Low growth forecasts for the current year weighed somewhat on sentiment among executives interviewed for the 2019 edition of the Business Barometer: Oman CEO Survey carried out by Oxford Business Group (OBG), although a plurality remained upbeat about the sultanate’s prospects, reflecting the much more promising outlook that both the World Bank and IMF have indicated for 2020.
As part of its survey on the economy, the global research and advisory firm asked around 100 C-suite executives from across the sultanate’s industries a wide-ranging series of questions on a face-to-face basis aimed at gauging business sentiment. The results are now available to view in full on OBG’s Editors’ Blog.
Almost half (47 per cent) described their expectations of local business conditions as positive or very positive for the coming 12 months, down from 80 per cent in OBG’s December 2018 survey. Considerably more business leaders responded favourably to Oman’s current tax environment (business and personal), however, with 74 per cent describing it as competitive or very competitive on a global scale.
On a separate issue, more than one third (35 per cent) of those interviewed described Oman’s efforts to improve the ease of doing business as good, suggesting that the Royal Decrees issued in July approving new laws on foreign capital investment, privatisation, bankruptcy and public-private partnerships will be welcomed by the broader business community.
In a sign that business leaders are struggling with the extension of a ban on recruiting foreigners for key roles, 59 per cent of those surveyed cited reforms to labour laws as the legislative changes they felt would be most effective in promoting economic growth. Leadership (35 per cent) and engineering (22 per cent) ranked first and second respectively as the skills executives thought were most needed to support growth, in another indication of the challenges recruiters face stemming from the sultanate’s Omanisation quota and a longstanding preference among locals for working in the public sector.
Regional political volatility remains the top external event that interviewees believe could impact the local economy in the short to medium term beyond the movements in commodity prices, chosen by 64 per cent of interviewees, although there were also signs of the growing impact that China is having on the local economy. Demand in growth from the Asian giant was the response given by 12 per cent of executives to this question, ahead of protectionism in trade (10%).
Billy FitzHerbert, OBG’s Regional Editor for the Middle East, said that while Oman, and the region as a whole, was still recovering from the crash in oil prices five years ago, there were several bright spots to draw on.
“The imposition of fiscal reforms in the shape of the so-called sin tax that came into effect in June and the value-added tax, which is now likely to be implemented in 2020, bode well for government efforts to broaden revenue streams, and feed into the government’s wider goals of economic sustainability and a reduced reliance on hydrocarbons revenues,” he noted.
FitzHerbert said executives’ recognition of China’s growing role in Oman’s development reflected broader economic activity, most notably the investments being made by the Asian powerhouse under its Belt and Road Initiative.
Turning to business leaders’ evident frustration at some of the country’s labour laws, he acknowledged that the challenge presented both economic and social considerations. “The authorities are well aware of the need to better align public sector compensation with that of the private sector if this tendency is to be successfully curbed,” he said.