I should have known that I was in trouble when the address listed for Oman Telecommunications Corporation was OmanTel Building, Near the Vegetable Market, Seeb, Muscat. You could use GPS, but it turns out that GPS isn't particularly adroit at interpreting "near the vegetable market," either.


But we're nothing if not adventurous, so I headed out in the direction of the vegetable market. Sure enough, just up the road was a massive building with "OmanTel" emblazoned across the top. There was also no apparent way to get to the OmanTel building from the highway we were on -- until I noticed another car simply pulling off the highway at a convenient point and cutting across the desert into the dusty parking lot.

Why we were here
Motley Fool Asset Management has substantial interest in companies in the Middle East. For people who don't have much firsthand experience in the region, it's easy to make the misconception that the economies in the region are all about oil and gas. And while it is true that these are extremely important segments to the region (I'll resist making a fueling metaphor), several of the markets there have highly diverse economies.

While the Middle East is not exactly known for as a vanguard for political enlightenment -- a week after we left Bahrain, it was wracked again with violence by disenfranchised Shiite Muslims -- several of its markets are highly professionally run, with excellent shareholder protection protocols in place. The United Arab Emirates and Qatar rank just below Japan and above South Korea and Norway in the 2014 Index of Economic Freedom.

Muscat At Dusk

Muscat at dusk.

Yet these countries are often overlooked as investment destinations, perhaps because of their relatively illiquid markets. In fact, that same illiquidity had long prevented global index compiler MSCI from elevating UAE and Qatar into its emerging-market index until it finally did so in June 2013. Qatar -- which is the world's richest country per capita -- is emerging in the same spirit that Duke is in the process of developing a good little basketball program.

The good times return
The last time I was in Dubai, it was at the epicenter of a self-inflicted credit-bubble crisis, struggling under the weight of a multi-hundred-billion debt load. (See "Dubai: A Mirage of Wealth?" February 2011.) Cranes all over the city -- and there were hundreds of them -- had ground to a halt. Fast-forward to 2014, and the cranes were back in business. Taxi drivers couldn't find our hotel, as it was in a part of the city that had existed for only a few months -- and it wasn't the only new part. The good times are rolling again. The emirate recently acquired a Bugatti Veyron (list price of about $1.5 million) for its police force.

Dubai's achievements are miraculous. It's a city with no clear advantages (no oil; no natural harbor; just a truly excellent location) that has taken its indigenous population's propensity for trade, a relatively enlightened ruling family, and its proximity to massive oil revenues and parlayed itself into the unofficial business capital of the Middle East, as well as an international tourist destination.


We came to Dubai because it was the easiest place to meet lots of local companies. In the region, it takes very little to persuade managers to come to Dubai -- so we spent our days talking with executives from companies from Jordan, Saudi Arabia, and Kuwait as well as from the UAE. The refrain for our meetings was repetitive. "Where would you like to meet? Dubai? No problem."

Our Dubai foothold even made it simple for us to get to the companies that could not travel to meet us. Aluminum Bahrain had invited us on a number of occasions to see its smelters -- some of the largest on Earth. AlBa is a fundamentally important company for the Kingdom of Bahrain, which, like Dubai, has limited hydrocarbon resources, and it accounts for a massive percentage of the country's exports. AlBa's financial performance has been harmed in recent years by the government's decision to jack up natural gas rates (a particularly short-sighted decision, given the company's importance and the fact that the government owns a large stake), but new management is intently focused on operational excellence.

Oman prepares for privatization
And finally, Oman (which we also flew to through Dubai, meaning in the same day we visited a Kingdom, an Emirate, and a Sultanate). Oman spent much of the last generation in total isolation, but it has a proud history of being among the more wayfaring Arabian states (in the mid-19th century the Sultan of Oman moved the country's capital from the peninsula to Zanzibar, in present-day Tanzania).

Oman is an interesting market in that the Sultanate is preparing to privatize much of the economy, so several important segments are in transition. The Omani stock market is relatively small and illiquid, but the country is blessed with a young, enterprising population, excellent infrastructure, and a rapidly growing economy.

Oman is the precise kind of country where we'd be delighted to invest if the opportunity comes along. It has the lowest per-capita income of the Arab Gulf countries, given its relatively modest oil reserves. By the same measure, it is undergoing a remarkable transformation, with average life expectancy having risen more than 20 years over the past three decades. It's also small enough and isolated enough that Omani companies aren't as likely to attract aggressive foreign competition. It's an island economy, even though it isn't an island.

Oasis On Nizwa Road

Oasis on Nizwa Road.

In the end, we found in the Middle East several markets where enormous amounts of money are being made -- in Saudi Arabia entire cities are being built, and Qatar is investing upward of $200 billion to host the World Cup in four years. Yes, there is a lot of oil in this part of the world, but to focus on the oil is to miss out on a much larger story.

  • Sage advice: Dubai is remarkable and one of a kind, but Oman immediately went to the top of my list of "places I didn't expect to be as awesome as they were."
  • Best Omani food in Oman: (harder to find than it sounds): Ubhar, Muscat.
  • Fantastic museum: The Dubai Museum, Bur Dubai
  • In the event you'd like to eat camel: The Local House Restaurant, Bur Dubai

Bill Mann and The Motley Fool have no position in any stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.