OPPORTUNITIES GALORE

Oman 2017 | FINANCE | INTERVIEW

TBY talks to HE Abdullah Salim Abdullah Al Salmi, Executive President of the Capital Market Authority (CMA), on encouraging a stronger insurance industry, working to attract PPPs, and upcoming projects.

HE Abdullah Salim Abdullah Al Salmi
BIOGRAPHY
HE Abdullah Salim Abdullah Al Salmi was appointed Executive President of the CMA in 2012. He had been the executive vice president of CPA since 1999. Earlier, HE Al Salmi held several roles in the Ministry of Commerce & Industry, including Director of company affairs department, the Secretary of Commercial Registration, and the Director of internal trade department. He is the founding member and board member of the German University of Technology in Oman (GUtech) and also served as chairman of the board of Oman Investment Corporation SAOC from 2005 to 2010 and chairman of the Muscat Securities Market between 2002 and 2008.

From a capital market perspective, what was the impetus behind the mandate requiring all insurance companies in Oman to list publicly by 2017?

First, we want to have big players and well-capitalized insurance companies. We want these companies to be able to underwrite certain risks and to keep these risks in Oman and depend less on reinsurance. We are trying to have stronger insurance entities and to encourage consolidation in the industry. Secondly, we want to see better corporate governance and transparency in the industry. In addition to market pressures, shareholder pressure can force companies to be more efficient, transparent, and reliable.

The CMA recently ruled to restrict the amount of non-auditing services of audit firms. What does this move accomplish and how does it improve capital markets?

External auditors play an important role for publicly listed companies of showing the shareholders and all stakeholders the financial position of the company at a certain period of time. We want auditors to focus on this work, rather than diversifying their attention into other businesses within a company. This also eliminates any potential conflicts of interest. We have not blocked all services, just those that conflict with them being the financial auditor of a company. This is the norm and we have conducted considerable due diligence. We are trying to introduce the best and globally recognized practices, and while auditors are prohibited from providing other services to one client, they are not prohibited from providing them to others, such as companies they are not auditing. It dove-tails with the new Corporate Governance Code, which was issued in 2015 and came into force in July.

How can PPPs help create a more favorable capital market environment in Oman?

For the past 45 years, the government has been doing a great deal. But, it has done its part, and now it is time for PPP arrangements. Outsourcing these activities would certainly help in the efforts to diversify the economy and bring in new sectors. It will also help the private sector and the economy grow, as well as the financial sector and the capital market. Oman began by implementing extensive PPPs in power generation, which appears to have been successful. For example, in the 1980s when the government was responsible for power generation and transmission, the cost of electricity was very high. With each PPP project, costs for consumers came down and are now a fraction. It is a successful model and this success in the power sector can definitely be replicated in other sectors.

What is your outlook for the CMA for the next 12 months?

Being the regulator of the capital markets and the insurance sector, our purpose is to ensure that these sectors are working within the laws and regulations, as well as functioning and properly integrated with the international economy and to ensure appropriate rules and regulations are helping, encouraging, and stimulating the sectors. In the next 12 months, we will work toward achieving these goals, reviewing and updating the regulations, and trying to help the market participants in these two sectors develop new ideas. In addition, we have started working on insurance for the agricultural sector, which is outlined in the five-year plan. We are designing new regulations that will facilitate the growth of investment in agriculture, including farming and fisheries, by using insurance as a means for its propagation and development. Another project we have already started working on is revamping the role of securities and derivatives. Health insurance is another area that we work to develop, because it is an area that is growing around 30% annually. My advice to investors is for them to come to Oman. We have promising free zones, especially in heavy industry, chemical industry, and logistics. There are opportunities available in Duqm, Sohar, and other areas. The government is already undertaking huge investments in state-of-the-art infrastructure and it is time for investors to come and benefit.