Times of 32nd National Day Supplement …because the stories are so many, we are
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scroll down and view the captions in red for subject content to each article. We apologize for this inconvenience. Fiscal sector experiences
TRANSFORMATION By Palazhi Ashok Kumar THE institutional framework of Responding to the recent financial crises, countries
worldwide have started implementing international standards in banking
regulation and supervision. In fact, Over the last three decades, the local banking sector
experienced a deep transformation because of the changes in the global financial
arena. Standardisation of banking regulation and supervision reduces information
problems and improves the access of developing country institutions to the
international financial system to a great extent. As at the end of 2001, the number of banks in Though According to the Central Bank of Oman (CBO), the three largest banks accounted for almost 70 per cent of total assets, 71 per cent of total credit, 66 per cent of total deposits and have combined assets of nearly $8 billion. Lending to the private sector accounted for 73 per cent of total assets, with personal loans commanding the majority at around 34 per cent of private sector credit. Ten per cent of total assets were held in securities that included government development bonds as well as local and foreign treasury bills. Commercial banks’ liabilities are dominated by deposits, which represented 64 per cent of total liabilities as of December-end 2001. Of total liabilities, 52 per cent constituted private sector deposits, and of those time deposits represented around 58 per cent and with the balance split between demand and savings deposits. All the segments of the financial market, namely money
market, capital market and foreign exchange market have grown significantly with
improvement in quality and range of new products and services. While money
market is associated with short-term credit markets and capital market caters to
the requirement of long-term funds. The foreign exchange market acts as an
equilibrating factor. Money and capital markets in The apex bank continues to strengthen its supervisory and
regulatory norms aligning them with the international practices. Financial
reforms were supported by legal changes with the banking law revised and updated
and officially decreed in December 2000. The CBO had also conducted a
self-assessment of the supervisory system and practices in pursuance of the need
to evaluate compliance with the core principles as recommended by Basle
Committee on Banking Supervision. Overall the survey indicated that the banking
supervisory framework in The consolidation of commercial banks in Banks in Total deposits of commercial banks rose by seven per cent to RO2,683.1 million in 2001. Of these deposits, rial Omani deposits accounted for about 90 per cent and foreign currency deposits 10 per cent. Private sector deposits grew by 8.6 per cent and the increase was mainly reflected under demand deposits followed by savings deposits. The core capital and reserves of banks stood at RO425.8 million. It constituted 16 per cent of total deposits and 10.1 per cent of total assets. Total private sector bank deposits as of July-end 2002 stood at RO2,299 million and total credit stood at over RO3,199 million. Money supply rose to RO761.7 million compared with RO613.6 million as of July-end 2001, showing an increase of over 24 per cent. The number of bank accounts in the country is set to cross a million. The average interest rate on total rial Omani deposits fell from 4.053 per cent in July 2001 to 1.885 per cent in July 2002. The weighted-average interest rate on rial Omani lending and other regional currencies, according to regional banking experts, are set to fall further with the US dollar continuing to exhibit a declining trend. The weighted-average interest rate on rial Omani lending to all sectors which stood at 9.5 per cent in July last year declined to 8.8 per cent in July this year. Private sector rial Omani time deposit interest rates also
declined from an average of 6.280 per cent to 3.272 per cent. The total bank
deposits in l Continued on Page 38 l From Page 10 During the period under review, total bank credit recorded an increase of 2.2 per cent at RO3,199 million compared with RO3,130.9 million. Credit to the private sector rose to 3,051.6 million, showing an increase of nearly two per cent. Money supply (M1) registered an increase of 24.1 per cent to reach RO761.7 million compared with RO613.6 million. Rial Omani deposits rose by over 36 per cent and currency in circulation (with the public) increased by 7.5 per cent. Quasi money (includes savings in local currency, time deposits, forex deposits, etc) increased by 6.7 per cent to RO1,946.6 million. The broad measure of money supply (M2) rose by over 11 per cent to RO2,708.3 million. In a move to spur the economic activity, in January 2002, the apex bank relaxed the personal loan lending-limit from 35 per cent to 40 per cent of the total loan portfolio of banks. The CBO also reduced the interest rate ceiling on personal loans from 13 per cent to 12 per cent. The apex bank had also announced that banks could charge a maximum pre-payment fee (pre-closure free) of one per cent of the outstanding balance of loans (existing or new) up to RO 50,000. In fact, the interest rate ceiling on personal loans was removed in 1998 but brought back under a ceiling of 13 per cent in 1999 to restrict very high interest rates being charged on personal loans by banks. “Ideally speaking, the CBO would seek a free market, bereft of all regulations. Impossible practically as it is, it has to settle down for an alternative with the least of regulations or restrictions. Hence, in place are a few caps like quantitative ceiling of personal loans and the interest rate charged by banks on such loans,” said Hamood bin Sangour Al Zadjali, executive president of the CBO. The CBO is committed to promoting international banking
standards in The rationale for placing a quantitative ceiling for banks was both to address the evils, booming personal loans were causing individuals, family, society and the economy to force banks to diversify the application of their funds and incomes. It was also envisaged that both the banks and individuals will be restricting individual loan amounts in their own interests. Market forces except for a ceiling on personal loans
determine interest rates in In October 1993, as a first move towards deregulation of interest rates, the CBO freed the local currency deposit rate ceiling and followed it up in June 1994 by deregulating lending rates barring consumer loans of RO9,000 or less for which a ceiling applied. In January 1999, the interest rate ceiling on consumer loans was also lifted, and the interplay of market forces was allowed to determine the interest rates. However, side by side a quantitative ceiling on personal loans was imposed and which continues to be in force. Having observed a disturbing rise in interest rates charged on personal loans to totally unreasonable levels of nearly 20 per cent, the CBO in October 1999 re-imposed the ceiling of 13 per cent per annum. According to a recent announcement, banks cannot charge more than the 12 per cent interest on personal loans. To the extent that interest rates are out of alignment with those in international markets, they tend to converge, as capital flows in and out of the country. At times, there may be differences between the domestic interest rates and international rates. This is either because of risk premium or conscious policy choice in order to encourage local deposit mobilisation