone in the Middle East Integrated Zone: Sea port, industrial area, new town, fishing harbor, tourist zone, logistics center, education and training zone Opportunities: Oil & Gas and Mineral Extraction & Processing

Al Rusayl Industrial Zone: Well established zone (since 1983) undergoing capacity expansion Barka Logistic Hub: Large-scale logistics hub to serve the Muscat capital area Muscat Port: Government intends to transform Muscat’s port to a tourism hub

Strategic Location: Industrial port outside the Strait of Hormuz which reduces insurance premiums Connectivity: Connected to Muscat & GCC countries; will receive Muscat’s cargo and industry Opportunities: Metal Steel, Agro-bulk, Food Processing, Logistics and Petrochemicals

Duqm

Muscat Sohar

Salalah

UAE

KSA

Yemen

Gulf of

Oman

Arabian

Sea

Strait of

Hormuz

Salalah

Muscat

Duqm

Sohar

Oman offers business numerous advantages in any of its Free Zones or Industrial Estates

25

Deloitte PowerPoint timesaver – March 2011

Thank You (Q&A)

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence. Deloitte's professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities. About Deloitte & Touche (M.E.): Deloitte & Touche (M.E.) is a member firm of Deloitte Touche Tohmatsu Limited (DTTL) and is the first Arab professional services firm established in the Middle East region with uninterrupted presence for over 85 years. Deloitte is among the region’s leading professional services firms, providing audit, tax, consulting, and financial advisory services through 26 offices in 15 countries with over 2,500 partners, directors and staff. It is a Tier 1 Tax advisor in the GCC region (International Tax Review World Tax 2010, 2011 and 2012 Rankings) and was recognized as the 2010 Best Consulting Firm of the Year in the Complinet GCC Compliance Awards. In 2011, the firm received the Middle East Training & Development Excellence Award by the Institute of Chartered Accountants in England and Wales (ICAEW).

27

Deloitte PowerPoint timesaver – March 2011

Annex: The Omani Investment Promotion

Roadshow to the United States

28

Overview of the MoCI Roadshow Objectives

The purpose of developing this study was to provide analysis into Oman’s economic sectors and identify targeted opportunities for investment by American companies

Following up the United States-Oman Free Trade Agreement which went in to effect in 2009, the Ministry of Commerce and Industry in Oman decided to embark on a roadshow to the US.

The purpose of this roadshow is threefold, mainly:

Branding Oman as a Place to do Business

Promoting Investment in target non-oil sectors

Improving Quality by attracting talent and

technology

Introducing Oman to the US market and emphasizing the

mutual benefits of investing in Oman, using the FTA and other

relevant incentives

Attracting American investment in key non-oil sectors to

encourage growth and economic diversification in accordance with

Omani development plans

Increasing the exchange of technology and expertise

between countries to broaden the capabilities of the Omani workforce and improve goods

and service offerings

In preparation for the Roadshow, MoCI in collaboration with Deloitte conducted a study of Oman’s economic sectors to identify optimal opportunities for investment from the US.

29

Process of Selecting Investment Opportunities

Before selecting the investment opportunities, MoCI undertook four key steps to understand the prospects for attracting investment into Oman, as well as the current investment landscape

1) Conducted Analysis: To asses the current investment landscape in Oman and identify future opportunities, we analyzed available data and information on Oman’s economic sectors

2) Developed Report: The results of each sector study were documented in a report which provides comparable and relevant information for decision-making based on a framework for investment selection

3) Consulted Stakeholders: The MoCI - Deloitte team met with nearly 20 stakeholders throughout Oman to discuss investment opportunities and ensure that the analysis is reflective of current and planned initiatives in the Sultanate

4) Scored Results: To synthesize the study and provide a quantitative view of the sector results, we scored each sector according to: benefits to Oman, alignment with government objectives, relevance to US investors and the comparative advantage of the sector in Oman

Ex) NCIS and Desktop Data Ex) Section of Sector Study Ex) Stakeholders Interviewed Ex) Scoring Mechanism

30

Sector Assessment Framework

Potential rev. generation/ Increased investment

Job creation for Omanis Competitive wages New technologies/

knowledge Economic diversification Value-added to industry Increased visibility of

sector

Meets 2020 Vision priorities

Aligns with 5 year plan goals

Supports existing or planned infrastructure investments

Aligned with sector or ministry objectives and plans

Market size & accessibility

Cost advantage (labor, rent, transport, utilities materials, feedstock)

Market advantage, Gov’t/ business incentives

Cluster development Relevance to value

chain Size and manageability

of risks Data availability Sector position in US

Geographic location Free trade agreements Potential ROI Market size/ growth/

accessibility Public sector services Laws, regulations, and

policies Taxes Overall ease of doing

business Infrastructure Stakeholder readiness

Benefits to Oman

Alignment with Omani

Government Objectives

Comparative Advantage of Sector

in Oman

Relevance to US Investors

We looked at four key criteria and a number of sub-criteria to map each sector against in order to determine the optimal investment opportunities for the Roadshow

31

0

10

20

30

40

50

60

70

80

90

100

Sector Scoring Results

We scored each sector comparatively on 4 criteria and a wide set of sub-criteria based on research and available data; sector scores did not determine those sectors chosen for the Roadshow, but contributed to the overall analysis

Sector Scores

* Insurance was grouped together with finance in scoring, but has a designated section in the sector study and analysis; Oil and gas was not considered as a sector to take forward

= Sectors selected for US Roadshow

32

Defining Viable Investment Opportunities

• 14 sectors analyzed for investment potential using available data and desktop research

• Sectors compared across a common framework and scored • 8 investment opportunities identified across 4 sectors

Sect

or

An

alys

is

• Each opportunity was evaluated to determine market potential and specific ‘selling points’

• We then identified the top branded American companies in each opportunity

• Opportunities and companies were mapped across the US to determine the optimal cities for the roadshow

Op

po

rtu

nit

y A

nal

ysis

~200 pages of analysis

• Developed an investors ‘ brochure detailing relevant information and opportunities for investment in Oman

• This brochure should act as a ‘one source’ investment document for Oman P

rom

oti

on

al

Bro

chu

re

Illustrative

It was essential to have an understanding at the macro and micro level of Oman’s economic sectors and the opportunities available for American investors

33

Outcome

The Omani delegation visited numerous cities, generating press and meeting with companies, potential investors, and conducting site visits

• Following the Deloitte- MoCI project, NUSACC arranged B2B meetings, conferences, events and site visits in the targets sectors and cities, generating press along the way

• This April Oman will receive a trade delegation of potential investors in Oman from the USA

• The Omani government is currently looking into how it can further grow its relationships with foreign investors through roadshows and related activities

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence. Deloitte's professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities. About Deloitte & Touche (M.E.): Deloitte & Touche (M.E.) is a member firm of Deloitte Touche Tohmatsu Limited (DTTL) and is the first Arab professional services firm established in the Middle East region with uninterrupted presence for over 85 years. Deloitte is among the region’s leading professional services firms, providing audit, tax, consulting, and financial advisory services through 26 offices in 15 countries with over 2,500 partners, directors and staff. It is a Tier 1 Tax advisor in the GCC region (International Tax Review World Tax 2010, 2011 and 2012 Rankings) and was recognized as the 2010 Best Consulting Firm of the Year in the Complinet GCC Compliance Awards. In 2011, the firm received the Middle East Training & Development Excellence Award by the Institute of Chartered Accountants in England and Wales (ICAEW).