Salaam Said Al Shaksy, Member of the State Council; and CEO, Alizz Islamic Bank : Interview

Interview : Salaam Said Al Shaksy

How could fiscal reforms such as the increase in the corporate tax rate and the proposed value-added tax affect Oman’s appeal to foreign investors?

SALAAM SAID AL SHAKSY: Oman is currently in a situation where GDP growth is being tested due to decreased oil revenues, a growing population and a gap in employment opportunities. The government has a vast payroll base to cover every year for which it seeks solutions. The usual solutions include increasing taxes and reducing capital investments. The challenge in this situation is to manage the balance between facing recessionary pressure and the expectation to have expansionary vision, while at the same time being under pressure to reduce spending and maximise revenues. Nevertheless, the taxation environment in the sultanate is low compared to other markets, and it is important to note that foreign companies are taxed in the same manner as local companies. Oman also provides political and social stability, resulting from consistent policies of peace, inclusiveness and non-interference. This has enabled Oman to generate the goodwill required to promote foreign investments, and provides a foothold to investors to consider Oman as a viable investment option. While political stability and high growth prospects may be in Oman’s favour, the country needs to continue diligently working on formulating regulations and policies that seek to improve public services and reduce bureaucratic procedures. This will help maintain its appeal to foreign investment, despite potential forthcoming increases in taxes.

What role do you envisage public-private partnerships (PPPs) playing in economic growth under the national diversification strategy, Tanfeedh?

AL SHAKSY: PPPs are extremely important for the country, and they can be strengthened in two major ways: privatisation of government-run sectors and assets, and incentivising investments from the private sector. This will also reflect positively on the government’s budget deficit and release it from the burden of capital investment. There are initiatives in the pipeline that work on understanding what both the public and private sectors need.

The formation of PPPs in Oman can positively contribute towards Tanfeedh’s initiative directly and indirectly in certain sectors. Oman has endless potential for growth, mainly because of its strategic location and availability of resources. Partnerships formed with balance from both parties can play a significant role in driving economic growth. This will also reflect positively on the government’s budget deficit and relieves the government of its capital investment burden.

What needs to be done to create a more attractive regulatory environment for foreign investors, and what should be the top priorities?

AL SHAKSY: Oman has made improvements in many areas. The Ministry of Commerce and Industry has made significant progress for small and medium-sized enterprises, and has been actively working to improve the ease of doing business. At the same time, a clear strategy needs to be developed and widely employed across all sectors, and only once all details of the strategy are finalised can there be encouragement of both local and foreign investment. A determination must be made about which segments require foreign investment in order to directly impact job creation, foreign trade and GDP. Upon this decision, the government can work on support programmes and policies, which can be actively pursued to provide the highest value and fuel economic growth. The government also needs to work on an integrated approach that enables foreign investment to have one point of contact for all due processes, and not have to go through several layers and ministries for approval. The current protectionist labour laws must be re-evaluated to allow for a free and efficient labour market. Without this, quality foreign direct investment could be difficult to attract.