Oman


In a big boost, Oman’s small and medium-sized enterprises get wider access to government tenders



Muscat: Supporting the development of Oman's small and medium-sized enterprises (SMEs) is regarded as a key method to boost job creation in the private sector and ensure better Omani involvement in the economy.

With these goals in mind, government policy is being implemented to provide SMEs with additional funding and expertise, as well as to grant them wider access to government tenders.

According to some estimates, more than 90 per cent of all registered firms in the Sultanate fall into the SME category, though their combined contribution to GDP is only around 15 per cent.

Most of these small-scale businesses are rated by the Public Authority for Social Insurance as being micro-enterprises, with 78 per cent of companies in Oman employing five people or fewer, between them accounting for just 10 per cent of total employment nationwide.

One route that authorities have identified as key to supporting SME growth is giving small businesses a greater role in the large-scale infrastructure and industrial development programme.

Encouragement
While few SMEs are in a position to bid for major projects such as the national rail network, new petrochemical plants or social support programmes such as state housing developments, SMEs are being encouraged to play a part in such schemes through the provision of services or components, or as subcontractors to larger companies.

As the official entity that awards the contracts for many government projects, the Tender Board has called for at least 10 per cent of all work on such projects to be carried out by SMEs, a requirement that will see larger contracting firms farm out portions of contracted activities to their smaller counterparts. SMEs will also be in line to benefit from a planned requirement that more locally produced material is used in projects contracted out by the state.

Bid for contracts
Currently, many of Oman's SMEs are not in a position to bid for state contracts or supply services or materials of a quality required by government projects. One problem cited by SME operators is about gaining access to adequate capital to fund expansion, an issue also addressed by the government.

 Late last year, the Central Bank of Oman issued a regulation stating that a minimum of five per cent of commercial bank lending should be directed to SME clients. The new measure, according to central bank estimates, will open up a funding pipeline of more than $2.6b a year for SMEs to tap into, rather than the $1b that they are currently able to access.

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