September 20, 2018
Finance

Ripple effect of hidden trade hits Omans economy

Hidden trade is a serious problem in Omans labour market that needs to be addressed, according to Shahswar Al Balushi, CEO of Oman Society of Contractors, reported the Times of Oman. Hidden trade occurs when an Omani has a company, which he doesnt actually run, operate or finance, and an expat does and uses the commercial registration against a fee.

Al Balushi added that hidden trade is not just bad for individuals involved but for the economy of the country as well. First, it means there is no Omanisation. Second, there have been cases whereby the potential expat whos conducting business takes deposits for work to be done and runs away, with no mechanism of controlling the policy.

“It is a huge practice in Oman and we need to address the issue of hidden trade,” said Al Balushi. When he presented his paper to Tanfeedh as the leader of labour labs he tried to demonstrate hidden trade in the construction sector, which is the biggest employer in the country, employing approximately 750,000 people; 55,000 are Omanis and the remainder is made up of expats. On further analysis, medium and large companies employ half of the Sultantaes expat population, while small companies employ the other half.

“Out of the 55,000 Omanis, the medium and large companies employ 52,000 and the small companies employ only 3,000. So there is a distortion. Therefore, Omanisation in the sector is below eight per cent, but if you take the medium and large companies, Omanisation is 16 per cent,” he explained.

Al Balushi also emphasised the importance of quality and not quantity Omanisation. He added that in order to ensure quality and not quantity Omanisation, upskilling of middle management and top management needs to be introduced, and a balanced formula between jobseekers and the process of upscaling needs to be established, which will create a flow upwards. "People who are already in the work will get upscaled and those who are new fill in the lower gap. Over a period, we will see a natural flow of people going in and up. At the moment we are only trying to shove people in without any gaps, so companies dont know what to do with these people,” he said, as reported in the Times of Oman.

He also said that it is important to fix and achieve the right Omanisation target. The current Omanisation rate fixed for the construction sector is 30 per cent and Al Balushi and his team have been pushing to bring it down to 10 per cent, and steadily grow to 15 per cent by 2020 and then create different ways to achieve Omanisation, such as direct hire, training for employment.

The labour lab of Tanfeedh, the national programme for enhancing economic diversification has proposed 14 solutions for the labour lab, one of which includes an employment centre to match the needs and demand and supply of human capital. Currently an authority registers Omani manpower, but now the process needs to move from registering to supply and demand. Al Balushi added that the people that are registered are raw material; there needs to be a way to check if they need further process or are ready to go to the market. By this end to end, the private sector will say what what the market requires.

In addition, Ahmed Al Hooti, director of the economic wing of the Oman Chamber of Commerce and Industry, said there needed to be better streamlining of Omans economy when Tanfeedh comes into effect, adding that the Government and private sector, when they are thinking of the future, have to think altogether. “Today, the Government and other institutions are trying to change the rules and regulations to help the local and foreign investors to make it easy to invest in Oman. “We are trying to use our foreign relations in a way to help our economy. I believe this is the right time to keep talking about the change in these kinds of regulations. We are asking the Government in different locations and at different events and during different talks that we need to find change happening, not just that we talk and then wait for a long time for change to happen,” he said in the Times of Oman report.

Original Article

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