Tighter Omanisation rules for state contracts

• Companies have a year to comply
• Could face ban on contracts
• Banking must employ 60% Omanis

Companies operating in Oman have just under a year to adhere to Omanisation quotas or face being banned from applying for government contracts, as the Gulf state strives to increase opportunities for new Omani graduates.

The decision was announced on June 2. It means companies tendering for contracts have a deadline of May 31, 2026 to comply with regulations related to the percentage of Omanis employed in their workforce, according to the rules of the Ministry of Manpower. 

Oman has set different Omanisation percentages for different sectors. The highest are for banking and finance, which have to employ a minimum of 60 percent Omanis, and the lowest is the retail sector, where just a fifth of employees have to be local citizens.

Companies tendering for government contracts would need to terminate or not renew the contracts of their expatriate employees and employ Omanis to replace them.

The sultanate last year awarded $4.1 billion worth of contracts to local-based companies, up from $3.2 billion a year earlier, according to the Oman Tender Board. 

But company directors say the stricter rules could be difficult to implement.

“We understand that thousands of graduates are looking for jobs but we need to be careful how we replace skilled expatriates with inexperienced youngsters,” Ahmed Al-Fahmi, a director of infrastructural maintenance and services, told AGBI.

“That will create a talent void and lead to quality deterioration of services we provide.”

Each year about 55,000 Omanis graduate from schools and colleges to enter the workforce, according to the Ministry of Manpower. Ministry data also shows that in almost half a million businesses in the sultanate, Omani nationals accounted for less than 14 percent of employees: 260,000 Omanis versus 1.65 million expatriates.

Academics warn that skilled foreign workers could leave the Gulf state unless the government adopts a broader strategy to fill the gaps in the local workforce. 

“We will see an exodus of skilled workers in the labour market,” says Khalfan Al-Asmi, deputy dean of Modern College of Business and Science, based in Muscat.

“To reduce reliance on expatriates, we must boost training opportunities and that will not work overnight. There must be some compromise about this.”

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This is the second wave of job uncertainty to hit local expatriates. In the last three years authorities banned expatriates from serving in some oil and gas engineering roles, real estate, some hotel positions and selected tourism jobs.

“First, there are not enough qualified Omanis to take over some highly skilled jobs. Second, they don’t stay long after we train them and they leave to look for better paid jobs in the government,” says Jaffer Sayed, a software programmer at Enjaz Computer Services.

Oman’s economic indicators

The population of the country has grown from 1.7 million in 1995 to roughly 5.5 million now, of whom around 55 percent are Omani nationals.

As a result, unemployment is growing, posing a policy challenge to the government. Among the young, under the age of 25, unemployment is about 11 percent in 2024, according to the ministry of manpower. 

“Is it wise to remove expatriates in skilled jobs at a time when Oman is spending billions of dollars diversifying its economy away from energy income? We don’t have enough skills for these diversification programs under the implementation stages,” says Saif Al-Kindi, an economist at Oman Business Forum.