Work without licence impacts national economy

Muscat: Individuals and companies doing business in the country without valid permission from various ministries and licence from the Chamber of Commerce and Industry (OCCI) are affecting the national economy in a big way and impacting the national planning and policy formation.


Officials and economic experts have urged to curb the menace of fictitious companies operating in the country to legalise their entity or to tie up with the already established companies failing of which legal actions should be initiated against them.


“Working without a licence implies any namesake company, with or without the expertise, carrying out jobs of similar companies which are registered with the OCCI”, said Dr Muhannad al Asfour, Head of the ‘Work without Licence Committee’ and member of the Labour Market Regulatory Committee at the OCCI.


“These companies are affecting our GDP in multiple ways”, he adds, “first, they are breaking the rules and laws of the country, secondly, they create unfair competition by taking away the jobs of legally registered companies, and thirdly but most importantly, they are evading taxes thus causing the coffer huge financial losses.”


Speaking to the Observer on the sidelines of the workshop organised by the OCCI on “Work without a licence” attended by experts and businessmen and stakeholders interested in organising the labour market in Oman, Dr Al Asfour pointed out that one of the most important problems faced by economic planners and economic decision makers is the difficulty of quantifying the phenomenon of practising without a licence and its impact on the national economy.


They observed that this lack of accurate information leads to the inability of the economic planners to develop effective economic plans that correspond to the ground reality. This leads to hidden trade and the migration of funds outside of the Sultanate, which impede the programmes of growth and development in society.


“If the shadow economy is some 20 to 30 percent of the GDP, then the government is losing an equivalent amount by way of taxes and other revenues by such (operating without a licence) practice”, says Dr. Abdul Salam Yahya, an economic expert at the OCCI.


“Although the problem or phenomenon of growing the volume of work without a license is one of the main problems that can exist in any economy, it may turn into a real economic problem because it leads to the growing size of shadow economy or the informal economy”, Dr Yahya added.


“The focus is slowly shifting from nabbing the illegally operating service providers to booking the clients who are the ultimate beneficiaries of lower prices that shoot up their profitability”, adds Dr Muhanned al Asfour.


“Unless and otherwise the takers are subjected to the law for enjoying the services of companies without licence, we won’t be able to control the service providers. Having said, such companies are strongly advised to legalise their operations or become part of an organisation that operates legally in the country”, he further said.


The workshop urged the competent authorities to initiate some steps, including educating all parties to stop assigning work to those who do not have a licence, and limiting the dealings with legally authorised parties. It also urged to work on organising a broad awareness seminar to discuss the points raised in this regard.


Accordingly, a national campaign to raise awareness about the negative effects of the phenomenon of work without a licence will be organised.


“The committee is working to identify the challenges facing the labour market regulation and its direct and indirect negative effects on the national economy. We are also working on the ways that can be followed to identify this phenomenon and work to eliminate it or reduce its presence to ensure improved labour market performance”, said Mohammed bin Hassan al Ansi, Chairman of the Labour Market Regulatory Commission at the OCCI.