Interview: Gert Hoefman
What can be done to increase and develop Oman’s manufacturing export base?
GERT HOEFMAN: With the lower oil prices affecting the economy in Oman, the need for diversification is becoming more urgent. Industry in Oman has a good base to start from, but when you look at the industrial sector in Oman you will find that it is predominately commodity based. To prepare for a more competitive market, stepping up in the value chain could be a way out. So how can we improve our ability to create more added value? We need to innovate and move past commodity products. Adding more value enables the industrial sector to sell its product in more distant markets and to make them more attractive for new export markets at the same time.
So innovation is a key word here. When talking about innovation there are different approaches. Not only is process innovation important, product innovation also helps to step up in the value chain. Assistance is available; The Research Council for instance, has a very good reputation in helping companies to innovate. Diversification and innovation go hand in hand, and are key in assisting the country in improving industry competitiveness and in increasing its chances in the export markets. Today, non-oil exports in Oman have great potential to rise. For industrial companies, the first logical focus is the GCC market and the countries in the MENA region. These markets are geographically close, and we understand their way of conducting business. There is also assistance available for Omani companies, with the help of the Public Authority for Investment Promotion and Export Development.
How can sustainable growth be guaranteed for the manufacturing sector in Oman?
HOEFMAN: The reduction in the oil price is obviously increasing the need for companies in Oman to get their act together. The speed of market developments is increasing and competition is fierce. Sustainable growth is required to face the challenges of the markets, both in Oman and in the export markets. The manufacturing sector in Oman is doing well and evolving to face these challenges. Most industries have a sound basis to build upon in terms of market position and quality of product offering. With market conditions the way they are, the sector will advance and come out stronger than before.
How can the sultanate make the in-country value (ICV) initiative a success?
HOEFMAN: The ICV concept was first implemented in the energy sector in Oman, and seeks to capture and retain as much of the expenditure within the country as possible. The initiative is a success in the oil and gas sector, and efforts are being made to apply the same concept in other areas, including industry. The standards for ICV in the oil and gas sector are a good guideline for the rest of the economy, but at the same time they need to be carefully examined and declared fit for use else where. When it comes to industry it is a little more complicated because of the export aspect. For exporting Omani producers, it is very hard to meet the domestic ICV criteria of other countries, in which companies are not actually producers. Take the UAE for example; most companies only export there and do not meet local ICV criteria. The potential danger of ICV is that it can work as a protectionist measure. The GCC countries are working to create one internal market, and if each country is creating its own individual ICV rules then export will become more difficult.
Most elements in the ICV programme are already perfect; they stimulate SMEs, they support the educational commitment made to Omanis and they stimulate the local sourcing of raw materials. These are good examples of valuable contributions that the ICV makes to the local economy in Oman.
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