Payment backlogs costly for construction sector

SAMUEL KUTTY -

MUSCAT, Jan 9 -

Even as there are provisions in the 2017 Budget to clear dues of the contracting companies of the previous year, payment backlogs will continue to hinder the growth of construction sector in Oman as many small firms find the business unsustainable.

“Payments for old and present government projects continue to be challenging”, said Shahswar al Balushi, Chief Executive Officer of Oman Society of Contractors (OSC) on Monday.

According to him, the funds to be allocated this year are against the outstanding payments carried over from the previous year.

“This issue needs to be looked into”, he said while addressing the annual conference of the Society on Monday at Grand Millennium Hotel Muscat.

Shaikh Abdullah bin Nasser al Bakri, Minister of Manpower was the chief guest on the occasion.

Dr Hamed Hashim al Dhahab, Chairman of OSC, also appreciated the move by the government to release without further delay the overdue payments to the contractors.

“The funds will not directly benefit the construction industry, as all the projects are financed by banks; however, this will give us some breathing space, and allow us to get some additional benefits from banks,” he said.

Shahswar pointed out that the construction sector has a particularly long supply chain which includes many small and medium enterprises. Any delay in paying contractors will put jobs at risk all along the supply chain.

He expressed his optimism that the government is giving much importance to the development of construction sector. According to Shahswar, Oman’s construction sector is bound to achieve the stipulated Omanisation levels.

“The sector should start the current year with a 10-12 per cent Omanisation target, which will go up to 15 per cent by year 2020. All big firms that have achieved 12 per cent Omanisation are free to hire any number of expatriate employees. But those that have failed in reaching the 10 per cent target will not be able to access the ministry system to carry out any services”, he said.

With more opportunities for career and business in the private sector, more Omanis will be attracted to the sector, he said.

Earlier, Ashok Hariharan, Partner, KPMG Oman, speaking on Oman’s Budget 2017 opined that the government needs to accelerate the privatisation process during the current year by transferring its interests in its assets to the private sector.

Hariharan opined that the recent transfer of government shares to sovereign funds suggests to the fact that “the government is looking to maintain good levels of private investment to spur economic growth”.

The 2016 Tanfeedh programme is expected improve the investment climate and make it easier to do business and attract foreign and domestic investment.

“The outcome of the programme is expected to boost GDP by more than RO 1.7 billion and create an additional 30,000 jobs for Omani nationals”, he pointed out. While terming it as realistic in changing conditions, Hariharan said the budget has maintained development spending levels although it has limited public expenditure including recruitment.

The freeze on new government jobs will definitely help young Omanis to look for jobs in the private sector, he said. “Every year hundreds of young Omanis come out of colleges after graduation. This is a great opportunity for them to get employed in the private sector”, he added.

OEPPA ties up for publication

MUSCAT: Contractors, a quarterly publication was released during the annual conference of the Oman Society Contractors (OSC) on Monday.

Dr Hamed Hashim al Dhahab, Chairman of OSC handed a copy of the publication to Saif al Mahrouqi, the Acting CEO of Oman Establishment for Press, Publication and Advertising (OEPPA).

The publication, which is termed as the voice of Oman’s construction industry will be printed and published by OEPPA following an agreement

with OSC.