and lending in domestic currency. The CBO has all along been encouraging the process of financial sector reforms supported by legal changes as evident by the new Banking Law. The new Banking Law has opened up more opportunities to strengthen the financial system and to render it truly competitive, well structured and resilient. Initiatives for technological changes have been an integral part of the reform process. Greater transparency, stringent conditions for disclosure of provisions as well as the necessity of setting aside provisions for diminution in value of investments, stiff capital adequacy requirements and a host of prudential norms coupled with a deposit insurance scheme provide an environment for stability and growth in the banking sector. Commercial banking in Banks in All the banks have developed good administration procedures and relatively modern operating systems which ought to ensure better internal information and control systems. In the second week of October 2001, Oman Switch became a reality by the CBO announcing the merger of two ATM services — Shamel and Al Watani. In accordance with the decision announced here by the Central Bank (CBO), Oman Switch has been linked to the United Arab Emirates (UAE) Switch. The Switch links the ATM network of eleven banks — BankMuscat, Bank Melli Iran, Citibank, Habib Bank, HSBC Bank, Majan International Bank, National Bank of Abu Dhabi, National Bank of Oman, Oman Arab Bank, Standard Chartered Bank and Bank Dhofar Al Omani Al Fransi in Oman with over 300 ATMs to provide services to ATM cardholders. The single ATM network is obligatory for any bank with at least one ATM. Oman Switch would soon be connected to other ATM switches in all AGCC countries. The CBO is also planning to develop an electronic fund
transfer system (EFT) to keeping pace with the e-government initiatives of The system will not only help banks reduce operating costs but also provide them with a new infrastructure for collection of loan instalments, payments of salaries, Internet and mobile-phone banking. Moreover, bank customers will be benefited more as a wide
range of new products and services would help them manage their finances
efficiently and reduce dependence on cash. The time taken to clear cheques
presented outside the central commercial area would also be reduced to a great
extent. The apex bank foresees substantial lowering of settlement risks and
increased mobilisation of deposits, as banks would be able to offer their
customers with value-added services into the interior areas of The new services would become realities through the
proposed delivery mechanisms, over the counter in conventional bank branches,
telephone banking, ATMs, Internet and web-enabled mobile phones. The
consultants, according to sources, will hold individual discussions with banks
and reach practical conclusions for help in developing the system, which will
help banks offer their customers with new corporate and retail products and
services. Further discussions will also be held with the Ministry of Finance,
State General Reserve Fund (SGRF) and the Muscat Securities Market (MSM) to
ensure that their particular requirements can also be met. The recent increase
in banking activities in Boost in Omanisation By A Staff Reporter IN the current reign of rapid Omanisation at all levels in the employment scene, it is imperative that the Sultanate obtains the right Omani with the right qualification. Reforms in the educational stream would have a major impact on the Omanisation drive, which the country has embarked upon. The recent accelerated Omanisation drive has made it imperative to have an educational system that matches, if not excels, the international standards. Attending the 19th session of the AGCC Labour and Social
Affairs Ministerial Council, which was held in While on one hand This shows the new trend which stressed the need to have a full-fledged, rounded individual who was not only a good student, but someone, after his education/graduation, is capable of meeting the challenges of the modern world and its growing demands today, the private sector feels. Armed with proper education, an Omani can meet any future professional challenges that he or she may face in their path. “Our education systems in the Grade XI and XII segment are fine, but there is always scope for improvement and we are hoping to embark on a secondary education reform drive that will bring out educated Omanis who are ready to face any professional challenges this modern era will throw up,” Yousuf Al Molahi, director of educational information and documentation at the Ministry of Education, has told the Times of Oman. Students are future leaders and they need to be inculcated with the best of education and values, he has said. Once this is deeply embedded in the psyche of the Omani student also, it will reap in rich rewards. In fact, as part of its major move to reform its secondary
education, The Ministry of Education will be organising this conference in cooperation with Unesco. The conference would provide an international forum where the challenges and opportunities of secondary education in the 21st century can be explored by practitioners, policy makers and all of those who are involved with the future of the world’s young people. This important and timely conference is designed to have a positive impact on the future of secondary education in a global world in which standards are high and graduates must be capable of strong performance and productive contribution to societal development. A national forum on national manpower employment organised on the directives of His Majesty Sultan Qaboos bin Said last year emphasised the government-private sector partnership in the Omanisation drive. Juma bin Ali Juma, while attending a session of the AGCC Labour and Social Affairs Ministerial Council, had also noted that the Sultanate was embarking on preparing a new labour law that copes with international and Arab labour agreements and recommendations, which embodies the Sultanate’s achievements in the labour sector. In fact one of the major outcomes of the Saham and Ibri Omanisation symposium was the speeding up of the labour law. Also, the other best aspect is the fact that the government’s agreement that the private sector should review the Labour Law before it is enforced. “The Businessmen’s Council has discussed and reviewed the labour law with the minister of manpower. We have handed the businessmen’s view to the ministry,” Khalil bin Abdullah Al Khonji, secretary to the Businessmen’s Council, had said earlier. “We had a very positive meeting with the minister. We would also like to express our satisfaction in this regard and would like to appreciate the minister’s cooperation with the Businessmen’s Council in this regard. “The minister has appreciated our points in different sections of the labour law,” he noted. Early this year, at a meeting to discuss the final report of the committee on Omanisation in the construction sector, Malik bin Suleiman Al Ma’amari, minister of transport and telecommunications and chairman of the Tender Board, noted that the main objective of the committee was to have a joint vision between the government and private sector in order to find job opportunities for Omanis and increasing the Omanisation ratio. Juma bin Ali Juma, who was also present, stressed on the need to increase the Omanisation ratio in the professions specified by the joint committee. These professions require skills, which the Omanis should obtain, to seize the opportunities in the private sector. The joint committee had laid some objectives and visions
for the Omanisation plan in the construction sector. The main visions of the
