Attracting foreign investments to the country has always been a challenge and Oman now needs a new perspective to explore alternative methods to pull in international funds. Thirty five years after plans were announced to allow foreign companies to invest in Oman, limited efforts have been taken to move forward in that direction. The Sultanate will not keep producing oil and gas for a long time.
With limited output, crude oil productions have not crossed the million barrels per day threshold.
If Saudi Arabia, a super producer with the largest reserves in the world is being forced on its knees, how could Oman bank its economy on such unpredictability?
Rather than working around the edges, the only way forward is to finish what has been started by having more faith in foreign investments.
To start with, the government has to remove all the barriers and leave it open to international manufacturers.
The bureaucratic climate must evolve. The investors who are already here are attracted to the fact that Oman is politically stable.
But that is never enough. They have one question in their mind. Why should they invest their money in Oman and what kind of returns they should expect back?
They want to see legislative predictability and a single mindset.
For example, they see the ownership system in Oman non-competitive compared to other countries. The regulative environment is also another factor that challenges foreign cash flow into the country.
Foreign investors have no objection of recruiting Omanis but the country does not have enough supply of skilled workers. The government must not insist on imposing mandatory recruitment of local manpower to a high level. But above all, infrastructure is a major obstacle to bring in serious investors.
Oman has excellent connectivity in Muscat but not beyond the borders of the capital.
The other thing that has been working against business progress in the Sultanate is the technology.
Local companies do not have enough capital to invest in the state of art equipment. At the same time, the government is reluctant to give incentives to technological companies to make the country competitive. Latest technologies effectively link up local firms with foreign partners to transfer skills and raise productivity.
Not all international companies would come here with bags of cash.
Some can bring in the needed knowledge, skills and expertise and transfer them to the local business environment. For this category of investments, easy access of capital is important. At the moment, government funding is wholly reserved to Omani companies. Local banks are not big enough to lend multi-million investments and they are reluctant to do it, anyway.
Foreign companies that pulled out in the past had concerns on the protectionism of local firms.
For example, government owned organisations enjoy unlimited subsidies.
Foreign companies cannot compete in such business environment. Binding tariffs should be equally applied to all trading companies without any exceptions.
Government owned companies should not enjoy special privileges or incentives. Business protectionism makes local companies survive but the action does not benefit long-term economic viability of the country.
It restricts capital movement, limits business expansion and slows down employment.
Besides, Oman cannot anymore dig into its financial reserves to keep supporting state-owned companies now that fiscal deficits are rising. It makes sense to remove that burden by dismantling the protectionism regime.
The Sultanate cannot any more afford to sit and wait expecting the situation will improve. Oman needs to promote itself to the international markets in a different way to lure in investors.
Changing investments rules and tweaking on taxation laws are not enough. Global promotional campaigns are needed.
World-class activities planned the whole year like trade exhibitions and investment promotions at a global scale will put Oman in the world map.
Such activities turn the heads of investment heavyweights when a country has a full calendar of world-class events.
Oman Observer is now on the WhatsApp channel. Click here
