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Standard Chartered and HSBC have leveraged their global presence and strong networks to change Oman's financial landscape over the last five decades. Both banks are currently disrupting the space with support for government policies and green bonds.
What is Standard Charter's strategy in Oman, and what role does it play in the Tanfeedh program?
HUSSAIN GHALIB AL YAFAI Standard Chartered has been operating in Oman for 51 years. Our strategy has evolved through the years to where we are currently assisting the government in meeting its financing requirements, especially after the decline in oil prices. We have been involved in the financing of every strategic public infrastructure project financing as well as budgetary deficit financing. We have also acted as transaction advisors on many projects. We have acted as advisor to and structuring bank on most of the independent water projects and independent power projects in the country. We have also been mandated on all of the government's bond and sukuk issuances. Moreover, we maintain a strong relationship with the World Bank, which enables us to attract other sources of international capital. We complement the government's strategic vision through direct financing support as well as supporting strategic GRE entities.
How has the global economic landscape impacted Oman's macroeconomic environment?
ANDREW LONG Globally, we are witnessing an economic slowdown. The current global situation has a direct impact on the Middle East because it affects oil prices. As such, meeting the KPIs of diversification strategies highlighted by Tanfeedh, becomes extremely vital for the long-term sustainability of Gulf economies. The Omani economy, in particular, has witnessed its debt-to-GDP ratio grow from 4.93% in 2014 to around 55% in 2019, with further expenditures on infrastructure putting pressure on the budget balance goal of the newly established Tawazun program. Despite this challenging national context, in 3Q2019, HSBC Bank Oman reported a 3.2% increase in net profit, driven primarily by 3% growth in revenues. Net trading income increased by 22.7% YoY. Through our wholesale banking business, we supported OCTAL to secure its USD625-million financing facility, one of the biggest private-sector financing deals in Oman in the last decade.
What is your perspective for the capital markets moving forward?
HGAY Oman has built an active borrowing curve in the international market, but locally, there has been gradual progress, with only a few issuances through sukuks and perpetual bonds, and modest engagement with local capital markets. The central bank is working extensively with the Development Bond issuance, and the Capital Market Authority, in conjunction with the Muscat Securities Market, is working on putting the right infrastructure in place to ensure that investors are comfortable, thus creating a market for investment, debt market, and liquidity. Now that the government is pushing for privatization, many companies will eventually be listed. This will add depth to the stock market and debt capital markets. Once you have this monetization happening locally, it is a win-win for everyone.
In 2020, Oman is set to enter a new economic cycle. Where are the main opportunities for the banking sector?
AL Today we can count on strong relationships with major family businesses, as well as a wide array of multinationals, with little exposure to industries such as the contracting one, which has been suffering the most from the recent liquidity crunch. Looking at the industry, there is a sizeable opportunity in the middle market, especially in some of the strategic sectors outlined by Tanfeedh, such as tourism, logistics, and the downstream segment. Agriculture and fishing still have to make more strides to gain attractiveness, just like mining, which is perhaps bound to witness some action with the new law. Among the other developments we are watching closely, there is the new PPP Law and the new target of privatizations which has overall taken a long time in the utilities segment, but that can soon involve sectors such as education and healthcare.
Where do major opportunities for impact investing lie in Oman?
HGAY International investors are allocating a significant portion of their portfolio into sustainable and green financing. We are a global leader in sustainable finance and are in the top-five banks globally with regards to issuing green bonds. We have handled several transactions in the bond market and sustainability-linked syndicated credit facilities, and we will do more of that in Oman in the future.
AL Sustainability plays a vital role in our banking operations, and companies must think about how to position their activities to meet environmental, social, and governance pillars. The future of investment definitely lies in this direction, and while instruments such as green bonds may not offer financial advantage today, soon they will. In the meantime, they offer a considerable reputation advantage.
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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.
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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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