plan include increase skilled Omani workers in the construction field. In order
to achieve this goal, a specified training period for Omani workforce will be
split in first and second category companies. The Ministry of Manpower, which is entrusted with this task, will be Omanising 16 professions in the first stage and eight in the second. “Currently it is envisaged that this will be achieved in a space of four years,” Khalil Al Khonji, had said. The 16 professions that will be gradually Omanised in this period are: Grocery shops, vegetable shops, gift shops, watch (repair) shops, readymade clothes shops, flower shops, delivery vans, petrol pumps, car washing units, Internet cafés, photo studios, fish (selling) shops, meat shops, chicken shops, electrical repair, and tyre puncture repairing centres. The second stage will see the Omanising of more technical jobs like these eight professions: electricians, fridge repairing shops, painters, upholstery repair, carpentry, steel fabrication, plumbing and goldsmiths. This will be implemented by the Ministry of Manpower. They have their own institutes where new curriculum will be adopted which are tailor-made to suit these professions. Therefore, this will not be a hasty decision where a profession will be Omanised and there are not enough trained Omanis to fill the gap left by expatriates. This current one will be a more practical approach. The Ministry of Manpower will be Omanising the grocery
shops, vegetable and fruit shops, fish, meat and chicken stalls, delivery vans
in cooperation with the The grocery shops will see 50 per cent Omanisation as a start in the first stage and it will be fully Omanised in the second stage. “Next year, the ministry will evaluate what they have done in the previous year and will continue on the same lines. So, the plan is that by the end of the current fifth year plan, we will have in place a creditable Omanisation percentage in all these categories,” Khalil Al Khonji said. He also unveiled the sector-based targets. According to him, nine sectors have been identified, which the government hopes to achieve the set percentage of Omanisation within four years, by 2005. Therefore, the agriculture and fisheries sector must see 35 per cent Omanisation; electrical, water and gas segment must have 75 per cent Omanisation; construction, 15 per cent; retail, wholesale and restaurants, 30 per cent; transport, storage and communication, 90 per cent; finance sector, along with real estate, 85 per cent; industry, 35 per cent; mining and marble, 85 per cent; others, personal assistants, etc., 10 per cent. Al Khonji also revealed that the government would induct (rehabilitate) 2,000 young Omani graduates/students as computer programmers; 1,200 accountants; 7,000 sales executives; 15,000 engineering and other technical professions which will include related agencies like construction and petroleum industries; 1,200 storekeepers. “This is also another outcome of the highly successful and enlightening Saham and Ibri seminars and will be implemented in a period of four years, from this 2002 to 2006,” Al Khonji said. The other great aspect that is planned is the standard of Omanisation will be given top priority when offering government tenders. “For e.g., the government will be enforcing Omanisation percentages to different sectors and will pay the cost difference, or rather they will bear the difference (ensued following the induction of Omanis as opposed to expatriates) between the expatriate and Omani labour. For e.g., if a private sector company is building a hotel and the government says take 35 per cent Omanis, the contractor will say in return that it is difficult for them as the cost of that would amount to RO1million. But, here, the government will be willing to bear the RO1million. “Also, take the case when a contract is given for a company for hospital maintenance for say, three years. And once the period is over, if it goes to a new contractor, the Omanis working on that project will be retained. This way, we can ensure that the Omanis will be constantly employed.” The Sanad fund will greatly help the Omanisation process. It will help the Omani entrepreneurs who can work independently with the aid of the Sanad fund. “The fund will finance up to RO5,000 for small entrepreneurs, who will therefore have no obstacles to enter into small businesses like before. “For e.g., if a grocery shop has to be Omanised, the owner can seek the assistance of the Sanad fund, if his intentions are to have to full Omanisation of the shop. In other words, if an Omani wants to benefit from the Sanad fund, he/she will have to completely replace expatriates with Omanis,” Al Khonji said. He noted that eight Sanad fund offices will be opened in There will also be separate social funds which are for those Omanis who wish to operate offices or small-scale activities, within the confines of their homes. This fund will be managed by the Ministry of Social Development. Currently, the government has allocated a sum of RO2 million to the Sanad fund, while the social fund will begin with half a million. “The other aspect is schooling. The government has decided to expand the capacity of the universities; the secondary school segment etc. “This is imperative as without education and training, Omanisation will not work. Of course, with the new development of the curriculum which will be tailormade to suit the needs of the market, we will indeed be seeing a new era of Omanisation,” Al Khonji said. He also noted that the government would soon be
establishing new training institutes all over Al Khonji also advocated the setting up of incubators and workshops for the activities of professionals for productions and services near residential and industrial areas, depending on the nature and technical specialisation of each activity. The development of human resources is critical and crucial
for successful implementation of So the top priority remained providing “adequate number of suitable employment opportunities for Omanis”, said Maqbool bin Ali Sultan, minister of commerce and industry, recently. “So far, as the total employment creation (Omanis and expatriates) is concerned, the World Bank, in their December 2000 report on ‘labour market in Oman’ had noted that Oman’s pace of employment creation, which posted an average annual growth rate of 7.6 per cent, during the decade of 1990s, is well above the average growth recorded in other MENA (Middle East and North African) countries. “What is more significant is that unlike Mena countries,
