Recently, I learned of an Omani businessman whose decision to build a factory in Muscat came to nothing. His enterprise, had it seen light of day, would probably have made profits, generating dozens of job opportunities as it grew. To his great disappointment — and ours — he was frustrated by a plethora of bureaucratic procedures associated with the establishment of business. He finally planted his investment in the Jebel Ali Free Zone in the United Arab Emirates, where he was welcomed with open arms and a friendlier set of procedures — one that was less complex, more affordable, and quicker to follow.
This incident, it is fair to say, is by no means unique. Despite substantial and commendable steps undertaken in recent years by Oman government to reduce bureaucracy in business, the country has still not managed to capture the vibrant investor interest being experienced by other GCC states. There is no telling how many investors may have either curtailed or phased out their investment in Oman or skipped it altogether, preferring to take their money to other GCC countries that offered them friendlier choices and incentives. The good news is that Oman can gain the title of being the best investor destination in the Middle East. How? It is no secret that legitimate investors will park their investment — and create thousands of jobs in the process — in a country that is able to aid rather than hinder investments.
There is a lot to be said for a government-authored ecosystem that fortifies investor confidence rather than erodes it.
For Oman, this may involve several tangible measures such as simplifying procedures or just eliminating them, reducing or scrapping fees, and shortening time frames wherein a businessman can effectively begin his enterprise.
Successful countries, especially in the area of investment promotion, have their doors wide open to local and global businesses, coupled with concerted effort towards the promotion of free trade, tourism and transfer of knowledge across borders. Creating such economic conditions has enabled many countries, such as the UAE, to become powerful magnets for growth and global investment.
It therefore follows that lesser the bureaucracy, the greater the ease of doing business, and the more rewards there are for the local economy and the population.
This conclusion has been validated year after year in the 'Ease of Doing Business index' created by the World Bank. A high ranking on the ease of doing business index indicates that the regulatory environment is more conducive to the setting-up and management of a local firm.
The report assesses 189 countries and positions Oman 47th on the list. This rank is impressive within a global context, but falls shy of the highly competitive benchmarks that the GCC subscribes to. To add perspective, we note that Singapore is the easiest country in the world in which to do business, while the UAE ranks 23rd, Saudi ranks 26th, Qatar 48th and Bahrain 46th.
The same report highlights the pain points that Oman faces as a business investment destination. For example, it takes a businessman 10 days to register his business in the country, during which time he must complete five procedures. To build a factory, he must obtain licenses by wading through 13 distinct procedures, all of which could consume 174 days. Once his business completes a year, Oman's procedures for filing tax require 14 procedures that could take up around 68 days.
This is not to say that Oman has not made efforts to transform its image as an investment friendly destination. For instance, we must note that the Oman's Public Authority for Investment Promotion and Export Development has been applauded for its one-stop-shop solutions with generous tax incentives and no capital flight restrictions policy for investors. Moreover, a 2014 United Nations Conference on Trade and Development (UNCTAD) World Investment report revealed that FDI inflows to Oman reached $1.62bn in 2013, compared to $1.04bn in 2012.
It is time, however, for Oman to further reduce bureaucratic controls by several notches and give entrepreneurs the best ecosystem under which to flourish. A happy investor is an economy booster on his own; a nation full of happy investors will become an engine that will propel us unstoppably on a path of growth and prosperity. Oman must strategise now to build this nationwide commune of happy investors.
The author is the Chairman of National Bank of Oman and an International Advisor to the Brookings Institution. All the views and opinions expressed in the article are solely those of the author and do not reflect those of Times of Oman.