THE ART OF RUNNING A BUSINESS

Oman 2020 | CONSTRUCTION | INTERVIEW

Sarooj Construction Company has a tried-and-tested strategy for success: build strong relationships, and opportunities will come knocking.

Simon Karam
BIOGRAPHY

Simon Karam is founder of the Al-Taher Group of companies that includes Sarooj Construction Company, Synergy Petroleum's EPC contracting business, Electro Mechanics' MEP business, and marine contracting company Masirah International, among others. He is also a founder member of the Oman Society of Contractors, the Oman Society for Petroleum Services and the Omani Society of Water. He has been based in Oman for more than 45 years and became a naturalized Omani in 2013.

What is your reading of the market slowdown of the past four years, and how do you see the future of the contracting sector in Oman?
The economy suffered significantly as a result of the decline in oil prices, and construction companies were not immune to that. The growth rate is retracting, though it is not that bad because the boom of 2014, 2015, and 2016, when the price of oil was USD120 per barrel and attracted too many companies, which was unsustainable. As such, the market is currently correcting itself and adapting to the new situation. Looking toward the future, the construction of villas and homes in Oman will continue, even if they are done by small companies. Second, there are certain sectors in the country where construction is booming like never before, such as oil and gas, including the petrochemical sector. Huge infrastructure projects like the Duqm refinery, Sohar, and Liwa Plastics are ongoing. The third sector that will always continue to develop is power and water. In terms of power, there is clean energy, and there are projects around. There are also projects in water distribution. Unfortunately, contractors in other sectors are feeling the heat because there are no government projects. The budget for ministries was reduced by 15% in 2018, and there is no uniform distribution of work. Moving forward, all initiatives of Tanfeedh will come to plan. There are many projects now in the Salalah Free Zone and Sohar Free Zone. Madayn is also quite active, creating more industrial estates and expanding existing ones. The big contractors will benefit from this.

What main initiatives can businesses in Oman expect from a regulatory standpoint?
One great initiative that we hope will be launched soon is the classification of contractors. At present, the construction sector is in a mess. We have about 6,000 companies that have registered for construction. This figure is wrong because there are about 500-600 companies—1,000 maximum—that do the majority of the work, and the others disrupt the market. They undercut prices and fail to finish projects. The Oman Society of Contractors is planning to design a classification similar to ISO. A third party will inspect companies to determine if they have the resources and experience, the right systems, a financial expert, an HSC advisor, a quality manager, and so on in place. We want this classification to be accepted by all government agencies.

Why are the new set of laws that came up in 2019 and early 2020 revolutionary for Oman's business environment?
Oman today boasts five impressive laws and new authorities: Company Law, Foreign Investment Law, PPP Law, Privatization Law, and Bankruptcy Law. While the bureaucracy still lags, initiatives such as InvestEasy by the Ministry of Commerce and Industry have created a one-stop shop in an efficient way. Aside from covering mainly a regulatory role, the government is committed to spearheading digitalization.

What are your expectations for 2020?
On the macro level, there will not be much of a change compared to 2019 except in the Khazzan gas field. There is a great deal of interest from upstream operators around the world, such as Total, ENI, and other big players. In the corporate environment, people are going green, cutting costs, and becoming more efficient. SCC has a motto: We look after relationships, not projects. New projects will come as a result of our relationships. There was a tough but fair client with whom we worked last year, Majid Al Futtaim. It has acquired us, and now it will undertake any project we offer. We have at least 10 clients, and they work with us. We prefer to be transparent and lay all the cards on the table to build a relationship. Some people may do things differently; however, you must go that route to be successful globally.