most of “Another feature of employment in The report had also stated that, ‘ “The challenge before us is to translate this overall trend into progressively increasing ratios of the employment of Omanis,” Maqbool noted. “It is our view that apart from wage employment either in the public or private sector, there is another avenue, which we may call ‘self-employment’, which could not only add to the income of a household, but also lead to the development of the community and national economy. “The government is pursuing programmes that would empower the Omanis to engage in self-employment economic activities, such as the Sanad project,” Maqbool said. Maqbool had also earlier noted that the sixth plan is expected to provide about 109,200 new employment opportunities in the non-oil sectors. According to him, 85.3 per cent of the new employment opportunities are likely to be provided in the private sector — mainly in construction, tourism and manufacturing sectors. The Omani labour force will receive 73 per cent of the additional employment opportunities created in the plan, he had said. As part of the sixth plan, HM’s appreciation for private sector HIS Majesty Sultan Qaboos bin Said has hailed the response of the private sector to his call last year for provision of jobs to Omanis but said it must do more to achieve the aspirations of Omani society. His Majesty the Sultan, addressing the Council of Oman on its annual meeting, earlier this month, urged the youth to take advantage of the opportunities available to acquire knowledge and skills through studying and training, and to work diligently and devotedly to gain more experience in the various labour and production fields. His Majesty the Sultan emphasised that the human being was the ultimate goal of the development process, and its instrument and means at the same time. “The more effective this instrument is, the more capable it becomes of achieving targeted development,” His Majesty stressed. His Majesty added that it was because of this that “we always call for the development of human resources, their scientific capabilities, technical skills and technological expertise in order to meet society’s urgent requirements and needs, and to provide opportunities for those resources to fully contribute to the blessed Renaissance witnessed by Oman in all walks of life”. On the response of the private sector to embrace his call last year for Omanisation, His Majesty has observed: “We are pleased to say that the response from the private sector to that national call has been good and has reflected the sector’s patriotic spirit and feelings towards society. “This has been evident in the coordination seen during the past months between the government departments concerned and the private sector in preparing and formulating plans, programmes, policies and measures aimed at increasing Omanisation and raising the standard and training.” Essence of By A Staff Reporter A THRUST area of high priority is the comprehensive development of the tourism sector. Besides earning valuable foreign exchange, this sector would provide scope for absorption for Omanis too. In fact, as part of the Sixth Five-Year Development Plan, the Ministry of Commerce and Industry is planning to increase the Omani labour force in the tourism sector to 50 per cent. The plan is to bring in many Omani young men and women, not only in the travel and tourism sector, but also in various other economic activities, which get stimulated as direct and indirect effects of tourism. The government has prepared a detailed master plan called
Tourism Priority Action Plan (PAP) wherein integrated tourism development
projects have been identified for regions in “Our focus will be on eco-tourism, sun, sea and sand-based facilities, cultural and heritage attractions, adventure tourism, coastal resorts and leisure retreat resorts,” said Maqbool bin Ali Sultan, minister of commerce and industry, recently. “ A feasibility study for ascertaining the suitability of Also, to facilitate the development of the tourism industry
in The IDI is engaged to provide appropriate experience,
advice and assistance to the ministry to implement the agreed measures to
achieve the economic and social objectives. It should enable the ministry to
operate in accordance with the highest international standards and As per the main objectives of the tourism sector for the
sixth plan, Among the main policies adopted for national strategy for the development of the tourism sector include the setting up of a national strategy for the development of the tourism sector; diversifying tourism products, establishing integrated tourist projects in different regions, and encouraging internal tourism. The Ministry of Commerce and Industry has undertaken nine major projects at around RO126.11 million since last July. These include hotels, youth hostels, a municipal theatre, a cave project, a tourism and hospitality academy, etc. These and other projects (some of which are given below) are expected to provide thousands of jobs for Omanis, especially in the areas where they are being built. One of the top projects is Al Hoti Caves project, which is
expected to open by the second half of 2004. The Due to the largeness and adventurous character of the Hoti plateau, and as the caves are very suitable for tourism, the ministry has decided to develop this cave for tourism purposes. Construction of phase one the Oman Tourism and The main objective of the academy is to train and empower Omani youth interested in hospitality sector to meet both the personal and professional challenges of the tourism and hospitality industry. The Municipal Theatre and the Youth Hostel in Salalah and the $308 million Al Sawadi Tourism project are the government’s priority projects. With Al Sawadi resort, the Sultanate will develop into a strong stand alone destination for European guests and a must-see attraction for Omanis and residents of all neighbouring countries. Al Sawadi resort has a prime location, as it is located in Al Sawadi area in the wilayat of Barka, with a total allocated area of 34 square kilometres approximately will form the first high class resort, designed in an authentic Omani style plot, the project will include various luxury hotels, two 18-hole golf courses, with a golf and country club, an outstanding family water park, private villas and a multitude of leisure, entertainment and sports facilities. Al Sawadi project is designed to be the high profile, top class tourism product in the Gulf region. It is built exactly to match the needs of its growing source market. With its unique architecture and traditional landscape, Al Sawadi is the first authentic Omani resort and unmatched in the region. Combining modernity and tradition, it stands out as the most sophisticated destination development project in the Gulf area and provides an excellent opportunity to invest in. Phase one of this integrated tourism resort, with an investment of RO135 million, will be completed by 2005. The Barr Al Jissah Hotel and Beach Resort Complex is
located on the The development will feature three hotels with a total of approximately 672 rooms, a modern spa and a health club, ample swimming pools and leisure facilities including a relaxing water ride, all situated within 200,000 square metres of attractively landscaped grounds. The entire integrated complex is expected to be ready by mid-2004. The Mirbat tourist village in the Salalah region is already under implementation envisaging an investment of nearly RO9 million. It will have all required tourist facilities such as hotels, chalets, villas and restaurants. The private sector would also be developing a golf course
in The Castle Hotel shall provide the ultimate beach resort
experience. Perched on an elevated plateau above the rest of the resort, this
hotel will offer a combination of 171 deluxe rooms and suites, world class
dining facilities, 1,500-square metre ballroom and pre-function area, nine
meeting rooms, exclusive swimming pools, elite fitness facilities, and a private
beach. With commanding views of the ocean and surrounding landscape, this
