A number of government and private sector officials have lauded the Royal Directives of His Majesty Haitham bin Tarik for the formation of the Economic Committee as part of the mandate of the Supreme Committee tasked with managing the COVID-19 pandemic in the Sultanate.
Eng Sami bin Salim al Saheb, Director General of Industry, said: The formation of the committee comes at an opportune time when private sector businesses feel overwhelmed by challenges posed by the economic slowdown. The committee will help companies address problems such as high energy/electricity costs, increased cost of production and labour, trade protectionism, and ongoing economic uncertainty. This pandemic has led to the loss of jobs, cuts in salaries, economics, and social welfare. The committee will formulate plans to enable recovery of the economy, and introduce incentives to help companies mitigate the effects of this pandemic.
Eng Sami Al-Saheb urged local companies to look at sourcing their raw materials from within the region, given supply chain disruptions triggered by the pandemic. He said that adapting industrialisation to the “new normal” was likely to have impact on the economy and the society. This new normal has been imposed by the pandemic. Therefore, it is important to look into the post pandemic situation and adapt to this new normal. With the efforts of the committee and those who have interests involved with it at all levels in the Sultanate, it is now clear that this phase would pass and more flexible, comprehensive and sustainable manufacturing will start which will be able to face social and economic challenges which could be caused by any such pandemic in future.
Al-Saheb said that it would also be necessary to find solutions at the microeconomic level, particularly for small and medium enterprises. The Ministry of Commerce and Industry has noticed that the volume of supply and demand caused by the suspension of some economic activities was unprecedented. It required specific interventions of the committee and the concerned authorities to balance the demand and supply, accelerate the recovery of various sectors and help them to gradually return to the previous level which was before the crisis. This may require time and efforts.
Engineer Sami al Saheb said that the Ministry of Commerce and Industry would continue to simplify and accelerate the process of obtaining permits and approvals for new projects, particularly those required in medical industries. This will increase the supply of basic personal protective equipment (PPE) and medical items for the Omani health care supply chain.
In addition to this, the ministry will continue to encourage industries to participate in the production of basic commodities, such as personal protective equipment and other such items. Whereas, this is in line with the 2040 Manufacturing Strategy and the In-Country Value Initiative (ICV) across all sectors to develop health clusters in the Sultanate which can provide basic and advanced medical items to address the needs in Oman as well as to export in a longer period.
The ministry will also continue to support local industries to take advantage of the new opportunities provided by the “new economic situation.” He said that the new situation provided an opportunity to diversify products and transform to new ways of working. The ministry will increasingly look forward for more cooperation between manufacturers, which would ultimately change positions and supply chains in the future and provide new and safer ways of working.
Qais bin Mohammad al Yousef, Chairman of the board of Oman Chamber of Commerce and Industry (OCCI), said: “We have firm faith that this committee would help in dealing with the economic effects of the pandemic by formulating appropriate mechanisms to ensure speedy restoration of economic activities. This will reflect positively on all institutions of the private sector and will help in achieving the required economic growth rates. The health and economic issues are the highest priority and the Sultanate is heading towards recovery and coexistence with this pandemic.
It is expected that the economic committee will move to implement these remedies: the opening of remaining economic activities and markets along with abiding by preventive measures, formulation of a plan for reopening of air, sea and land corridors, the extension of work according to economic decisions taken by the Supreme Committee till the end of 2020 at least, extension of work according to the decision of the Central Bank of Oman and the incentives given to commercial banks for next two years till 2022 in addition to the incentives of banks in consultation with the Central bank of Oman for providing easy finances and required cash flow for the private sector organisations.
This can be either by postponing the instalments or restructuring of loans or providing loans on nominal rates to face the crisis together. These government organisations should be advised to pay dues to the companies, particularly to the small and medium enterprises, making mechanism to pay or ensure these dues are settled. This is particularly regarding the dues of 2019 which were yet to be paid. The Central Bank of Oman can give guidelines to the banks and financial organisations to not to demand additional guarantees as a result of the decrease in the value of assets by less than 133 per cent, and to keep the value of guarantees as they are at the end of 2019 and to maintain this evaluation until 2022 and exemptions from some government fees until the end of 2020 at least. It can also reconsider the electricity and water tariffs of commercial, tourist and industrial establishments for the next two years until 2022, taking the tariff to what it was before 2016 – for this period.
The committee should make procedures which include the approval of a comprehensive medium / long-term incentive plan which has financial packages, bank facilities, exemption periods, restructuring of bank loan periods, reducing interest rates, and encouraging investment through projects with ready permits with some investment incentives and directing investment funds and pension funds to increase their investments in local markets during the next five years. It should also develop a plan to support the overall demand to restore economic activities quickly. One of the options available in this regard is to give a boost to investment by starting implementation of some strategic projects on which economic activity revolves, or long-term residence for expatriates under specific terms and conditions related to investment or real estate in addition to working to find a package of tax incentives that include reducing the corporate income tax and government service fees for the next two years with no imposition of new taxes or fees until 2022.
Eng Said bin Nasir al Rashidi, Chief Executive Officer of the Omani Industrialists Association, said: The committee was working effectively in dealing with the economic implications of the Corona virus pandemic. It is making efforts to maintain economic strength of companies as it is a particularly important factor for private sector institutions so that they can continue to work particularly during these difficult circumstances being faced by the whole world. There are affected sectors which may not be able to withstand the crisis without the intervention and support of the concerned authorities.
The association was cooperating with the Ministry of Commerce and Industry on an ongoing basis. It has submitted proposals to the Ministry on what support can be provided to the industrial sector. It has urged the ministry to give support to the most affected and needy sectors on a priority basis. There is also continuous coordination to help industrialists to overcome some of the crises which are directly linked to the Coronavirus pandemic, such as dealing with workers’ problems and maintaining a safe working environment for all.
If we talk about the economy in general, we wish to see a comprehensive economic support package for those affected by the crisis. We can start identifying the affected sectors. At the present time those affected can be easily identified as they have suspended their work completely. The reality is that there are sectors that are highly affected due to the lack of director orders of closure.
Reducing of interest rates, broader exemptions and compensating some factories for their losses, particularly those who have committed to pay the salaries of their employees even during the crisis and a package to encourage exports and overcome some obstacles in front of exporters to neighboring countries and other such measures can help the economy in bouncing back, particularly in the industrial sector, to the pre-corona virus level.”
Murtadha bin Hasan Ali, Chairman of Genetco and an economic expert, said: “The supreme committee took many measures at the beginning of its work to address the health effects. In view of the seriousness of the economic implications, His Majesty the Sultan has issued directives to take certain steps to help the economy of the Sultanate of Oman, assist small and medium enterprises so that they can deal with the implications of the pandemic and beneficiaries of the loans of the Oman Development Bank and Al-Raffd Fund, according to certain terms and conditions decided by the committee.
I believe that the next logical step will probably deal with helping big companies. Some of these companies are beginning to suffer from many problems, including difficulty in paying salaries to their employees. He pointed out that the total salaries and wages paid by only 18 thousand companies from the total registered companies the number of which are about 190,000. These companies have paid about RO 175 million per month or about RO 2 billion per annum to the Omani workers. This huge amount is approximately equal to the total salaries and wages paid to all employees in the government in 2010. These companies have about 250,000 employees.
In addition to that, they pay more than RO 26 million to the Social Insurance Fund per month as part of their contribution to it. If those companies face any difficulties more their capabilities, and if a large number of employees are laid off, we all will face an increasing number of job seekers. They will be in addition to the existing number of unemployed people the number of whom increase annually. Then it will be more difficult to face the situation. ONA