Incentives must for Omani SMEs to compete against ‘hidden trade’

Omani entrepreneurs, as well as owners of small and medium businesses (SMEs), should be given incentives to offset “unfair competition” from expatriates involved in ‘hidden trade’ practices, according to a well-known authority on SME development.

Shaikh Salah Hilal al Maawali (pictured), CEO – SME Development Fund, warned that small Omani businesses face “huge barriers” in a market skewed by expatriates running ‘shadow businesses’ that contribute little to the national economy.

He underlined in this regard the need for Omani entrepreneurs to be suitably incentivised to pursue their own self-employment opportunities and thereby ease the dependence on the government and private sectors for job creation.

He explained: “For example, an Omani university graduate will receive a minimum wage of around RO 900 per month in government service or RO 700 in private service. But if he chooses to start his own business, he should be able to earn at least RO 1000 per month for his effort.

But he faces unfair competition from expatriates operating hidden businesses.  Many in the latter category have no educational or professional qualifications, but use the services of a hidden (Omani) partner or sleeping partner to front the business. To all intents, the expatriate owns the business, pays no taxes and fails to provide a proper service to the nation (in the form of job creation). Yet, they compete with Omani university graduates running legitimately small businesses.”

Al Maawali made the comments in the context of the immense challenges being faced by Omani SMEs amid the lockdown ordered by the authorities to stem the spread of the novel coronavirus (COVID19).

“We cannot encourage entrepreneurship without suitable incentives to support Omani SMEs,” said the official.

The hidden trade menace is currently the subject of a draft legislation which is being discussed by various legislative agencies before it is enacted into law. Last month, the government revealed that the draft law had reached the State Council for deliberation.

“Hidden trade occurs when a company is owned on paper by an Omani national but, in truth, is run by someone else. Such a person does not create employment for the workers of this company and instead tells them to go out and find their own jobs, while still being contracted to this company. It is a process that sees the company owner reaping profit at the expense of the workers,” said the government in a statement issued on the occasion.