five-star plus hotel will set the standard for luxury hotels within Situated along the main beach is the Town Hotel. The five-star facility will embody a seaside town built in an expression of traditional Omani architecture. Accentuated by lush tropical landscape, a network of swimming pools and sundecks, a poolside amphitheatre and tennis courts, this hotel will become the focal point of resort activity. At the eastern edge of the resort, separated from the Town and Castle hotels by a steep and narrow jebel, the Village Hotel’s secluded setting will be enhanced by an atmosphere of fun and entertainment uniquely designed to cater for families and younger couples. The ministry has also launched a RO2 million, four-star, 45-bed, three suites, 12 chalets, hotel with all facilities (health club, gymnasium, sauna and swimming pool) in wilayat Khasab. The project is expected to be completed in May, next year. In line with the continuous efforts of the Commerce and Industry Ministry, to establish tourist facilities in various regions of the Sultanate, a three-star hotel RO1.3 million project is launched in Diba, in a total land area of 50,000 square metres. The hotel will have 32 double bed guestrooms, eight suites, health club facilities, and a multipurpose hall and is expected to be completed by November, next year. Also, a three-star hotel project is being planned in Masirah, which will be set in an area of 50 square kilometres. It will have 20 double bed guestrooms, two suites, eight chalets and is expected to be completed in November, next year. Focus on non-oil sector l From Page 7 Services sector recorded a higher growth of 6.6 per cent last year, thus improving its share in total GDP to over 45 per cent from 42.9 per cent in the preceding year. As nominal GDP increased, total final consumption expenditure rose by about eight per cent to RO4,954.2 million last year compared with RO4.591.8 million in the preceding year. Gross fixed capital formation was higher at RO1,010.2 million compared with RO913 million, accounting for over 13 per cent of the GDP. The increase in capital formation was attributed to the expansion in capital formation in building and construction, plant and machinery and vehicles activities. Public finance analysis shows that international oil price
though softened in 2001 stayed at a reasonably comfortable level which
strengthened fiscal position of The actual average price oil realised for Omani crude in 2001 worked out to $23 per barrel compared with the estimated $18 a barrel. Consequently, the gross oil revenue accrued to the government accounts was in excess of the budgeted amount. At the anticipated price of oil, the budget proposals for the year 2001 had envisaged aggregate revenue receipts of RO2,495 million and expenditure of RO2,812 million leaving a financing gap of RO317 million. As oil price remained higher than the expected, actual total revenue receipts rose marginally to RO2,530 million. The actual total government expenditure increased by around two per cent to RO2,858 million. As compared to the actual revenues and expenditure of 2000, aggregate revenue receipts last year rose by 10.5 per cent while net oil revenue improved by 8.9 per cent. Non-oil revenue expanded by around 22.4 per cent mainly due to four-fold increase in income earned on government investments and improvement in collection of customs duties. Total expenditure too rose over the year by 7.6 per cent. Current expenditure rose by 4.4 per cent and investment expenditure by over 13 per cent. Government participation and support to private sector jumped up by RO45.9 million to RO118.5 million. In real terms, the fiscal deficit in 2001 was lower by around 10.5 per cent compared with RO366.3 million in 2000. As percentage of GDP, the fiscal deficit came down from 4.8 per cent in 2000 to 4.3 per cent in 2001. The ratio of deficit-to-expenditure also contracted from 13.8 per cent in 2000 to 11.5 per cent in 2001. The fiscal deficit, by large was financed by drawing down RO295 million from the State General Reserve Fund. Besides, net receipts under government development bonds amounted to RO5.8 million. Component wise analysis of the public finance shows that the total revenue as at the end of June 2002 rose by 23.6 per cent to RO1,463.9 million compared with RO1,184.7 million in the corresponding period of the previous year. Net oil revenues for the period stood at RO1,090.6 million compared with RO937.5 million in the corresponding period of the preceding year, showing an increase of 16.3 per cent. While, the current expenditure rose by 15.4 per cent to RO1,064.2 million compared with RO922.1 million. The total public expenditure registered an increase of 13.5 per cent to RO1,329.2 million compared with RO1,170.8 million. The government spent RO3.6 million for natural gas exploration during the period. Corporate income tax rose to RO45.3 million from RO32.6 million, an increase of 39 per cent. Notwithstanding the fact that the near-term oil price scenario was not too promising, the year 2002 budget was framed by pegging the average oil price to the same level ($18 per barrel) as in the preceding year. Although moderate loss was anticipated in revenue realisation, the budget allocated larger amount under investment expenditure. The compression in the rate of increase in total expenditure and providing for a smaller expansion in fiscal deficit in the year 2002 budget reflects the continued policy emphasis to carry forward physical strengthening and physical consolidation process. Besides, reduction of government debt continues to remain as a main feature of fiscal framework. The ‘growth-oriented’ budget, as described by Ahmed bin Abdulnabi Macki, minister of national economy and deputy chairman of the Financial Affairs and Energy Resources Council, endeavours to provide larger impetus to economic growth. A comparative analysis (1996-1999) shows that the country had witnessed the highest actual deficit in 1999 at RO472.9 million and the lowest in 1997 at RO40.1 million. Net oil revenue for the year 1999 was the lowest at RO1,201.6 million compared with a higher RO1,748.9 million in 1997. However, the net oil revenues were budgeted higher at RO1,875 million in 2001 (the actual figure is yet to be declared). Technically speaking, a higher budget deficit of RO380 million budgeted for the current year is not a bad sign or an unfavourable pointer to the country’s future economic growth. In true sense, it is a favourable sign, as it is meant to stimulate the economic development and diversification. Here comes the significance of the principal instrument of a nation’s macroeconomic policy, the ‘government spending’. The key tool, of course, is the domestic spending by the government. If we go to simple business economics, we could say that when spending goes up, the Gross Domestic Product (GDP) will grow at a greater speed, augment the economic activity and generate more employment opportunities for nationals. Oman’s total public expenditure (actuals) for the years 1996, 1997, 1998, 1999 and 2000 stood at RO2,253.7 million, RO2,307.3 million, RO2,221.6 million, RO2,269 million and RO2,608 million, respectively. While, the budgeted expenditures for the year 2001 and the current year stand at RO2,812 million and RO2,870 million, respectively. There are indications that the total actual expenditure for the year 2001 would be higher than the estimated figure. No doubt, Though However, subsequent pick up in world oil prices eased the binding on government fiscal balance. The actual average price of oil realised for the Omani crude worked out to $26.71 per barrel in 2000 and the gross actual oil revenue was far above the budgeted figure. In July 1986, the price of a barrel of Omani oil declined to — $8 — more than a three-fold decline from the average oil price of $27 in 1985. In fact, the average oil price of Though the net oil revenue was estimated higher, the
current year budget estimated the net oil revenues lower at RO1,819 million. The
current year budget has allocated RO556 million for the development of social
service sector, which constitutes over 19 per cent of the total expenditure of
RO2,870 million. Moreover, the budgeted figure indicates over seven per cent
increase in social service sector spending compared with RO521 million allocated
in the 2001 budget. The capital expenditure for the year 2002 is estimated to
