Oman’s government first enacted Omanization in 1988 to replace guest-workers and expatriates with Omani citizens in all jobs within the country. Oman and many other Gulf states rely heavily on foreign workers, but efforts to nationalize workforces to fight rising unemployment rates have accelerated in recent years. Oman intensified its Omanization policy over the past 12 months by increasing work permit fees by 50% for all expatriate workers.
Recent news reports indicate that 250,000 expat workers have left Oman since the COVID-19 pandemic began in February 2020, including some mid- and senior-level expatriates. In addition to the struggling oil and gas industry and economic crisis, sources cited that this increased supply of rental housing due to assignee departures decreased Muscat rents over the past 6 to 12 months. Landlords have become slightly more flexible, particularly with payment terms and lease break clauses.
Omanization will continue in the coming years as the government replaces foreigners with Omani nationals when existing work permits expire. Recent announcements such as the 2021 push to allocate expatriate-held jobs to Omanis in higher education highlight the government’s plans to shore up an economy weakened by low oil prices and the COVID-19 crisis. The new 5% VAT coming into effect in April 2021 is another of the government’s methods to increase its sources of much-needed income in a country where skilled talent has been forced to leave.
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