On factors affecting Oman’s evolving economy and investment environment
How would you assess the government’s privatisation initiatives, and what role have public-private partnerships (PPPs) played in these?
MAQBOOL AL SALEH: These have been very good initiatives, as governments are meant to govern and not manage private sector business enterprises. Unfortunately, the pace of privatisation has not been as fast as one could hope for. Some of the infrastructure projects, for example, require a sizeable monetary investment. Therefore, the private sector alone cannot undertake such projects. In these areas, PPPs are incredibly useful tools, and this has been recognised by the National Programme for Enhancing Economic Diversification, or Tanfeedh. Here again, an acceleration in pace would benefit the economy.
With regard to improving the ease of doing business in Oman, which measures have had the largest impact?
AL SALEH: Oman has been slowly climbing up in the ease of doing business rankings. The recent royal decrees issued by Sultan Qaboos bin Said Al Said provide a much-needed, introduction of the rules and regulations to improve the ease of doing business in Oman. However, further progress is needed as a number of the new laws have introduced difficulties for businesses. The government has since realised the negative effects of such measures and is taking action. However, what an overseas investor looks for is stability and transparency in government policies so that they can make informed investment decisions. There should be an assurance that the new policies being introduced will be in place for a reasonable length of time. This is essential in attracting foreign direct investment.
In what ways can the government support the growth of small and medium-sized enterprises (SMEs)?
AL SALEH: Having a reasonably sized middle class is key to any economy because it propels domestic consumption. Similarly, SMEs are also very important as they provide an avenue for employees to utilise their entrepreneurial skills. By definition, SMEs are of modest size and pursue projects that large enterprises would generally not be interested in. Overall, this model is beneficial to all the participants in a community and economy.
The government has taken several steps to develop SMEs. For example, banks are required to reserve a percentage of their total lending portfolio for SMEs – although banks have yet to achieve this. Additionally, the government set up the Al Raffd Fund and Sharakah initiative to support SMEs and entrepreneurs financially. The Oman Development Bank also assists SMEs in setting up businesses. Having a more clearly communicated framework for SMEs, as well as mentoring for potential entrepreneurs, would also help SME efforts. While this is happening to some extent, more could be done.
What are the main challenges in finding qualified human resources and hiring local talent?
AL SALEH: Entrepreneurs in Oman would prefer to hire local talent as opposed to expatriates; however, a number of factors prevent this, including a lack of local skill sets and the high cost associated with hiring nationals. For Omanis to be more successful in finding employment, the government should provide tailor-made education to help them acquire the skills that better match the private job market. A lot of the time, we find Omanis that have what might be considered an appropriate education qualification, but they don’t have the practical skills and job experience that a foreigner with a similar qualification can bring. As has been stated in many forums, the government and Tanfeedh should also allow Omani businessmen to hire from abroad until local workers are at the same or a comparable level.
With regard to cost, while minimum wages are common in many countries, the mandatory wage set in Oman has created a large disparity between foreign and local workers, even if one assumes that the productivity and the work culture of both are identical. There should be more emphasis on vocational training to prepare citizens to take on jobs that are available in the country.