increase by over 12 per cent to RO589 million compared with RO525 million in the
previous budget. The actual capital expenditure registered the highest increase
in 2000 at RO491.7 million and the lowest in 1997 at RO383.7 million. The budget 2002 has estimated over eight per cent increase in its non-oil revenues for the year 2002 at RO671 million compared with RO620 million estimated in the previous budget, which shows that the diversification policies are gathering momentum. Natural gas revenues for the year is estimated to record an impressive growth of over 12 per cent at RO83 million compared with RO74 million in the 2001 budget. The state’s general budget for the current year is growth-oriented and expansionary in character, but is more cautious and pragmatic, which is reflected in its financials. The nation’s membership in the Arab Gulf Cooperation
Council (AGCC) and the Indian Ocean Rim States Association for Regional
Cooperation (IORARC) ensure that the country plays a pivotal role in the
development of trade and economy. The Ministry of Commerce and Industry conducts
necessary coordination with AGCC secretariat for qualifying the Omani
manufacturing companies, to enable them to export Omani products to all AGCC
countries duty free. The expansion of the market would help these manufacturing
companies to increase their sales, thus moving towards achieving greater
economies of scale. The $960 million Oman-India fertiliser project, coming up
at the Sur Industrial Estate, has set the foundation for opening dialogues
between In the $316.5 million equity, Oman Oil Company, a 100 per
cent closed joint-stock company, owned by Lately, Omifco has successfully arranged the $644 million
debt facility. The lead-mandated group, comprising three international banks —
BNP Paribas, ANZ Investment Bank and Arab Banking Corporation had successfully
underwritten the $644 million facility for the project. Of the total
arrangement, $325 million is Export Credit Agency (ECA) covered loans and $319
million, non-recourse commercial loans. The repayment period for the ECA loan is
10 years from the date of completion and 8.5 years (from completion) for
commercial loans. Of the total ECA covered loans, In fact, initiatives on the fertiliser project were
formulated under as part of the bilateral agreement on cooperation in
hydrocarbon sector between As Though the average oil price for Omani crude declined to an
average of $23 per barrel last year from $26.71 per barrel in the preceding
year, The oil export earnings, including refinery products were lower by 13.5 per cent at RO2,963 million compared with RO3,426 million. The trade balance surplus indicates a fall of over 14 per cent. As the central bank underlies, the world economic growth,
after an impressive performance in the preceding two consecutive years,
contracted last year. The slowdown in the Moreover, despite the weak global economic conditions, The capital account showed a net deficit of RO345 million as against RO197 million in the previous year. During the year, the government reduced its foreign liabilities by making net loan repayments of RO172 million, while banks liquidated their external gross liabilities by RO43 million. The overall BoP shows a surplus of RO389 million, which has accrued to the foreign exchange reserves of the country. The Liquefied Natural Gas (LNG) project, which became fully operational during the year, contributed RO331.8 million to the Gross Domestic Product (GDP). Moreover, LNG exports contributed RO451 million to the total export earnings. The export of LNG was of the order of RO423 million and export of downstream condensate was RO28 million. With Petroleum activities constituted nearly 43 per cent of the GDP at RO3,274 million (RO3,719.9 million). According to the apex bank, the total non-petroleum activities witnessed over 11 per cent growth last year at RO4,539.3 million compared with RO4,069 million in the preceding year. In fact, the total non-petroleum activities rose by nearly 21 per cent from RO3,758.8 million in 1997 to over RO4,539 million in 2001. Non-petroleum industrial activities expanded by 38.8 per cent in 2001 to RO896.6 million from RO645.9 million in the previous year. Manufacturing sector grew by 55.1 per cent to RO634.8 million as against RO409.3 million. Construction activities witnessed an increase of over 15 per cent at RO167.3 million from RO145.4 million in the preceding year. Agriculture and fishing sector recorded a growth of 2.7 per cent at RO153.9 million as against RO149.8 million. Service sector registered a growth of 6.6 per cent at RO3,488.8 million as against RO3,273.3 million in 2000. The non-oil exports advanced by 12.85 per cent last year to RO843 million compared with RO747 million in the preceding year, said the banking top management, CBO. The value of non-oil exports of Omani origin rose to RO265.8 million from RO247.8 million, indicating an increase of over seven per cent. Export of base metals showed the highest growth at RO44.7 million (RO36.7 million), witnessing a growth of over 21 per cent. Export of live animals and animal products stood at RO40.5 million compared with RO41.6 million. The value of re-exports for the year stood at RO577.6 million compared with RO498.6 million in 2000. The United Arab Emirates (UAE) accounted over 35 per cent
of total non-oil exports of During the year under review, The Sultanate’s economic direction is considered to be in line with the contemporary trends of trade and investment liberalisation, which are adopted by the WTO. In view of the developments that are taking place in the Omani economy and the government’s commitment to the policy of attracting investments, the Ministry of Commerce and Industry, in coordination with other concerned authorities, is continuously reviewing and updating the investment and commercial legislations. During the last few years, these laws have been comprehensively revised with the aim of ensuring their compatibility with the contemporary international economic and investment trends and the agreement of the WTO. Policy of diversification pays
off l From Page 20 Though However, subsequent pick up in world oil prices eased the binding on government fiscal balance. The actual average price of oil realised for the Omani crude worked out to $26.71 per barrel in 2000 and the gross actual oil revenue was far above the budgeted figure. In July 1986, the price of a barrel of Omani oil declined to — $8 — more than a three-fold decline from the average oil price of $27 in 1985. In fact, the average oil price of Though the net oil revenue was estimated higher, the
current year budget estimated the net oil revenues lower at RO1,819 million. The
current year budget has allocated RO556 million for the development of social
service sector, which constitutes over 19 per cent of the total expenditure of
RO2,870 million. Moreover, the budgeted figure indicates over seven per cent
increase in social service sector spending compared with RO521 million allocated
in the 2001 budget. The capital expenditure for the year 2002 is estimated to
increase by over 12 per cent to RO589 million compared with RO525 million in the
previous budget. The actual capital expenditure registered the highest increase
in 2000 at RO491.7 million and the lowest in 1997 at RO383.7 million. The budget 2002 has estimated over eight per cent increase in its non-oil revenues for the year 2002 at RO671 million compared with RO620 million estimated in the previous budget, which shows that the diversification policies are gathering momentum. Natural gas revenues for the year is estimated to record an impressive growth of over 12 per cent at RO83 million compared with RO74 million in the 2001 budget. The state’s general budget for the current year is growth-oriented and expansionary in character, but is more cautious and pragmatic, which is reflected in its financials. The nation’s membership in the Arab Gulf Cooperation
