The government's program to diversify from the oil industry emphasizes the industrial sector, with a steady increase in small- and medium-sized industries based on heavily subsidized industrial parks. The first industrial estate, at Ar Rusayl, fifteen kilometers from As Sib International Airport, was developed in the mid-1980s and housed about sixty enterprises, including manufacturers of cement, soap, crackers, and copper cathodes. The sultanate's second industrial estate, a 100-hectare site at Raysut, was developed in the early 1990s by the local firm of Shanfari and Partners. The sultanate's third industrial estate is a planned fifty-hectare project at Suhar. Other estates are planned at Nazwah, Sur, Al Khasab, and the Al Buraymi Oasis. The government is also studying the feasibility of establishing cottage industries to produce such items as pottery, rose water, and frankincense. As a result of these efforts, by 1991 manufacturing contributed 3.5 percent of Oman's GDP.

A few small-scale traditional industries use primitive methods, such as in the production of ghee (clarified butter) and the drying of fish, dates, and limes. Some handicraft industries remain, but their importance is steadily being eclipsed. Silversmiths practice their trade, and artisans work with clay at Bahla, just west of Adam, an important center for the production of household pottery. Goldsmiths follow their trade in the Muscat metropolitan area and its environs. In several regions, workers fashion low-quality, hand-made cloth from locally produced wool. The coastal towns remain boat-building centers.

Whereas the industrial sector during the 1970s and 1980s was aimed at import-substitution industrialization (see Glossary), the objective in the 1990s was to encourage export industries for the gulf market. However, this assumes that Oman will be able to operate effectively in an increasingly competitive market, attract foreign investors, and increase the role of privatesector industry.

To increase its ability to compete with its gulf neighbors, particularly Dubayy, where the Mina Jabal Ali Duty Free Zone permits fully owned foreign subsidiaries, Oman needs to overhaul its commercial and economic laws. The Ministry of Commerce and Industry set up three working teams in early 1992 to recommend amendments to existing laws for discussion with the Oman Chamber of Commerce and Industry (OCCI) and the Consultative Council. The government revised laws to permit GCC nationals to own up to 49 percent of the shares in twenty specified Omani companies, ten of which are banks. The OCCI has introduced an industrial consultations unit, computer-linked with the Vienna-based United Nations Industrial Development Organization, offering investment advice on twenty industrial sectors as well as data on equipment suppliers and training needs.

Data as of January 1993