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'Hidden trade' hits Oman in the pocket
April 16, 2018 | 10:10 PM
by Times News Service
Instead of generating wealth, the illegal practice is harming the Omani economy
 
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Muscat: Hidden trade is a serious problem in Oman’s labour market that needs to be addressed, according to the CEO of Oman Society of Contractors.

Expats who run companies which are illegally fronted by Omanis who play no active part in that business could be acting illegally and are harming the economy.

There are a number of ways in which hidden trade is being practised in Oman unlawfully. Giving an example, Shahswar Al Balushi explained, “If an Omani has a company, but actually he doesn’t run, operate or finance the company and the expat does and uses the commercial registration against a fee, that is hidden trade”.

Hidden trade is not just bad for individuals involved but for the economy of the country as well. “It affects the economy. Number one, there is no Omanisation levels there. Number two, there have been cases whereby the potential expat who’s doing the business takes deposits for work to be done and runs away. there is no mechanism of controlling the policy. There are a lot of issues associated with hidden trade”, he revealed.



“It is a huge practice in Oman and we need to address the issue of hidden trade,” said Shahswar 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.

“We employ around 750,000 people, 55,000 are Omanis, the rest are expats. When we analyse the expatriates, the medium and large companies employ half of them and the small companies employ the other half.

“The medium and large, out of the 55,000 Omanis, employ 52,000 and the small companies employ only 3,000. So there is a distortion. Therefore, Omanisation in the sector as a whole is below 8 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. “In order to ensure quality and not quantity Omanisation, we need to introduce upskilling of middle management and top management and create a balanced formula between jobseekers and the process of upscaling, it will create a flow upwards,” he said.

Al Balushi added: “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 don’t know what to do with these people”.

He also said that it is important to fix and achieve the right Omanisation target. For example, currently, the Omanisation rate fixed for the construction sector is 30 per cent. Al Balushi and his team have been pushing to bring it down to 10 per cent.

“The idea was to say the minimum needs to be 10 per cent and gradually 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 program for enhancing economic diversification has proposed 14 solutions for the labour lab, one of which includes the employment centre.

“The employment centre is matching the needs and demand and supply of human capital. At the moment we have an authority that registers Omani manpower. But now the process needs to move from registering to supply and demand”. He added: “The people we have registered are raw material and we need to check if they need further process or are ready to go to the market. By this end to end, the private sector will come in and say this is what we need so through this process we know what the market requires. At the moment we have a mismatch”.

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 Oman’s economy when Tanfeedh comes into effect.

“The government and private sector, when they are thinking of the future, they have to think altogether,” he said.

“If they are putting things in the right segment, then they are in a better position, and you can do that. Sometimes, you will face some problems and challenges, and then you can’t do that job on time. When you talk about tourism for example, it covers the unemployment in this sector, the projects in this sector, what we have as an alliance in the government, what project are given to the private sector, what we need from the government and private sector, so what we need is a clear picture.”

“If a person knows how to use this programme, he will succeed in it, so what we need is all these segments working together,” he added. “Maybe we need to do so some changes in rules and regulations for the foreign investors, but this is not such a big issue, because all you need to do is act on the change and then people will come and invest in the country.”

Hooti also added that a revision of policies to make it easier for investment to take place in Oman was under way.

“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,” he added.

“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.”

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