The COVID-19 side effect in Oman

Muscat: As the COVID-19 pandemic and global fall in oil prices start to impact the economy, Oman could soon feel the adverse impact of more than 160,000 expatriates leaving the country this year.
Expats leaving the country take away with them their skills, and the money they spend locally, which may hamper future growth, say economists.
According to data from the National Centre for Statistics and Information (NCSI), there were 1,658,111 expatriates in Oman in January. That number went down to 1,497,511 at the end of July, which means 160,600 foreigners left in a span of just seven months.
The construction sector was the worst affected by the exit of so many expats, which saw more than 70,000 workers leave, followed by the automobile and service sectors, which lost about 22,000.
The food and hospitality sector also lost more than 9,500 foreign employees. About 25,000 workers left Oman’s agriculture, forestry and fishing industries.
Impact on spending cycle
Dr Venkat Ram Thumiki, an assistant professor at the Faculty of Business and Economics at the Department of Management and Law at the Modern College of Business and Science, co-wrote a paper on the economic impact of COVID-19 in Oman, with his colleague Dr Hesham Magd. He said that so many expats leaving would impact the cycle of spending in the country.
Economists say that there will be a huge vacuum in society when so many expats leave the country. “From landlords, to grocery stores, textile shops, restaurants and taxi drivers everyone feels the pinch,” an economist said.
Anvwar Al Balushi, the chairman of Anvwar Asian Investment, said that so many expats leaving would definitely impact the spending that went into the economy, but added that there were enough skilled Omanis to take over the roles of the expats leaving the country. “Yes, there will be a downtrend in the economy with regard to vacant real estate, low rents and less spending by the expatriates but at present this is a worldwide phenomenon and not Oman specific only,” he explained. “2020 has been a real test and full of challenges, and we look forward to a better and successful 2021.”
Dr Venkat Ram Thumiki went on to say, “Firstly, when so many workers leave the country, their jobs will have to be done by others, who might not have the right skill to do these. “This will lead to lower quality of work, which in turn will impact the bottom line, and the revenue a company receives. After all, the main source of income for a company is from its sales. The money earned by the company and its workers goes into the economic cycle, where it would multiply, but right now, that is not happening, because no one is in a mood to spend.”
“Corporates are unwilling to spend because of the current situation, and consumers will not spend on anything more than basic goods. Spending on automobiles, real estate and luxury goods has fallen now. It is likely that it will stay this way until the overall condition improves. But once that happens, you will see a significant increase in the purchase of these items, because people will be more secure,” he added.
Positive side
“There are several sectors in Oman that have not been affected by the pandemic: the manufacturing sector is still stable, obviously, the medical sector has picked up – many companies are using 3D printing technology to make medical equipment, and the transportation and logistics sector is still going strong, so there are many positives to see during this time as well.”
Al Balushi said, “While we appreciate and value the different roles played by the expatriates for their contribution towards building modern Oman, I do not see any issue of a brain drain. Thanks to the wise leadership of the late His Majesty Sultan Qaboos bin Said, and His Majesty Sultan Haitham bin Tarik, the young Omanis are professionally educated in all spheres of life and ready to play their role in the future of Oman. This has given a platform for them to showcase their skills and boost their confidence.”
The impact of so many expats leaving is being felt by the services that depend on them. A manager at a real-estate firm in Oman said his company was feeling the pinch because so many people had been unable to pay their rents before leaving. “Many of our customers have asked for a reduction in rent right now, but we can only reduce it a little bit,” he said. “We have not been able to fill a lot of the apartments that are now vacant, so our income has greatly reduced. This means we cannot pay our staff on time and have to reduce their salaries. It also means that we might need to cut costs on the maintenance of our current buildings.”
A taxi driver in Muscat added, “Earlier, I used to get many expat labourers in my taxi. But now, many have left so it is harder. It is primarily expats who don’t have cars of their own who make use of my taxi, so I am afraid my business will suffer in the months to come.”
Dr Ahmed Al Hooti, the head of economic research and a board member of the Oman Chamber of Commerce and Industry said expats leaving would provide an opportunity to bring skilled workers back into the country, but once the impact subsides, the economy will pick up once again. “A lot of the expats who have left are in sectors where more Omanisation was needed, such as the construction, transport or the hospitality sector, so these are areas where more jobs need to be found for Omanis,” he said.
Saleh bin Ahmed Al Badi, Chairman of Nakheel Al Shamal International LLC, said it was natural for expats to leave, because they had lost their jobs owing to reduced business because of the pandemic. Keeping these people on board when there is no work would lead to companies incurring huge losses. “Many companies right now, especially those in the contracting and construction sector, don’t have many projects, so they had to let go off their staff, for their survival,” he said.