Council (AGCC) and the Indian Ocean Rim States Association for Regional
Cooperation (IORARC) ensure that the country plays a pivotal role in the
development of trade and economy. The Ministry of Commerce and Industry conducts
necessary coordination with AGCC secretariat for qualifying the Omani
manufacturing companies, to enable them to export Omani products to all AGCC
countries duty free. The expansion of the market would help these manufacturing
companies to increase their sales, thus moving towards achieving greater
economies of scale. The $960 million Oman-India fertiliser project, coming up
at the Sur Industrial Estate, has set the foundation for opening dialogues
between In the $316.5 million equity, Oman Oil Company, a 100 per
cent closed joint-stock company, owned by Lately, Omifco has successfully arranged the $644 million
debt facility. The lead-mandated group, comprising three international banks —
BNP Paribas, ANZ Investment Bank and Arab Banking Corporation had successfully
underwritten the $644 million facility for the project. Of the total
arrangement, $325 million is Export Credit Agency (ECA) covered loans and $319
million, non-recourse commercial loans. The repayment period for the ECA loan is
10 years from the date of completion and 8.5 years (from completion) for
commercial loans. Of the total ECA covered loans, The project would significantly benefit from the expertise of Indian promoters — Iffco and Kribhco — the two large cooperatives of Indian farmers with a track record of successful completion of such large projects and of course, their profitable operations. The requirement of gas for the project is four million
standard cubic metres per day. In fact, initiatives on the fertiliser project were
formulated under as part of the bilateral agreement on cooperation in
hydrocarbon sector between As Nevertheless, the outward looking policies, sound macroeconomic management to address internal and external imbalances, reorganisation and structural adjustment efforts resulted in achieving a higher growth with macroeconomic stability and social progress. Though the average oil price for Omani crude declined to an
average of $23 per barrel last year from $26.71 per barrel in the preceding
year, The oil export earnings, including refinery products were lower by 13.5 per cent at RO2,963 million compared with RO3,426 million. The trade balance surplus indicates a fall of over 14 per cent. As the central bank underlies, the world economic growth, after an impressive performance in the preceding two consecutive years, contracted last year. The slowdown in the US economy, which began in the early part of last year owing to a fall in information technology-related activities and compounded by the September 11 incident, together with contraction in economic activities in Europe and continuing slump in Japan, affected the performance of global economy. Moreover, despite the weak global economic conditions, The capital account showed a net deficit of RO345 million as against RO197 million in the previous year. During the year, the government reduced its foreign liabilities by making net loan repayments of RO172 million, while banks liquidated their external gross liabilities by RO43 million. The overall BoP shows a surplus of RO389 million, which has accrued to the foreign exchange reserves of the country. The Liquefied Natural Gas (LNG) project, which became fully operational during the year, contributed RO331.8 million to the Gross Domestic Product (GDP). Moreover, LNG exports contributed RO451 million to the total export earnings. The export of LNG was of the order of RO423 million and export of downstream condensate was RO28 million. With Petroleum activities constituted nearly 43 per cent of the GDP at RO3,274 million (RO3,719.9 million). According to the apex bank, the total non-petroleum activities witnessed over 11 per cent growth last year at RO4,539.3 million compared with RO4,069 million in the preceding year. In fact, the total non-petroleum activities rose by nearly 21 per cent from RO3,758.8 million in 1997 to over RO4,539 million in 2001. Non-petroleum industrial activities expanded by 38.8 per cent in 2001 to RO896.6 million from RO645.9 million in the previous year. Manufacturing sector grew by 55.1 per cent to RO634.8 million as against RO409.3 million. Construction activities witnessed an increase of over 15 per cent at RO167.3 million from RO145.4 million in the preceding year. Agriculture and fishing sector recorded a growth of 2.7 per cent at RO153.9 million as against RO149.8 million. Service sector registered a growth of 6.6 per cent at RO3,488.8 million as against RO3,273.3 million in 2000. The non-oil exports advanced by 12.85 per cent last year to RO843 million compared with RO747 million in the preceding year, said the banking top management, CBO. The value of non-oil exports of Omani origin rose to RO265.8 million from RO247.8 million, indicating an increase of over seven per cent. Export of base metals showed the highest growth at RO44.7 million (RO36.7 million), witnessing a growth of over 21 per cent. Export of live animals and animal products stood at RO40.5 million compared with RO41.6 million. The value of re-exports for the year stood at RO577.6 million compared with RO498.6 million in 2000. The United Arab Emirates (UAE) accounted over 35 per cent
of total non-oil exports of During the year under review, The Sultanate’s economic direction is considered to be in line with the contemporary trends of trade and investment liberalisation, which are adopted by the WTO. In view of the developments that are taking place in the Omani economy and the government’s commitment to the policy of attracting investments, the Ministry of Commerce and Industry, in coordination with other concerned authorities, is continuously reviewing and updating the investment and commercial legislations. During the last few years, these laws have been comprehensively revised with the aim of ensuring their compatibility with the contemporary international economic and investment trends and the agreement of the WTO. All trade barriers will be removed: Maqbool MAQBOOL bin Ali Sultan, minister of commerce and industry, has said the AGCC ministers set next year as the maximum time frame to remove all barriers to trade exchange and agreed that the AGCC secretariat-general coordinate on this matter with member states, all of whom had shown a desire to take the step. In a statement at the end of the 21st meeting of the
Industrial Cooperation Committee, which consists of AGCC ministers of commerce
and industry, in He said it would be compulsory and in harmony with the World Trade Organisation’s (WTO) stipulations. Maqbool said the committee affirmed the importance of
attracting foreign investments, encouraging industrial investment in particular
and cooperating with economic blocs such as the Asean, the European Union and
