MUSCAT, SEPT 29 – Expatriates make up nearly 45 per cent of Oman’s total population. Together, they remit around a staggering RO 4 billion every year — representing nearly a sixth of Oman’s GDP — to their home countries. While a significant chunk of this goes into providing necessities to families in their home countries, a considerable amount is invested in various other asset classes like equities, bonds and real estate. The Omani economy gains nothing tangible from this arrangement.
The outflow is so significant that the government studied the option of taxing these remittances before shelving the idea entirely as negative consequences of such a move would outweigh its benefits.
It’s a similar in other GCC countries as well. With overwhelming expat numbers and no hopes for long-term residency, it is natural for expats to build their futures where they see a future and therefore high remittances.
While the Omani government has pushed lucrative deals in the free zones of Duqm and Suhar along with the option of real estate investment into the ITCs, such high-value financial instruments with constrained liquidity are not an option for the middle-class expats who make up a notable segment of the foreign population.
There is an option for smaller investments which has been struggling to attract the attention of the expats in the country, not due to the low rate of returns but lack of awareness. Anyone watching the MSM index for the past few years can testify of its low volume of trades. Statistics show that trades have fallen from nearly half a million in 2013 to below 200,000 in 2017. Even sectors which have historically done well at listing are unable to sustain the low interest.
The challenge is liquidity. Oman, like other hydrocarbon-based economies, has witnessed liquidity being squeezed since oil prices collapsed in late 2014.
What can be done? Simple steps first, the Omani investment market must be promoted to the middle-class expat community. Either in social clubs or advertisements at expat events, the message of the Sultanate being an investment haven needs to reach the resident expat population.
With expats making up 85 per cent of the private sector workforce, listed companies shouldn’t find it hard to encourage employees to invest in their own companies and incentivising them financially or through other miscellaneous ways. They can also provide these stocks as a remuneration option. This may also increase the sense of belonging to the organisation among employees, helping the company to retain useful talent.
Moreover, listed companies at the MSM are usually known to give attractive dividends that can rival returns from other asset classes. If expats see growth in their investments, the less volatile Omani markets may become a preferred alternative for their family investments back home.
GCC countries are actively looking at expat investment power to provide the much-needed economic stimulus. For Oman, although it comes with regulatory challenges, better investment models for expat investors are warranted to transform the Omani economy and leverage its attractive geopolitical stability to actively promote itself.
Syed Haitham Hasan
(The writer may be contacted at: firstname.lastname@example.org / @SyedHaitham)