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Oman’s blame game threatens economic progress 

Instead of waiting for contract awards, businesses must seek opportunities and be more innovative

Oman's blame game Alamy/Charles Stirling (Travel) via Reuters
Market shoppers in Oman. Retail is one sector that does not rely on government contracts, and it has potential to grow

Oman is mending its balance sheet and may be on course to regain its invest grade rating, but some people are not feeling happy.

The country’s privately owned companies are feeling deprived of lucrative government contracts. But Omani businesses must end the blame game, end the attacks on the government for a slowdown in their business and instead start using their initiative to expand. 

In 2022, the government awarded private companies projects worth $6.4 billion but last year granted only $3.3 billion, a contraction of about 50 percent. 

As the government retrenches, so it is being less generous with private sector collaborators. This year, the government plans to award $2.8 billion in projects to the private sector, $500 million lower than last year.



Companies that for many years have depended on these contracts are now feeling the pinch. The directors of private enterprises are blaming Oman’s government for their contractual woes.

The government is pushing back. Speakers at a recent economic seminar said Oman’s private sector must stop the blame game and take proactive measures instead.

They pointed out that the slow-down of contracts is not just confined to Oman but can be found in other Gulf countries.

The private sector should take advantage of local banks’ willingness to extend loans

What the private sector needs to understand is that the government regulates the economy and spurs development but it is up to the companies to shore up their own businesses.

Oman produces roughly one million barrels per day of crude oil. This has not stopped state revenues declining over the past decade by 38 percent, as oil prices plummeted from $118 per barrel in April 2014 to about $80 now.

The drop in revenues obviously has an effect on how and how much the state awards in contracts.

Private sector leaders must now accept that they must play a bigger role in economic development. Instead of waiting for contract awards, businesses must seek opportunities and be more innovative.

The long-term outlook for the private sector need not be gloomy as long as owners and managers shift their business models away from reliance on government. The private sector should take advantage of local banks’ willingness to extend corporate and industrial loans, and expand their operations into new areas.

They could, for example, start looking at investing outside Oman. Currently, fewer than 15 percent of Omani companies do business abroad, although there are robust economies in Asian countries such as China, India, Malaysia and Singapore where Oman has historical ties.   

Private companies need to play down the risk factors, too. When it comes to overseas, all that most Omani companies see is higher risk. They stick to their local experience which they view as offering lower risk.

Local companies do not even venture out into the region, where, thanks to geographical proximity, the costs and risks are lower.

The service sector is another area private companies can revisit. Official statistics show that the service sector in Oman has room to grow, while retail has not reached its full potential – and retail does not depend on government contracts. 

The pressures are beginning to show. Lower profitability over the past three years means that some local companies are only just surviving. Many business analysts fear the worst.

Unless owners and managers redesign their businesses on a different model, the coming five years do not look good for private companies.

To survive, Oman’s private sector must expand in other areas, stop the blame game and stop the reliance on government contracts.

Saleh Al-Shabainy is a journalist and lecturer, and CEO of AlSafa Press & Publishing

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