Business


Oman gears up to secure in-country value wealth



Muscat: Omani companies, and especially those at the small or medium-sized end of the business spectrum, may be in line to gain a far greater share of the country's economic activity.

Calls to expand a state-backed scheme promoting greater input by local firms into the oil and gas industry are set to encompass other sectors, thereby building capacity across the economy.

During a recent roundtable debate moderated by television presenter Riz Khan focusing on Oman's in-country value (ICV) programme, several panellists said the scheme should be extended to other sectors in the economy beyond the hydrocarbon industry.

Among the sectors that speakers felt could benefit from ICV included tourism, construction, finance and telecommunications, though there was general agreement that detailed studies would be required before any roll-out of a policy expanding the scope of the ICV policy.

Under the ICV programme, launched in 2013, firms bidding for energy contracts in Oman are required to submit a plan outlining what measures they intend to implement to boost local content in their activities, from procurement of goods and materials through to support services, construction and ancillary activities. The higher the local input level, the more favourably a competitive tender bid will be viewed.

According to official estimates, up to $64 billion of spending by the oil and gas industry alone can be kept in country between the beginning of this year and 2020 if a policy of buying and hiring locally is rigorously pursued.

Studies conducted have identified more than 50 supply chain opportunities for Omani firms to support the industry, mainly in replacing goods and services that are currently imported or otherwise outsourced.

Innovation, investment
Though the hydrocarbons sector has embraced the ICV concept, with up to 80 per cent of the direct expenditure made by oil and gas companies going to local suppliers, this only represents part of total expenditure. While supportive of the ICV programme, Oman Cables' chief executive officer Gert Hoefman says there will be limitations to the scheme.

"The availability of goods locally is the number one factor to make ICV profitable for small and medium-sized enterprises (SMEs) and worthwhile for the industry at the same time," Hoefman told OBG. "There is a cut-off point where it is cheaper and faster to outsource abroad, so all local companies need to innovate and close that gap."

The best way that gap can be bridged, he said, was for SMEs to become more innovative and technically developed, allowing the benefits of ICV to be spread more broadly. The best way that gap can be bridged, he said, was for SMEs to become more innovative and technically developed, allowing the benefits of ICV to be spread more broadly.

Another to cite the need for a more advanced technical services component in the Omani economy is Nalin Chandna, the acting CEO of National Gas Company (NGC). NGC's preference was to utilise local firms whenever possible.

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