New government projects in Oman must take into account economic realities

With banks taking a leading role in financing new government projects, business ventures on the anvil must reflect on the financial realities to serve the country in its moment of need.
Local banks are being syndicated and foreign financial institutions are stepping in to give the economy a shot in the arm by providing attractive packages for project financing. However, the government cannot afford to have standalone projects anymore that take months to plan and complete. Departments in charge of such projects, stretching from real estate to tourism and mining, must do it right the first time.
These projects must be designed to have a faster turnaround process. In the past, repetitive processes have killed off projects in their infancy. The longer they take to implement, the costlier they will prove to be. The balance of decision making must change and so the attitudes of those, who make such decisions. There is also growing concern that projects that are deemed important lack a competitive edge. The time lapse to make them fruitful is another challenge.
The good news at the moment is that though the government can no longer rely on its financial reserves, banks are willing to provide the funds as long as the mindset in the corridors of power is going to change for the better. Another positive for government’s projects is that interest rates at the moment are very low. It means borrowing money is easier and cheaper. This can work well for the government.
Financing is one thing, but to work with the private sector in an environment that is conducive for the economy has always been a major challenge. The fist that controls the business regulations must lose its grip to allow innovation.
If new projects underway are to succeed, there should not be any unpredictability. The government must learn from the past. It now needs to work with partners by protecting the interests of investors, creditors and contractors. It is not the time now to dictate rigorous business terms. Flexibility is the key because potential partners now have the choice of whom to strike a deal with.
Most of the countries in the world have their backs to the ropes under the current situation. Oman is no exception, and is not among the worse off. However, having said that, Oman has greater potential of steering its economy towards private entrepreneurship from its untapped natural resources.
But it needs a more refined process of change management. These processes must be on the fast track than they have ever been before. A notable example is the process of privatisation that has not lived up to its full potential. In 1996, the government kicked off its privatisation process when the Manah power project was developed on a build, operate, own, transfer (BOOT) basis by the United Power Company. However, the privatisation process has rarely caught up with other areas outside the power generation sector. Even in the electricity sector, the process is at a standstill for the moment. It shows how the government is reluctant to give up its hold on its assets. Oman Air’s private shareholding was sold back to government after the privatisation bid failed. It proves how the government shies away from effective business collaboration with the private sector.
If privatisation remains to be a complex issue in the last three decades, then the government can vigorously pursue partners to implement projects already identified in the industrial areas and free zones. Manufacturing and logistics projects which are still not implemented, may interest private partners if the government start looking for them. The reality of the current economic scenario favours the private sector. It is no longer the case companies have to queue up to beg the government to sign a partnership deal. Entrepreneurs need to be lured and convinced that certain businesses are beneficial if they partner with the State. In other words, the government must do the chasing and not the other way round.