Interview: Tariq Al Farsi
What is your assessment of the new quotas to support small and medium-sized enterprises (SMEs), and what more can be done to realise the intended economic benefits of such decisions?
TARIQ AL FARSI: Both of these quotas are important to guarantee and encourage SMEs, and I believe that with the proper support systems to facilitate them, the targets are attainable. One of the key outcomes of the SMEs Symposium was the decision to allocate no less than 10% of tenders and government purchases to local SMEs. The decision was aimed at encouraging and supporting unemployed Omanis looking to start their own business ventures. It is expected that this decision will provide no less than OR180m ($466m) to entrepreneurs and SMEs. The goal is to transform the Omani population into entrepreneurs, which can only be done if the government can guarantee an environment that fosters both the establishment and development of SMEs.
The decision is coordinated by the Public Authority for Small and Medium Enterprise Development (PASMED), which liaises with the various ministries and government departments to capitalise on the benefits of the quotas. It will take time to measure and maximise the impact of the decision, but government departments have started to enter data into an electronic system developed by PASMED. The system contains a registry of qualified SMEs and identifies goods and services that these companies are well placed to provide. The system also tracks the progress of SMEs that have been awarded government tenders.
Another significant outcome of the symposium is the stipulation that local banks must allocate 5% of their lending portfolio to SMEs. This figure totals more than OR1bn ($2.59bn) of newly available funds for local SMEs. The banks are given two years to meet the targets and implement the proper procedures, though they may request more time and resources to reach the quota. For SMEs to be successful a variety of conditions must be met. These decisions have set a basis for ensuring that SME incubation and development is possible.
Could the family business mentality be detrimental to the development of SMEs? How would an anti-monopoly law impact the economy?
AL FARSI: Family-owned firms, which represent an important segment of the businesses in Oman, are vital to the economy’s success. Any growth in these businesses, either privately or publicly, will guarantee the development of their financial and technical abilities.
Knowledge transfer through joint ventures and an increased focus on good corporate governance only magnify these businesses’ capabilities. However, this can be a double-edged sword: on the one hand these firms will be able to grow and create more jobs and sub-contracting opportunities for SMEs, yet on the other hand they can create unfair competition for entrepreneurs who wish to expand into similar areas of business.
To avoid this, and to encourage and support entrepreneurs to develop their businesses, a decision was made to revise the rules and laws that regulate the competitiveness of monopolies. Revision of such regulations will protect SMEs and enable entrepreneurs to sell goods and offer services without being restricted to a system that makes them dependent on firms that hold the exclusive rights to international brands.
All companies, whether they are foreign or domestic, are asked to support entrepreneurs and SME owners through outsourcing exercises. As the capabilities of local SMEs grow and develop, the ability to outsource more operations will be amplified.
What is being done to ensure that SMEs make good use of the funds provided by the Al Raffd Fund?
AL FARSI: We assess a series of criteria to ensure the ethical use of the loan. The most important factors are the loan applicants themselves and their projects. We also look at the economic feasibility of the proposed project and evaluate the associated risks. The repayment period depends on the nature of the project and its credit risk. Finally, we disburse the money directly to the suppliers to guarantee responsible use of the funds.
You have reached the limit of premium articles you can view for free.
Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.
If you have already purchased this Report or have a website subscription, please login to continue.