“I don’t think so many expatriates leaving will cause a vacuum right now, because many companies have cut jobs. Many shopkeepers who could not afford to pay their rent at a time like this have preferred to leave, so that they don’t face more loss. I think if an expat in a leadership or senior position leaves, yes, it will affect the economy, if there is no one with the same level of expertise and competence who can replace him,” added Al Badi. “An Omani will spend all of his salary in the country, while an expat will spend some here and send the rest home. I would, however, like to thank them for doing their duty in helping the Omani economy.”
Shops in Oman have suffered major fall in business because of the pandemic. One shopkeeper in the country told Times of Oman that he’d chosen to keep his shop open even in the afternoons, when others chose to close for a while, so that he could get a few more customers. “I do this so that they can buy those items that are important to them at a time like this,” he said.
Al Badi went on to suggest that the country maximise returns from work, and automate those jobs that are hazardous or offer very low pay, to provide better living and work standards for Omanis and expatriates alike.
“There are many jobs in the construction and other industries can be partially or fully automated,” he explained. “Creating skilled jobs to attract Omanis will add value towards improving the rate of Omanisation. There are good numbers of Omani job seekers looking for work, and if the country is able to automate some jobs, this will give them better chances to work and better pay per month. Maximizing semi-skilled or fully skilled jobs will create attractiveness for Omanis and expats.
“Transforming low skilled jobs to mini, mid and high-level technology jobs will provide more opportunities for Omanis, as well as possibilities to attract international uniquely skilled employees. The idea is to increase the pay per job for Omanis and others,” added Saleh Al Badi.
Al Balushi said, “While we appreciate and value the different roles played by the expatriates for their contribution towards building modern Oman, I do not see any issue of a brain drain. Thanks to the wise leadership of the late His Majesty Sultan Qaboos bin Said, and His Majesty Sultan Haitham bin Tarik, the young Omanis are professionally educated in all spheres of life and ready to play their role in the future of Oman. This has given a platform for them to showcase their skills and boost their confidence.”
The impact of so many expats leaving is being felt by the services that depend on them. A manager at a real-estate firm in Oman said his company was feeling the pinch because so many people had been unable to pay their rents before leaving. “Many of our customers have asked for a reduction in rent right now, but we can only reduce it a little bit,” he said. “We have not been able to fill a lot of the apartments that are now vacant, so our income has greatly reduced. This means we cannot pay our staff on time and have to reduce their salaries. It also means that we might need to cut costs on the maintenance of our current buildings.”
A taxi driver in Muscat added, “Earlier, I used to get many expat labourers in my taxi. But now, many have left so it is harder. It is primarily expats who don’t have cars of their own who make use of my taxi, so I am afraid my business will suffer in the months to come.”
Dr Ahmed Al Hooti, the head of economic research and a board member of the Oman Chamber of Commerce and Industry said expats leaving would provide an opportunity to bring skilled workers back into the country, but once the impact subsides, the economy will pick up once again. “A lot of the expats who have left are in sectors where more Omanisation was needed, such as the construction, transport or the hospitality sector, so these are areas where more jobs need to be found for Omanis,” he said.
Saleh bin Ahmed Al Badi, Chairman of Nakheel Al Shamal International LLC, said it was natural for expats to leave, because they had lost their jobs owing to reduced business because of the pandemic. Keeping these people on board when there is no work would lead to companies incurring huge losses. “Many companies right now, especially those in the contracting and construction sector, don’t have many projects, so they had to let go off their staff, for their survival,” he said.
“I don’t think so many expatriates leaving will cause a vacuum right now, because many companies have cut jobs. Many shopkeepers who could not afford to pay their rent at a time like this have preferred to leave, so that they don’t face more loss. I think if an expat in a leadership or senior position leaves, yes, it will affect the economy, if there is no one with the same level of expertise and competence who can replace him,” added Al Badi. “An Omani will spend all of his salary in the country, while an expat will spend some here and send the rest home. I would, however, like to thank them for doing their duty in helping the Omani economy.”
Shops in Oman have suffered major fall in business because of the pandemic. One shopkeeper in the country told Times of Oman that he’d chosen to keep his shop open even in the afternoons, when others chose to close for a while, so that he could get a few more customers. “I do this so that they can buy those items that are important to them at a time like this,” he said.
Al Badi went on to suggest that the country maximise returns from work, and automate those jobs that are hazardous or offer very low pay, to provide better living and work standards for Omanis and expatriates alike.
“There are many jobs in the construction and other industries can be partially or fully automated,” he explained. “Creating skilled jobs to attract Omanis will add value towards improving the rate of Omanisation. There are good numbers of Omani job seekers looking for work, and if the country is able to automate some jobs, this will give them better chances to work and better pay per month. Maximizing semi-skilled or fully skilled jobs will create attractiveness for Omanis and expats.
“Transforming low skilled jobs to mini, mid and high-level technology jobs will provide more opportunities for Omanis, as well as possibilities to attract international uniquely skilled employees. The idea is to increase the pay per job for Omanis and others,” added Saleh Al Badi.