Statement by the Republic of Korea At the Trade Policy Review of Oman
25 June 2008
Thank you, Mr. Chairman,
I would like to extend a warm welcome to the distinguished delegation of Oman to its first trade policy review. I especially thank H.E. Mr. Maqbool Ali SULTAN, Minister of Commerce and Industry for his comprehensive introduction on Oman’s trade policy. Let me also express my thanks to Mr. Ravi Bangar of India for his valuable contribution as our discussant and to the Secretariat for its comprehensive report.
Mr. Chairman,
Korea appreciates this opportunity to participate in the first trade policy review of Oman.
Korea and Oman have enjoyed a mutually beneficial economic relationship over the years. Oman has been an important partner for Korea in the field of energy cooperation, while Korean companies have been contributing to Oman’s industrialization by participating in various development projects, including building oil refineries and petrochemical industrial complexes. Korea highly values this important partnership and sincerely hopes that both countries will continue to further strengthen economic cooperation by taking advantage of business opportunities in various sectors such as trade of goods and services, infrastructure investment and natural resources development.
Let me now make a couple of general comments on Oman’s economic and trade policies.
Korea is pleased to note that the Omani economy has maintained high economic growth coupled with relatively low inflation during the past years, especially recording an impressive annual average real GDP growth rate of about 5.3% over the 2000-2007 period. Korea believes this is largely attributable to the policy of trade liberalization, diversification of economy and privatization vigorously pursued by the Government of Oman as part of its development strategy. Therefore, Korea applauds the Omani government for successfully stewarding its economy toward a sustainable and diversified development.
On the trade and investment policy regime, Korea welcomes the good progress Oman has made over the years to further improve its trade and investment environment in order to enhance its conformity with WTO rules, since its accession to the WTO in 2000. Among others, we are pleased to note that not only does Oman maintain a relatively low MFN applied rate of 5.5% on average, but also significant non-tariff barriers are almost inexistent.
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Korea also appreciate Oman’s efforts to enhance the investment climate by introducing various incentive measures such as import duty concessions for domestic and foreign investors, tax exemption on profits for as long as up to 10 years and long-term use of land at favorable rates etc., resulting in a more than triple increase of FDI between 2003-2006.
Nevertheless, we note that Oman maintains some restrictions such as the prohibition of land ownership for foreigners except in designated tourist areas and the limitation of foreign ownership to 70%.
The progresses made are well recognized by the fact that in 2007, the World Economic Freedom Index ranked Oman the 18th most open economy out of 141 countries while the Arab Economic Freedom Index ranked Oman as the most open in the Arab world in 2006 as the discussant explained. Korea hopes that Oman continues its current economic policy centered on trade liberalization, diversification and privatization to achieve sustained growth while successfully addressing issues mentioned in the Secretariat paper such as the removal of some of the remaining obstacles to FDI, the further privatization of State owned enterprises and the improvement of Oman’s multilateral commitments both on goods and services.
Regarding Oman’s specific trade policies and measures, Korea has submitted a couple of questions related to the government procurement practice. Firstly, the Omani government gives a price preference of 5-10% to local and GCC products. Secondly, the Omani government gives main priority to the bid price, especially in the field of construction and engineering. Could Omani government reconsider this practice in terms of better quality and technology transfer facilitation given its economic development stage?
Regarding the “Omanization” program for human resources development, Korea understands its reason and legitimacy. But, in reality, foreign investors may be faced with difficulties to secure appropriate skilled labors in some sectors, considering the Omani labor market rigidity. Therefore, we believe that more flexible application of this policy in case foreign companies provide skill training to Omani workers would be desirable under its current economic situation.
Korea appreciates the written replies provided this morning and will review them with interest.
Mr. Chairman, I would like to conclude my remarks by expressing my appreciation once again to the Oman government and the Secretariat for their hard work in preparing for today’s meeting. I wish the Oman delegation great success on its TPR.
Thank you. Mr. Chairman. /The End/
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