Less bureaucratic controls will help small and medium businesses thrive in Oman

Opinion Saturday 30/April/2016 21:08 PM
By: Times News Service
Less bureaucratic controls will help small and medium businesses thrive in Oman

Paperwork is drowning the establishment of small businesses and has discouraged many people from starting their own ventures.
Official statistics show that in the last ten years, only 35 per cent of the small to medium enterprises (SMEs) successfully completed the licence processing stages. The rest never took off mainly because the process took too long while the owners kept paying the overheads while waiting for the final approval. Many people who want to start a venture do not do it knowing the length of time it takes to establish a business in the country.
Unnecessary bureaucracy crushes creativity, kills off aspirations and leaves a lot of people with unfulfilled dreams. Without any shade of doubt it slows down the growth of the economy, too. For many years, the trade establishment bureaucracy has focused inward and lost touch with business reality. The multifunctional rigidity needs to be revisited to smooth out the way for the creation of new businesses. There are too many committees to satisfy and a myriad of regulations to go over. Any paperwork that does not add value to the set up of an SME should be eliminated. What should be remembered is that aspiring business people have loan liabilities when they go through the licencing procedures. While they wait to begin their businesses, their capitals start to diminish.
In Oman, there is no standardisation of approval in the set up of small businesses. The applications of different projects have different rules. The lack of a single strategy contributes to the snail-pace processing. There is no data sharing between different offices that screen SME applications. The use of ICT or E-Government to speed the process is either ineffective or not in use at all. Questions should also be asked on people who receive these applications in terms of competence. Applications stay too long in the In-Tray and there is a considerable distance to the Out-Tray.
According to various SME financiers, more than a quarter of the applicants wanting to start new businesses were unsuccessful with their job applications. The only option left for them was self-employment. It goes without saying, efforts to speed up the process will reduce the job queue by 25 per cent. That will give a tremendous boost to the economy. Official statistics also show that SMEs that were successfully established in the last decade employed an average of seven employees each. That means, these SMEs created over 11,000 employment opportunities since 2006 despite the unbending bureaucracy.
The past statistics should encourage bureaucracy to be flexible. The figures also show the missed opportunities of employment to thousands if only the process was much more sympathetic to small business applicants. But reducing red rape is not just about fewer regulations. It also promotes transparency in the way applications are processed. This will give the opportunity for SMEs applicants to know where the process has reached and what are the stumbling blocks so they can quickly rectify it.
It is about compliance as well to avoid the processing of duplication information between various agencies.
However, red tape does not only get in the way for new SMEs only but for existing ones as well. Current owners are also struggling through the endless paperwork when they want to expand. A lot needs to be done to encourage small businesses to grow. For example, many SMEs need to move into bigger premises but owners are still waiting for their applications to be processed. The leasing of the government owned lands or the applications of hiring more staff take quite a long time. The conducive environment for existing SMEs is more important now than ever in the light of the current economic crisis the country is going through. Obviously the government’s cash flow is now restricted and these SMEs can flourish to fill up the gaps. It does not cost anything to lease lands but it will rev up the State’s revenues. In conclusion, red tape reduction has many advantages to the economy, not just to the SMEs.