OMAN CONTINUES TO COURT ASIA

UNCLAS SECTION 01 OF 02 MUSCAT 000018

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/ARP, EEB/CBA
COMMERCE FOR ITA THOFFMAN

E.O. 12958: N/A
TAGS: ECON EINV ETRD PREL MU
SUBJECT: OMAN CONTINUES TO COURT ASIA

REF: A. 07 MUSCAT 1139


B. 07 MUSCAT 624

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Summary
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1. (U) Over the course of 2007, the Omani government has made
significant efforts to strengthen its ties with its Asian
trading partners. As an indication of its continuing
courtship with the region, Oman recently sent a trade
delegation, led by its Deputy Prime Minister, to Singapore
and India in efforts to build economic relationships and
attract foreign investment. Just before embarking on his
two-nation trip, the Deputy Prime Minister also received
business-minded delegations from China and Vietnam. These
overtures are indicative of Oman's growing interest in an
area that receives the lion's share of the Sultanate's energy
exports and is increasingly seen not only as an attractive
destination for Omani investment, but also as a source of
foreign direct investment. End Summary.

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Reaffirming Ties to India
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2. (U) On December 12, Deputy Prime Minister for the Council
of Ministers Sayyid Fahd bin Mahmood al-Said arrived in Delhi
on a three-day mission to promote closer bilateral ties with
India. The Deputy Prime Minister was accompanied by a number
of prominent ministers, including those from Foreign Affairs;
Commerce and Industry; Oil and Gas; Agriculture; and
Information, as well as the Chairman of Oman Chamber of
Commerce and Industry and the Executive Director for the
Omani Center for Investment Promotion and Export Development.
An accompanying trade delegation included business officials
from the Omani private sector, representing firms in the
banking, manufacturing, service, and oil and gas industries.


3. (SBU) Of primary interest to the Omani side was enhancing
economic ties with India, which accounted for $1.4 billion in
bilateral trade in 2006. (Note: India was Oman's second
largest non-oil export market and third largest import
market. End note.) In recapping his visit with the
Ambassador, Commerce and Industry Minister Maqbool bin Ali
Sultan commented that India represented a "good fit" for
Oman, given the historical bilateral trading relationship,
the number of Indian businesses in Oman, and the prevalence
of Omanis of Indian descent in the business community. To
signify their commitment to working closer together, the two
governments signed four memoranda of understanding pertaining
to small and medium enterprise development, educational
opportunities in the information technology sector, and joint
investment possibilities that would build upon the
development of a $900 million fertilizer plant between Oman
Oil Company and Krishak Bharati Cooperative of India.
Representatives from Oman and India agreed to look into the
establishment of a joint investment company with start-up
capital of $100 million, while an agreement was reached
between Indian-based Larsen and Toubro, Oman Oil Company, and
Omani-based Zubair Corporation on the establishment of a $50
million industrial project in the port city of Sohar.

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Learning from Singapore
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4. (U) Prior to his arrival in India, the Deputy Prime
Minister and the delegation traveled to Singapore, where they
met with the city-state's president and prime minister, as
well as members of Singapore's Economic Development Council.
During the stop, Maqbool signed an investment protection
agreement with his Singaporean counterpart. The visit came
on the heels of more recent sub-ministerial visits to forge
closer cooperation on a broad spectrum of economic issues,
including tourism, port infrastructure and telecommunications
development. Maqbool noted to the Ambassador that Oman's
primary interest in Singapore was to learn about its model of
economic development and gain its expertise and even
investment in port development and management. Oman is also
in discussion with Singapore on a free trade agreement to
augment its $363 million in bilateral trade for 2006.

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Still Interested in Vietnam
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5. (U) Before departing for Singapore, the Deputy Prime

MUSCAT 00000018 002 OF 002


Minister hosted Vietnamese Deputy Prime Minister Nguyen Sinh
Hung and a delegation of Vietnamese business representatives.
While trade between the two nations is relatively small, the
Vietnamese delegation hoped to build upon a memorandum of
understanding signed by the Vietnam Oil and Gas Company and
the Oman Oil Company in May (ref B) regarding Omani
investment in constructing an oil refinery. Toward this end,
meetings with Minister of National Economy Ahmed bin Abdul
Nabi Macki and Maqbool generated another commitment to
explore how Oman's Investment Fund could assist in Vietnam's
development, as well as commitments to look into signing an
investment protection and double taxation treaty. The two
sides also discussed cooperative ventures in the tourism,
seafood, and maritime services industries, as well as the
possibility of Vietnamese labor coming to Oman.

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Comment
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6. (SBU) Amidst great media fanfare, the high-level meetings
signaled Oman's continued interest in forging closer ties
with its Asian trading partners, many of which serve as
primary markets for Oman's energy exports. In fact, over the
first 9 months of 2007, oil exports to China, Thailand,
Japan, and Korea accounted for 84% of Oman's total oil
exports. In recent meetings with USG officials, Omani
government leaders have expressed interest in ensuring that
the Asian economies remain vibrant in the wake of high energy
prices. Oman's participation in GCC free trade talks with
Asian partners will further bolster stronger trade ties, as
its imports from Japan, India, Korea, and China have already
risen by 68%, 100%, 78%, and 131%, respectively, from
2003-2006. Oman also sees opportunity for investment in the
growing Asian economies of China and Vietnam. While mindful
of its long-standing close relationships with the U.S. and
the UK, Oman will continue to court Asia, and will use facets
of its relationship with the West, such as its U.S-Oman Free
Trade Agreement, as a calling card for attracting more Asian
investment to the Sultanate. End Comment.


GRAPPO