also with the oryxoman.com By A Staff Reporter THE Arabian Oryx Internet site, www.oryxoman.com, launched last month tells the story of the return of the oryx and the establishment of a wild population in the Arabian Oryx Sanctuary. It also describes the ecology of the oryx and other wildlife of the sanctuary. Sayyid Ali bin Hamoud Al Busaidi, minister of the diwan of royal court, who presided over the Internet site-launching ceremony at Jaaloni, at the Arabian Oryx Sanctuary in the wilayat of Hima, in the Wusta region, said the launch of the site came in culmination of the attention accorded by His Majesty Sultan Qaboos bin Said and the continued efforts to preserve the Omani environment and its resources. Other projects of the Office of the Adviser for Conservation of the Environment are also covered, including the Arabian Tahr Project of the Wadi Sareen and the Arabian Leopard Project of Jabal Samhan Nature Reserve. The Arabian Oryx Sanctuary was established in 1994 to help protect oryx and to conserve desert habitat and threatened species. It covers approximately 27,500sq. km of central The sanctuary also contains examples of geological formations and landscapes that are of exceptional scientific and aesthetic value. It is the region’s first Unesco World Natural Heritage site. The attractively designed website offers the visitor a plethora of information about the sanctuary as well as similar projects in the region. Various links have been provided to give the visitor a detailed account about the location map of the sanctuary, the contact details, the tour operators, the people, the climate, etc., etc. It also offers interested visitors an account of various official formalities required, such as official permission and code of conduct, prior to a visit to the sanctuary. Also listed are the companies authorised to oraganise tours to the sanctuary and contact details. The site also offers a preview of the place and the oryx. Various shots taken by professionals are displayed in the picture gallery, giving a glimpse of the sanctuary to the visitor without a physical visit to the site. Information on plants, birds and other animals and vegetation can also be found in this user-friendly website. Comprehensive plan to Build
e-Oman DEVELOPMENTS in information technology (IT) taking place around the world are effecting a transition in the business as well as the social life. The new technology glutting the market is so huge that it gives people multiple choices to select what is good and useful at the same time cost-effective. IT’s chubby child, the Internet, is making revolution in the world, creating impact in health, economy and every segment of life. A country without proper IT infrastructure is not at all regarded much. Get online or go out of business is perhaps the mantra of the time. That appears to be the received wisdom about the future of e-business. We are in the grip of an Internet fever, as companies and individuals rush to get an e-business up and running before it is too late. Andy Grove, chairman of Intel, has said that in five years’ time all companies, at least in the US, will be Internet companies or they won’t be companies at all. In the Even so, in the din of the Internet revolution, a new watchword may be also heard: “caution”. Lured by the prospect of a fast-track to untold riches, both budding entrepreneurs and corporate heavyweights run the risk of losing sight of business fundamentals. Developing and developed countries strive to achieve the
best through utilising or manipulating the Internet and IT. The Like the West, where there is deep penetration of the
Internet and e-commerce usage, the A latest statistic (February 2002) shows that there were
over 509 million Internet users in the world. In the Asian growth is now out-pacing the more mature US and As in other parts of the world, IT, widely spelt as modes
of global communication, predominantly using computers and microelectronic
chips, with a heavy lean on the Internet, is fast expanding in the Arab world.
In The Sultanate of Oman, though a country with little potentials, has made a humble beginning of developing the nation as an e-based Sultanate in a very short span of time. The government’s efforts in setting up the IT park known as Knowledge Oasis at the Rusayl industrial area is a clear example of this effort. The IT park, when launched fully, is expected to cerate a stir in the world’s IT market. According to current trend, the park will create knowledge and skill-based human resources apart from developing latest technologies for the world’s ever-growing IT needs. The Public Establishment for Industrial Estates (PEIE), the custodian of the Knowledge Oasis, is also in the process of setting up IT incubators, which will help young Omanis who want to start their own businesses. This is expected to become operational by next year. These incubators will provide office space and other facilities at the park besides expertise and support. The incubator programme is in line with the goals of the
Vision for The government-sponsored IT task force is also deeply
involved in creating the right atmosphere that will transform The task force, which consists of 12 members and is chaired by the head of the Ministry of Finance, recently signed up Gartner Group, an analyst house, to help it build an IT strategy for the country. This company will also help put together an implementation timetable, pick project teams and identify quick wins that can be acted on immediately. The task is to move towards e-Oman, which consists of e-government, e-commerce, e-learning and other e-services. The task force is gathering data and meeting both technology providers and other involved parties. The idea is to have the whole e-Oman strategy in place before the end of this year. It is assessing best practices that have been deployed in a number of e-government projects elsewhere, both in the region and further a field. Also, a number of vendors have been invited to share their experiences, so that the Sultanate can avoid the obstacles of deploying e-government services. The IT task force plans to work alongside some of the
already ongoing IT initiatives within The task force is also working alongside some of the smaller ministerial and department initiatives that have started over recent months. However, the IT task force is still aware that it faces serious integration, change management — among government employees and the general population — and business process reengineering hurdles in the coming months. A core element of the strategy document will be a set of standards for system integration and data interchange. The IT task force has already hosted several workshops and seminars with different ministries to communicate the importance of standards. As part of the technology transformation, The project was designed in implementation of Royal Decree No. 66/99, which promulgated the Civil Status Law. The implementation of the project would start towards the end of next year. The system would allow for recording all personal details such as birth, marriage, divorce and death and issuing pertinent certificates. This is, in addition, to entry of birth and death cases of foreigners living in the Sultanate and also registering marriages and divorces if a partner is an Omani citizen. The citizens would be issued smart cards and expatriates residence cards containing data provided by applicants and confidentiality of such information would be strictly protected. The agreement provided for implementation of a comprehensive solution to the national identification system in the Sultanate in the form of the smart card, which would open the door for operating the system of electronic government. The card would record important personal details such as educational qualifications, employment status, details of work and medical record. It also serves as a multi-purpose card and could be used as an identity card, a voting card, a driving licence and a money-withdrawing card in conjunction with financial institutions. Green revolution gathers
momentum By Sharifa Al Kindy THE rugged mountains, green gardens, prestine beaches and
beautiful parks have made the Sultanate one of the beautiful tourism
destinations in the |