‘Private sector should be motor of Oman’s economy’

Conrad Prabhu –
Muscat, JAN 28 –
An expert at the Diwan of Royal Court has called for a “rebalancing” of the relationship between the private sector and the Omani government, which he characterised as fraught with “miscomprehensions” on both sides.
Dr Julio C Saavedra, Senior Policy Adviser at the Office of the Adviser for Studies and Research at the Diwan, stressed the need for the private sector to be suitably empowered and strengthened in order to fulfil its role as the motor of the Omani economy.
Speaking on the ‘Role of the Private Sector in Achieving Oman’s 2040 Vision’ here yesterday, Dr Saavedra said the time has come for the private sector to reduce its excessive dependence on the government for business and contracting opportunities.
“The private sector built the (nation’s) infrastructure, but always as a contractor of the government,” the expert said, noting that this model has been embraced by many economists because it has worked wonders, particularly in countries blessed with wise leaderships.
But he warned that the model has some limitations. “There comes a moment when the government cannot be the sole engine of the economy of a country. You can create only so much infrastructure. At some point you need to extract value out of it. That is the point where the private sector has to take over,” he stressed.
Besides, this model characteristic of the private-government sector relationship comes with “some side effects” as well, he said. “For example, the private in Oman is very dependent on the government, while the government, for its part, has become very involved in economic activity. But despite decades working side by side, a lot of miscomprehensions have been detected between the private and government sectors.”
Another pitfall from this lopsided relationship, said Dr Saavedra, pertains to the consequences to the private sector during a fiscal crunch. “The private sector is dependent on the government, as well as State Owned Enterprises (SOEs) for procurement, investment and business in general, and most importantly, for payments as well. Thus, when the government encounters a financial squeeze and has to delay payments, the private sector suffers as well.”
In the upshot, the role of the private sector in driving the economy was being emasculated, he noted. “This dependence on the government is so great that — if you remove from the picture all the companies that have a heavy dependence on the government, there is not much left but traders and small companies, with some notable exceptions like Omani multinational companies and some others. Traders, by definition, do not create much added value. That leaves us with a private sector that is a bit weaker than it could be in terms of creating value.”
In his address, Dr Saavedra identified young Omanis as key to Oman’s Vision 2040 goals. “Young people bring energy, vigour and ideas to any economy,” he said. “The great majority of young people — about 30,000 to 50,000 entering the labour market every year — need to be employed mostly in the private sector. We need to give these young people a sense of purpose and meaningful employment as well. This means the youth have to become the focal point of economic and social policy making in Oman for the next 10-20-40 years,” he said.