المحتوى المحلي محرك نمو المؤسسات الصغيرة والمتوسطة وتنويع الاقتصاد العُمانيLocal Content as a Driver of SME Growth and Economic Diversification in Oman

Small and medium enterprises (SMEs) are a fundamental pillar of the global economy, representing around 90% of businesses, providing up to 70% of employment opportunities, and contributing approximately half of global GDP. In the Sultanate of Oman, SMEs hold particular importance within the framework of Oman Vision 2040 and its aspiration towards a productive and diversified economy led by the private sector.

According to the Oman Vision 2040 report, the number of SMEs reached approximately 240,000 enterprises in 2023, providing employment opportunities for around 185,000 Omanis. An International Monetary Fund study also indicates that SMEs accounted for approximately 98% of companies, contributed around 33% of non-oil GDP, and employed approximately 76% of private-sector workers in 2023.

Against this backdrop, local content emerges as an economic tool that goes beyond simply giving preference to local products or suppliers. It seeks to transform expenditure and investment into economic value within the Sultanate by developing suppliers, localising products and services, building skills, transferring knowledge and technology, and connecting SMEs with large companies, government projects, and foreign investments.

First: SMEs as a Driver of the Economy

International experience demonstrates that SMEs play a pivotal role in job creation, innovation, and the development of value chains. Their importance is not limited to serving local markets; it also extends to their ability to grow and integrate into regional and global value chains. Therefore, the challenge is not merely to increase the number of SMEs, but to enable them to sustain their operations, expand, and export.

Second: Local Content and Building Value Chains

Financing and administrative support alone are not sufficient to ensure SME growth; these enterprises need sustainable markets and business opportunities. Major projects, government contracts, and foreign investments can create such opportunities when local participation extends to manufacturing, engineering and technical services, logistics, maintenance, and research and development.

In this way, local expenditure creates an economic cycle that generates revenues, investments, and employment opportunities while contributing to skills development, technology transfer, and higher productivity.

Third: Lessons from International Experience

The experiences of India and Malaysia demonstrate the importance of leveraging procurement and supply chains to develop the local private sector. India has utilised the strength of government demand and its large market to create opportunities for SMEs, while Malaysia has focused on supplier development and connecting local companies with multinational corporations and industrial investments.

The key lesson is that local content should not permanently protect local companies, but rather provide them with opportunities to build the capabilities required to compete locally and globally.

Fourth: SMEs in Oman

Current indicators demonstrate the significant role SMEs play in the Omani economy. However, the greater objective is to transform their numerical presence into productivity and the capacity to grow and export. This requires stronger integration with major projects and supply chains, alongside the development of their technical, operational, and commercial capabilities.

Fifth: From Local Expenditure to Economic Development

The Sultanate has significant opportunities to leverage government and investment expenditure across sectors such as oil and gas, industry, mining, renewable energy, logistics, tourism, and economic and free zones to create sustainable markets for Omani enterprises.

Oman Vision 2040 data indicate that the value of tenders awarded to SMEs through the Esnad system reached OMR 165 million in 2023, demonstrating the role of procurement in creating direct opportunities for these enterprises.

Sixth: How Can Local Content Become More Effective?

Enhancing the impact of local content requires contracts to be structured in ways that enable SME participation, including dividing certain large contracts into packages aligned with their capabilities. It also requires developing local suppliers and connecting them with large companies and multinational corporations.

Other priorities include raising quality and productivity standards, facilitating access to relevant accreditations and certifications, developing contract- and project-based financing, and providing early information about upcoming projects and opportunities. Most importantly, local content should be measured by its actual economic impact, including employment opportunities, capability development, technology transfer, productivity, and exports.

Seventh: From Local Content to Global Omani Companies

The ultimate objective is not to keep Omani companies confined to the domestic market, but to use the local market as a platform for capability building. Opportunities secured through Omani projects should enable companies to strengthen their systems, improve product quality, train their workforce, invest in technology, and ultimately leverage these capabilities to expand into international markets.

Eighth: Local Content as a Growth Policy, Not a Procurement Policy

The success of local content should not be measured solely by the value of local purchases, but by its ability to transform expenditure into sustainable national economic capabilities. An SME that grows through a local contract, develops its capabilities, employs national talent, transfers knowledge, and ultimately begins exporting represents the true value of local content.

From this perspective, supporting SMEs and advancing local content are not separate paths; rather, they form part of a unified economic approach aimed at building a more diversified, productive, and competitive Omani economy. The goal is not simply “Buy Local,” but to reach the stage of “Develop Locally, Compete Globally".