Tanfeedh economic initiatives to aid Oman's diversification drive

A Malaysian influence has been detectable in the GCC economic arena for many years, particularly in the Islamic finance industry, which has benefitted from the models trialled first by the Malaysian financial regulator. Kuala Lumpur has emerged as a generator of sharia-compliant standards to complement the GCC’s own Accounting and Auditing Organisation for Islamic Financial Institutions, based in Bahrain. In a wider sense, Malaysia’s status as an emerging economy with diversified sources of revenue serves as a useful example to the Gulf states seeking to move away from their dependence on hydrocarbons receipts. In this context, Malaysia’s Performance Management and Delivery Unit (PEMANDU) is of particular interest to government planners around the Gulf. Established in 2009, the body is charged with ensuring that national transformation programmes are successfully delivered, and operates on the basis of the belief that the methods and approaches used in the private sector can be successfully applied to the public sector. For a nation such as Oman, which has sought to accelerate its own economic diversification in its current strategic plan, the experience garnered by PEMANDU is invaluable.

First Stages

The government body created to coordinate and assess Oman’s diversity drive is a direct descendent of PEMANDU. The ultimate objective of The National Programme for Enhancing Economic Diversification (Tanfeedh) is to ensure that public and private sector participants efficiently implement the government’s economic diversification strategy, as established by the ninth five-year plan (FYP), which runs from 2016 to 2020. This involves identifying the responsibilities, resources and timeframes needed for diversification, setting clear standards and key performance indicators (KPIs), and providing regular progress reports. The establishment of Tanfeedh is the result of collaboration between Oman and Malaysia, by which PEMANDU was contracted as an international consulting firm to provide technical support to the Secretariat General of the Supreme Council for Planning. Tanfeedh differs from earlier diversification initiatives in Oman in that, like its Malaysian equivalent, it places a greater emphasis on listening to the concerns of non-government entities, such as private businesses, and ensures that the general population is able to track the progress of individual initiatives through regular updates. The private sector input to the current phase of Tanfeedh initiatives was solicited through a series of intensive labs that took place in 2016. Participants included public and private entities, academic institutions, and civil society organisations, and the lab outcomes were subsequently presented to the general public at an open exhibition where attendees could provide feedback. The work of the labs was also disseminated on social media, as well as the traditional channels of television, radio and newspapers. During this period an electronic survey on the Tanfeedh website also sought responses from anyone who wished to participate.

Finalisation

The next significant stage of the Tanfeedh model was the refining and finalisation of the KPIs originally established in the labs phase. The hundreds of KPIs which resulted from this process are the metrics by which the progress and ultimate success of individual projects will be judged, and they were therefore broken down by month and year in order to allow for improved accuracy in monitoring. Next came the implementation of the initiatives and projects defined by the labs, a phase which by 2018 was already well under way. During this period a monitoring body, the Implementation Support and Follow-up Unit (ISFU), identifies any challenges to the development of projects, and coordinates with ministries and other responsible parties to solve them. The final phase of the Tanfeedh model focuses on the verification and publication of results. This includes an audit independent from the work of the ISFU, performed in consultation with a committee of local and international experts, which results in a set of proposals and recommendations. Lastly, an annual report highlights the results of projects and the changes brought about by Tanfeedh as a whole.

Tangible Outcomes

The visibility over strategic outcomes granted to both the government and the general public by the Tanfeedh programme is a significant advancement in itself. The true test of Tanfeedh’s efficacy, however, lies in its ability to meet the objectives of the ninth FYP by successfully guiding the full implementation of its projects and initiatives. The work of the IFSU has made assessing the level of project implementation a relatively straightforward process. The results published by the IFSU to date have been mixed. Of the 29 KPIs for the manufacturing sector, only seven met or exceeded their 2017 targets, according to the IFSU’s report for the year. In some instances, such as the capacity utilisation enhancement planned for the OCTAL manufacturing plant, work had yet to commence. In others, such as the enhancement of the Sohar Cement Factory – part of a wider Tanfeedh ambition to boost cement capacity in the country, which will include two new grey cement plants, a white cement plant and two cement grinding facilities – as much as 80% of the targeted progress was attained. The success stories, where 100% of the 2017 target was met, included the realisation of the Koso Gulf Valves manufacturing plant, Al Taj Cement plant and the One Million Date Palms innovation project. A similar pattern of varied success emerged from the Tanfeedh-related projects in Oman’s tourism sector, where nine out of 35 of the targets established for 2017 were met. Successful initiatives here were concentrated in the creation of retail and food and beverage precincts, which included the development of Muscat Food Court, Salalah Grand Mall, Al Sarooj Restaurant complex and the Al Azaiba food and beverage complex.

In the logistics sector, seven of the 31 KPIs established for 2017 were met. These key successes included the improvement of air cargo import dwell time, the completion of the technical requirements for a mineral railway located in the Al Wusta region, the publication of a standard operating procedure for bonded warehouses and the establishment of the central services corridor at the Port of Salalah.

In the job market and employment stream of Tanfeedh initiatives only three of 23 KPIs for 2017 were met. Areas where progress was most disappointing included the drive to unlock part-time and flexible work as a means to boost overall employment, where just 256 of a targeted 13,087 targeted part-time workers were registered. Success stories, meanwhile, were largely confined to the area of bureaucratic processes, such as the Tahfeez programme for the development of small and medium-sized enterprises.

Lastly, the business environment and finance Tanfeedh initiatives have shown the most progress over the course of 2017, with 21 of 35 KPIs met or exceeded. Tangible gains in this area included the streamlining of environmental permits, the publication of regulations for real estate investment trusts, privatisation of a government-owned enterprise and the inclusion of a late payment penalty clause in some government contracts. The most significant success, however, was the total value of investment in targeted sectors, which reached more than double the anticipated level.

Looking Ahead

The architects of the Tanfeedh programme have taken note of the Malaysian experience, and do not expect every initiative to be carried through as defined in the lab stage. According to its 2017 report, the results of the many Tanfeedh initiatives are expected to follow a basic 30-30-40 principle, whereby 30% of projects will be implemented as originally planned, 30% will undergo some amendments as developments occur during implementation, and 40% will be reconsidered and replaced by other projects to achieve the same desired objectives, due to the possibility of having better economic opportunities or in response to the emergence of obstacles.

While the long-term results of the Tanfeedh programme remain to be seen, in the shorter term its effects as a developmental catalyst are clear. In 2018 Omani ministries regularly went to the press with updates regarding their efforts to meet the Tanfeedh KPIs for the year, often co-opting the private sector into the process. In October 2018, for example, the Ministry of Manpower organised a meeting for employers, including hotels and other private sector stakeholders, to discuss Omanisation, training and development in the tourism sector. The results of the Tanfeedh labs continue to drive change across the economy. One of the most significant of these possible structural alterations is the proposed integration of the gas and power sectors, suggested by Tanfeedh’s lab on the energy sector, which would see the electricity sector taken under the aegis of the Ministry of Oil and Gas. The meeting of individual KPI goals will continue to be of interest to stakeholders, but the more fundamental changes the Tanfeedh programme is bringing – that is, transparency, long-term strategic planning and the prioritisation of private sector development – will be the most significant long-term legacy for the sultanate.