VOICES FROM THE SECTOR: FINANCE
How do Pak Oman's operations in Oman differ from those in Pakistan?
Pak Oman was set up for investment and corporate banking in Pakistan, where we are the largest DFI and a highly profitable institution. We do not have any direct investment or credit exposure in Oman but offer advisory services for investors who need help with setting up their business and fundraising.
How has the government encouraged SME growth?
The government has a number of institutions that provide financing and mentoring to SMEs, such as the Public Authority for SME Development (Riyada) and the Oman Development Bank (ODB). They have achieved a lot in terms of supporting smaller firms here. Now, it is up to SMEs to capitalize on the support provided by the government, become more innovative, and find their niche.
Can you elaborate on the investment strategy of Fincorp's two funds?
We manage investments for various investors, including pension funds, retail, HNIs, corporations, and government entities across the GCC and international markets. We have two flagship funds with mandates to invest in the GCC markets: Fincorp Al Amal Fund and Majan Capital Fund. The main difference between these two are their investment policies. Both invest in the same markets and are benchmarked with the S&P GCC composite indices. Fincorp also compares performance of its funds with those of competitors. Despite their different investment guidelines, the objective of both is capital appreciation and wealth preservation.
How do you determine the composition of each fund?
Both funds have their own separate investor committees that review the investment performance and monitor the funds on a quarterly basis. Along with the fund investment team, they discuss the exposure to each investment market, so that the composition optimally captures each GCC market's growth potential.
What sectors of the economy does Nawa Investment target?
Since the introduction of Tanfeedh, we have seen the government's new focus on PPPs. We utilized the experience of the team we had on board and decided to play a role where we can benefit the government. One of our first focuses was on real estate investment trusts (REITs). Here, we worked with the authorities to introduce new laws and regulations and potential challenges.
What have been your biggest challenges since you started operations?
As a company building itself up from scratch, there is a great deal of additional work to do, such as getting approvals and licenses, as well as finding partners. To get the market recognition we want is challenging, because when we go to investors, we are just a new company, compared to larger, experienced ones.
How does Muscat Finance Company help support the SME sector in Oman?
Muscat Finance was established in 1987 and was the first leasing company and firm to open a factoring business in Oman. The government has embarked on a couple of initiatives to promote SMEs, and Muscat Finance has worked hand-in-hand with these policies and expanded its financing and business support to SMEs. The slogan of the company, “Enabling Dreams,” fits well with how we are working to help the youth and new companies. Today, we go beyond just financing and try to help promote SMEs and see how we can work together to improve their performance. One of the areas we look into is making sure our clients have excellent audits and manage their money well. Often people will have a great business idea, but if they do not manage their affairs and finances properly in terms of cash flow, they will not succeed.
What are Al Omaniya's target lending sectors?
Our focus and direction have certainly changed in the last four years, during which time we have redefined our business and made a strategic change. We have moved into the oil and gas sector, which continues to be robust and profitable with stable cash flows. We also moved into large-scale retail, healthcare, tourism, hotels, and education, our new areas of focus.
Why do companies borrow from non-banking financial institutions rather than commercial banks?
Money lending is basically a commodity business. Since branding a commodity is extremely difficult, in a business like this the most important unique selling proposition is the level of quality and services.
How has RSA's IPO in Oman changed your strategy or operating structure going forward?
Every local and new insurance company that enters Oman is required to float shares on the market. The IPO has not materially changed our strategy. All the insurance IPOs bring depth to the Muscat Securities Market (MSM) and a more mature approach to governance and transparency. There are spin-off benefits to having more public companies. The fact that we were more oversubscribed than any other IPO and that our share price has responded positively suggests that everything has been great thus far.
What are the benefits of operating Al Ahlia Insurance in Oman under the global arm of RSA?
Whilst it is valuable to leverage the experience of RSA, an insurance company that is 310 years old, we have been successful in Oman since the early 1970s because we have leaned upon the experience not just of RSA but also of our local partners and shareholders. Over its history, RSA has and continues to build up certain methodologies and techniques that we can deploy locally. For example, we monitor portfolios or assess client's commercial risks the way it is done in Scandinavia or North America. There is a shared expertise in underwriting that we can leverage.
Can you give us an overview of the company?
The New India Assurance Company is a public sector general insurance company owned by the government of India that operates in India and 28 countries across five continents. The market leader in India's non-life sector for 45 years in a row, it has a strong capital base, stable profitability, and the highest degree of financial strength to honor its policyholders' obligations. It is at the forefront of devising a unique and vast new range of insurance products and services. Throughout our history we have been consciously endeavoring to ensure that insurance protection reaches the doorstep of every customer with whom we have started a portal. We are also in the process of opening new direct branches and sub-agency operations in unrepresented areas.
What is New India's strategy within Oman to reach more rural markets?
We have been consciously endeavoring to ensure that insurance protection reaches the doorstep of customers and have started customer portals. We are also in the process of opening new direct branches and sub agency operations in unrepresented areas. As per the government's directives, we are appointing more locals in our workforce and training them.
What will be the biggest changes in your next five-year plan?
We are in the final stage or two years of our second phase of the strategic plan, which is in line with Oman's 2020 Vision. We are putting the plan together for the next strategy and will emphasise extending social insurance coverage, investment, and quality service. The new plan will allow us to further automate almost all of our processes, which include registration, collection contribution, investment, and disbursement in the form of pensions and other expenses. We also introduced data linking integration with most other government organizations and banks to speed up the process and make our records more accurate. Now, with the click of a button, we can obtain the data directly from the database of several ministries.
How do you balance a digital transition with maintaining a physical presence for your customers?
Change is always difficult, especially in this region, where the human touch is extremely important. We do not plan to completely do away with face-to-face interactions with our customers because there is no digital interaction that can completely replace a handshake.
How will you allocate the capital raised from your recent IPO?
Our plan to increase capital has been an inherent element of Vision's growth path. It also coincided with the change in the law requiring the raising of capital. The issue is the company's aspirations, and we want to grow as an institution over time and see our retention levels gradually increase. To say exactly where the USD12.99 million has gone is tricky; however, it fair to say that there has been organic growth, the network has expanded, there is more investment in technology and people, and our lines of business and solutions have expanded.
Will you offer insurance plans for the agriculture market?
One of the main things for agricultural crop insurance is the availability of a strong farmers cooperative society. Crop insurance policies also fall back on historic data about the weather, crop productions, and things such as locust and insect attacks and their historic impact on yields, data that is facilitated by a strong cooperative structure. We are, however, geared to offer things like agriculture and credit insurance, though data collection is still a challenge, and the nature of the profile of the risks is such that the underwriting requires dependable data before one can commit capital to provide cover for these situations.
VOICES FROM THE SECTOR: FINANCE
TABLE OF CONTENTS
Interview
Nasima Al Balushi , Director General - Export Development, Ithraa
Ithraa is the best example that Oman is open for business, ready to provide strong support to foreign and local firms looking to get involved in the domestic market, as well as target markets in the region and beyond.
read articleFocus: Vision 2020-2040
Wrapping up Vision 2020, solidifying Vision 2040
A diverse set of sound principles first established in 1995 to diversify the economy and double real income in 25 years, Oman's Vision 2020, despite its limited achievements, is paving the way for further and bolder reforms to be attempted under Vision 2040.
read article
