Sheikh Khalil Al Harthy, CEO, Credit Oman: Interview

Interview: Sheikh Khalil Al Harthy

Which industries offer particular potential to expand value-added goods production in Oman?

SHEIKH KHALILAL HARTHY : The government is focusing on two main areas to increase value-added goods production. The first is the expansion of the manufacturing sector. Oman has been traditionally known only for its light industry. However, the country’s industrial parks, free zones and strategic ports offer the potential to transport more goods – including those from medium and heavy industries – to the GCC and beyond.

The second objective is to develop the services sector through various entities. This would be quite sustainable in terms of adding value to the economy. While manufacturing requires significant investment and the payback period is longer, the services sector has a low physical asset base and can help support other areas of the economy, for example by boosting the use of technology by businesses.

How can the country better leverage its port network to position itself as a centre for re-exports?

SHEIKH KHALIL: As of 2018 the re-export market stood at OR1.8m ($4.7m) and – given the geopolitical situation and our strategic location – Oman is in a very strong position to increase re-export activity.

The upgrade of our ports has certainly strengthened the country’s re-export capabilities, especially following the creation of Oman Global Logistics Group. For example, the Port of Salalah has been identified as a cross-continental shipment hub, providing a very good opportunity to place Oman on the global re-export map. In common with Singapore, the Port of Salahah is capable of receiving large vessels from East Asia and the US, and products can then be re-exported to the GCC and vice versa. Other ports have also become more specialised, with Port Sultan Qaboos now known for tourism, the Port of Sohar for handling container ships and bulk items, and the Port of Duqm for downstream oil and mining industries, along with shipping repair.

What initiatives are being pursued to support local businesses in expanding their export markets?

SHEIKH KHALIL: Our memorandum of understanding with Ithraa at the end of 2018 has primarily worked to enhance the assessment of potential commercial and non-commercial risks for Omani exporters. For example, we now examine the creditworthiness of foreign markets, especially if there is unrest abroad or certain regulations that block payments. As a result, Omani exporters are given much better insight into whether a country is safe to trade with, including a better understanding of trading potential. This is important if they, for example, participate in foreign trade fairs. The key concern for Omani exporters remains money collection from outside buyers. To satisfy this, Omani exporters are also given commercial protection via guarantees in case a foreign buyer defaults or becomes insolvent.

Domestic coverage is now available for local businesses that wish to sell to each other, which will help Oman become more self-sufficient. Currently, around 5% of the non-oil export market is credit insured. We are working closely with Omani companies to help them better understand the benefits that they can receive by being covered, including the increased likelihood of receiving bank loans, improved financial protection, expansion of business operations and ultimately enhanced money circulation into the local economy. In which ways do small and medium-sized enterprises (SMEs) face challenges when exporting?

SHEIKH KHALIL: For SMEs, the ticket size per transaction is smaller, they tend to have less liquidity and selling products to complex markets can be more difficult. Therefore, efforts are being made to increase insurance coverage of SMEs, and insurance companies are working to ask the right questions of SMEs looking to expand overseas. These products should be seen as something of value that will ultimately increase their creditworthiness and lead to further expansion.