The Small and Medium Enterprises (SME) sector is important in the economic diversification efforts of the Sultanate of Oman. The number of SMEs registered in the country has increased to 58,683 by the end of last September, compared to 46,577 by the end of same month in 2020, with an increase of 26 per cent, according to statistics issued by the National Center for Statistics and Information (NCSI). The total number of SMEs that obtained an entrepreneurship card reached more than 22,000 in August last, an increase of more than 53 per cent over the same period last year, according to statistics issued by Riyada.
SMEs, in particular, are subjected to severe pressures globally due to the coronavirus pandemic that swept the world in 2020 whose impact is still present. This requires packages of government interventions in the form of direct support, legislative reforms or stimulus initiatives to help them withstand and recover during the pandemic, to reduce the economic cost back on the sectors and to ensure that workers and activities are not affected by the crisis of the business sector in general.
The countries of the world hastened to adopt direct measures for economic recovery, aimed at protecting small and medium enterprises. The basic formula for such measures was financial support packages, emergency loans and payment to facilitate access to government support for small and medium companies. In addition to exemptions from some fees and deferring loan repayment, pushing towards enabling environments supportive of entrepreneurship and stimulating competitiveness, and directing the SME sector towards determinants of sustainability, forming alternative plans to face risks, and adapting work environments to adapt to the volatile situations created by the pandemic.
The Council of Ministers, headed by His Majesty Sultan Haitham bin Tarik, approved in March last an economic stimulus plan aimed at accelerating the pace of economic recovery for the various economic sectors from the pandemic, and achieving high growth rates as targeted by the Oman Vision 2040.
The plan was based on five main axes, including: incentives related to taxes and fees, improving the business and investment environment, supporting small and medium enterprises, and incentives for the labour and employment market. Besides, banking incentives aimed at supporting efforts to mitigate the effects of the repercussions of the Covid-19 crisis on the national economy, which focus on banking aspect that supports the growth and recovery of economic activities, promoting and attracting foreign investment, and sustaining existing local investments and projects.
SMEs have had a share of measures, both with regard to reducing the income tax rate from 15% to 12% for the tax years 2020 and 2021, continuing to postpone their loan instalments due to the Al-Rafd Fund until the end of December 2021, and limiting assigning government procurement tenders whose value does not exceed RO 10,000 to small and medium enterprises whose owners have a Riyada card.
For further support, the Oman Investment Authority also launched a package of measures to support SMEs, including allocating purchases of no more than RO10,000 to institutions that have a Riyada card, allocating 10% of purchases in the companies affiliated with the authority to SMEs, exempting them from bidding fees and requirements of the initial guarantee of contracts and tenders, payment of the financial due within 15 days after completing the work, giving a rate of 10% as a preference to SMEs in purchases and contracts whose value is estimated between RO10,000-RO 50,000 in materials and services.
This package comes within the tenders and procurement policy, one of the policies that were formulated in “Rawabet” programme for the companies affiliated to the Authority.