Muscat: Oman’s economic prospects received a double vote of confidence as a billion dollar investment was announced as research showed more than 80 per cent of CEOs in the Sultanate are confident their businesses will grow.
Eighty one per cent of 25 leading CEOs interviewed from ten different sectors in the Oman CEO outlook survey expect their organisation to grow in the next three years, according to KPMG.
Watch: KPMG head of markets says Oman CEOs expect growth
More than two thirds of them also expected the sector they operate in to grow as well. The news came as Oman Oil announced a whopping investment of $1 billion to build various projects this year, according to a top-level official of the state-owned firm.
These projects include various upstream and downstream oil and gas projects across the country.
“We have a very hardworking set of indigenous population and nurturing them should be a major goal,” said Vikas Papriwal, Head of Markets at KPMG Lower Gulf, speaking to TimesTV’s Shruthi Nair.
“The standout point here is that we see that CEOs in Oman are quite optimistic about the industry and the economy as well,” he added.
The $1 billion investment is being planned by Oman’s state investment arm, Oman Oil Company, and its subsidiaries to build various projects this year, including various oil and gas projects across the country.
The major projects of Oman Oil Company (OOC), which are in different stages of planning and implementation, include Salalah LPG project, an ammonia project (expansion of Salalah Methanol unit), Duqm gas pipeline, Sohar-Wadi Al Jissi gas pipeline, a mega crude storage facility at Ras Al Markaz (near Duqm) and several other projects in Duqm free zone.
“Salalah LPG project has already been approved by the board and we are negotiating with banks for a financial closure in the next few weeks. We are also going to recommend to our board an ammonia project, which is a (downstream) expansion of Salalah Methanol project,” Isam Al Zadjali, chief executive officer of Oman Oil Company, told journalists on the sidelines of an event to sign a production sharing agreement for developing block 48 oil field.
He said that OOC is also building the Duqm gas pipeline and another gas pipeline between Sohar and Wadi Al Jissi. “Our plan is to build another crude oil storage facility in Ras Markaz,” he added.
Referring to the proposed projects in Duqm, Al Zadjali said that all projects planned by the state-owned company in coordination with Duqm authority are on schedule. The OOC in 2013 had said that the group is planning to invest a whopping $15 billion in Duqm in various projects. “But I have to admit that the financial situation has put little dent.”
Exactly half of the KPMG surveyed officials said that their company was in a process of slow growth with only a third of them saying their company was in recession.
Nearly 42 per cent of CEOs believe that new customers are the most important source of growth followed by new products (29 per cent) and new markets (25 per cent).
“The Tanfeedh initiative is going to drive growth in diversification of the Omani economy. Companies aligned to those sectors highlighted by the national diversification plan are going to see better than average growth in the next three years”, Papriwal said.
Most of the company bosses highlighted government regulations (56 per cent) as one of the most important factors that can impact growth followed by geopolitical challenges and rising interest rates.
“CEOs will be closely watching regulatory changes in the financial sector, tax reforms, PPP law and VATs. CEOs are also concerned about geopolitical changes. The third factor is rising interest rates which could present significant challenges to companies,” Ashok Hariharan, Head of Tax at KPMG Oman, said.
“The Tanfeedh programme is an excellent initiative where private sector is taking a proactive role in discussing where they can substitute to take on project spending,” Hariharan stated
More than two thirds of the CEOs expect their companies to transform substantially over the next three years, which would include employing disruptive technologies and changing the sectors or consumers they serve.
“Most CEOs are aware you need innovative transformation to overcome the challenges,” Hariharan added. The survey also found that three quarters of those surveyed are looking to increase their staffing levels by the end of the decade.
“Seventy-six per cent of the CEOs expect to increase their head count in the next three years. It is certainly a vote of confidence in the Omani economy,” said Paul Callaghan, Partner at KPMG Oman.
According to a survey by Gulf Talent, GCC job markets are going to recover in 2017 led by manufacturing and healthcare sectors.
Nearly half of the CEOs surveyed said new customers will be the major factor driving this predicted growth while 29 per cent said that new products will drive the market forward.
According to KPMG officials, 50 per cent of the CEOs surveyed represent companies with an annual revenue of less than $500million, while a quarter had annual revenues of between half a billion to one billion dollars. 23 per cent had annual revenues above one billion dollars.