ACCOUNTING
In spite of 2020 headwinds, Oman is setting itself up for success with the implementation of laws and initiatives encouraging foreign investment.
Where does the Omani economy currently stand, and how does the current macroeconomic environment impact the challenges facing your clients?
AHMED AL ESRY Oman's 2020 budget is based on crude oil price of USD58 per barrel. 2020 started well with the average oil price at about USD64 in the first quarter. Unfortunately, the outbreak of COVID-19 and the oil price war is having a significant impact on the global economy, with crude oil prices dipping to unseen lows. The full extent of the impact of these twin pressures on the global economy is still uncertain. However, the initial projections of 3% growth for the global economy in 2020 prior to the pandemic and the oil price war are unlikely to be achieved. Liquidity is expected to be tight, and organizations will focus on cashflow management. We are likely to see cost optimizations and project deferrals should the situation persist.
KENNETH MCFARLANE In broad terms, Oman's economy is not likely to undergo peaks or troughs, and although the post-2014 low oil price environment was challenging, the economy did not witness a steep depression, continuing to grow in a steady fashion throughout 2019. Although the public sector has a large involvement in the whole spectrum of economic activity, the contribution by the private sector is growing, creating opportunities for tech businesses and SMEs. At the same time, the market is undergoing a generational change with regard to family businesses, as many of the original founders are either passing away or becoming quite elderly. Some of the second or third generations are not that interested in the family business, while others are energized to take their family business to the next level. These generations are highly educated people who are motivated to prove themselves and are open to innovation and business transformation.
What should Oman leverage on to attract investments, and what industries are set to benefit the most from these conditions?
AAE The government has taken a number of steps to improve the investment atmosphere in the country. A new Foreign Capital Investment Law is in place with the primary objective of attracting foreign investment. The new law lifts significant restrictions and allows for 100% foreign ownership. In addition, the Public Private Partnership Law aims to encourage private-sector participation in the economy, thereby reducing the financial burden on the government. Other regulations issued in order to attract foreign investment include privatization and bankruptcy laws. The government is also investing in technology through the automation of services in the form of e-governance. The ease of doing business is one of the KPIs in Vision 2040, with an ambition of being in the top 10 countries globally. With regards to local investors, the Ministry of Commerce and Industry is expected to release a negative list for which foreign investment shall be restricted. In addition, Oman is striving for strategic investors including investment in areas currently funded by the government in order to address budgetary imbalances. In view of this, there should not be significant impact on local investors as a result of the government's initiative to attract foreign investment.
KF Political and economic stability are some of the crucial factors that investors should look at when considering deploying capital in a foreign market, and Oman checks both boxes. These conditions position the country as an ideal destination for long-term financing projects, although some sectors, such as logistics, can immediately reap economic benefits if supported appropriately by the government. If the country can continue to leverage its diplomatic, neutral stance, it can strengthen its position as a safe haven in a region that features widespread instability. Moreover, the road from Ibri to Saudi Arabia is likely to reshape the regional logistics traffic. For investors who seek exposure to the region, Oman should be an attractive proposition, and the appetite will keep growing as the Sultanate strives to streamline procedures then by making it easier to do business and generate further economic growth.
ACCOUNTING
TABLE OF CONTENTS
Focus: Future foreign policy
Friends to all, enemy to none
In championing the late Sultan Qaboos' non-interference foreign policy, the new ruler of Oman, Sultan Haitham bin Tariq Al Said, is determined to work for friendship and peace, justice and harmony, and coexistence and positive constructive dialogue.
read articleInterview
David Kalife, CEO, Oman Oil Marketing Company (OOMCO)
Despite Oman's fuel market slowing down, OOMCO increased its sales volume of lubricants by 36% in 2019 and is constructing a greenfield bunker terminal at the Port of Duqm. The company has transformed while growing its expertise in Marketing and Digital.
read articleInterview
Azzan Al Busaidi, CEO, Ithraa
Azzan Al Busaidi is an expert in competitiveness and economic growth. He was appointed CEO of Ithraa in 2019 after 17 years spent covering managerial roles in the organization. Al Busaidi was previously Ithraa's director general of planning and studies and is a strong advocate of the potential of digitization. He holds an MBA from the University of Strathclyde and a BSc in Economics from Sultan Qaboos University.
read articleInterview
Qais bin Mohammed Al Yousef, Minister of Commerce, Industry & Investment Promotion & Former Chairman, Oman Chamber of Commerce and Industry
Private Omani companies will be able to benefit greatly from the Fourth Industrial Revolution by enhancing their local value-added strategies and upskilling the workforce.
read articleInterview
Tahir Bin Salim Bin Abdullah Al Amri, Executive President, Central Bank of Oman (CBO)
The Central Bank of Oman's job is to ensure there is adequate liquidity in the system and that banks remain robust and resilient to meet the credit requirements of all segments without undermining financial stability.
read articleB2B
Capital markets
CMA and MSM are supporting Vision 2040 by providing financing to government companies that intend to go public, financing expansion of existing and new IPOs, and widening the investors base in Oman by enhancing and developing the investment funds and insurance industries.
read articleInterview
Khalid Al Balushi, CEO, Khazaen Economic City
International investors and business owners can benefit from Khazaen Economic City's strategic location and its close proximity to the main gateways of the country to import, process, manufacture, distribute locally, and export their goods and services.
read articleFocus: Port 4.0
Destined for greatness
Investments in world-class infrastructure have generated huge rewards for Oman. The goal now is to leverage technology as a disruptive enabler, build human capacity across the public and private logistics sectors, and drive operational efficiencies to build an integrated logistics business environment that is benchmarked against the world's best.
read articleFocus: Gap in tourism services
All bases covered
An amalgamation of local companies and unique experiences in Oman has created an original flavor that is further differentiating Oman's tourism offering from other countries and in the process attracting scores of tourists from all across the world.
read articleB2B
Engineering design
Renardet Engineering Consultants and Design Unit Engineering are recognized experts in their fields. While the former is an international company strongly committed to excellent engineering consultancy services and environmental practices, the latter is an Oman-based team of architects and engineers that incorporates local culture and traditions.
read articleB2B
Construction materials
Oman's construction sector is facing a host of challenges, but Hempel Paints and Al Maha Ceramics are confident that a mix of forward-thinking business models, unique products, and strong government initiatives will help them through turbulent times and generate positive returns in the long run.
read articleInterview
Salim Razvi, CEO, Oman Academic Accreditation Authority (OAAA)
Focusing on higher education institutional accreditation, program accreditation, and the updating and maintaining of the Oman Qualifications Framework, OAAA is helping further advance higher education in the Sultanate.
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