Clampdown on ‘clandestine' trade practices

People have suffered for decades from clandestine trade at the economic, social, financial, and security levels. The Omani circles particularly those involved in business have been severely affected by this and are still suffering from clandestine trade.

The Ministry of Commerce, Industry, and Investment Promotion issued a Ministerial Resolution No 54/2023 to combat clandestine trade and to impose deterrent penalties on both sides of this tainted equation, the party involved in hidden trade and the party which covers up for it. This comes within the scope of attempts to put an end to this phenomenon and its negative effects on individuals and society after finalising the legislative and economic system that permits foreigners to participate in commercial activities other than the forbidden ones. As a result, international investors have no choice but to invest in line with economic systems that motivate and encourage all the serious and committed individuals.

This necessitates everyone's cooperation in order to put an end to this phenomenon and the ensuring economic distortions and imbalances in the labour market, as well as unequal competition among entrepreneurs by means of enormous cash transfers worth billions of rials per year, in addition to tax evasion and other problems.

The decision to battle clandestine trade has undoubtedly arose from a desire to rid the national economy and society of a thorny economic quandary that has been causing bitter controversy for many years, as well as extensive demands from all walks of society to restrict, abolish, and uproot these practices.

Nevertheless, the ministerial order was issued to revive the hopes and convert them into a visible reality on the ground. The decision was made to reaffirm that there are alternatives that may improve the country's economic environment in a positive way when all parties, citizens, and residents work together to avoid the damage that this troubling issue does to the state and society alike.

The decision, as well as the precise and obvious treatments therein, will have far-reaching echoes on the society, particularly the business, financial and economic communities. This decision is also a positive step towards treating the scourges and woes caused by this intractable plague.

The effects of clandestine trade on the national economy are severe and complex, including commercial fraud and foreign transfers of funds worth RO 5 billion per year, the majority of which are the result of clandestine trade practices and excess profits, as well as capital migration abroad, monopoly of expatriate workers in some economic sectors, and the formation of illegal associations and unfair competition with entrepreneurs and small and medium enterprises. Clandestine trade also causes problems such as tax evasion to the government, in addition to the negative effects it has on monetary policies and pressures to deplete foreign currencies, not to mention the social effects and negative impacts that every job-seeker suffers from.

The decision empowers the ministry to impose one of the penalties, including striking off the activity from the commercial register, an administrative fine of RO 5,000, or an administrative fine of RO 10,000 if the violation is committed for a second time, with the activity suspended for three months, or an administrative fine of RO 15,000 if the violation is committed for the third time. If the violation is committed for the third time, the activity shall be struck off from the commercial register and cannot be re-registered until one year.

The decision emphasised that the legal person is jointly liable for the penalty imposed if the infringement was committed by one of his workers in the legal person's name or on his behalf.

Nonetheless, if the party involved in the clandestine trade or the party covering up for it rushed to inform about the facts of its occurrence, the Ministry of Commerce, Industry, and Investment Promotion may reduce or overturn the penalties set for the violation. This means the purpose of the decision is not to impose fines as much as it aims to halt the clandestine trade in any manner because of the catastrophes it caused, which had many repercussions.

These deterrent penalties is the last resort after all the attempts to treat this plague at the educational, legal, and security levels have been exhausted.

Of course, efforts to combat clandestine trade shall continue with cooperation from all elements, perhaps the most important of which is the citizen himself. The citizen must change the conditions at his institution to his own benefit and the benefit of the homeland as a whole. Also, he should engage in the economic activities himself.

We hope that our efforts will be rewarded with success in addressing one of the most complex economic issues confronting our country, and that these efforts will broaden the horizons for proper commercial practices consistent with the country's regulations, and which benefit from the available investment climate in accordance with the applicable controls. If foreigners truly want to invest, the door is now wide open, since there are no serious hurdles to their doing so.