MUSCAT: Commercial organisations in the Sultanate must be nimble enough to weather crises of the kind that have left many economic sectors severely impacted by the coronavirus pandemic and associated economic downturn, according to a well-known Omani economist.
Dr Al-Mukhtar al Abri, Dean of the College of Economics and Political Science at Sultan Qaboos University, urged corporate firms to change their business model so they can adapt to potential economic shocks in the future.
“Businesses and commercial companies should modify their business model after the pandemic by making their structures leaner and more responsive to shocks, changing the investment pattern by relying on the rental of equipment and machinery, and reducing the number of permanent employees while using external employees for specific tasks or outsourcing them to another company (for example, packaging and delivery),” said the academician in comments published in the latest edition of Tawasul, the research publication of Sultan Qaboos University (SQU).
The academic was among a number of leading scholars and researchers at SQU who were invited to offer their perspectives on the impact of COVID-19 on social and economic life in the Sultanate. “The emerging COVID-19 crisis has had a severe impact on all aspects of development in the Sultanate,” Tawasul said in an introduction to its report. “Worldwide, consumer spending has declined, travel and tourism have been disrupted, and industry has slowed down due to movement restrictions. Economic activities and services such as transportation and shopping were also affected, which has led to a decrease in both consumption and demand.”
In the article, titled ‘Impact of COVID-19 on Development in Oman’, Dr Al Abri identified a number of economic sectors and activities in the Sultanate that bore the brunt of the pandemic. The list includes hospitality, transportation and warehousing, and wholesale and retail trade, particularly luxury and durable goods, he said.
The impact was notably severe for small businesses and the self-employed, said the Dean. Among the casualties are sectors that rely on face-to-face, direct interactions with customers, he noted. “They were affected by the decrease in internal demand and collapse of demand by tourists and business travellers, as a result of border closures,” he explained.
Dr Al Abri lauded the government’s swift response to the crisis, which included a package of measures to maintain financial stability, support the affected sectors and groups, and stimulate demand to prevent a prolonged economic recession. Commercial banks were also exhorted to defer the repayment of private sector loans for a period of six months to help support their recovery.
“The government has adopted some measures to assist small and medium-sized enterprises, including supporting the workforce, deferring payments (such as taxes, rent, utility payments, etc.), and providing interest-free loans from the Development Bank,” he further stated.
The economist also welcomed the government’s far-reaching efforts to address structural and legislative shortcomings designed to support the economy’s recovery over the long term.
“COVID-19 has demonstrated the importance of expanding strategic sectors, such as food, basic services, and information and technology to overcome long-term turmoil. The changes in the labor market brought about by the pandemic can also be used to reduce imbalances within it, increase the participation of the national workforce, and improve productivity. The pandemic’s repercussions also constitute an opportunity to accelerate structural reform programs, such as developing the private sector and strengthening its partnership with the public sector, as well as improving the effectiveness of government spending and support,” he added.
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