The Sultanate has joined the MoU.  The Multilateral Memorandum of Understanding (MMoU) Concerning Consultation and Co-operation and the Exchange of Information with the International Organization of Securities Commissions (IOSCO), was signed by the  Capital Market Authority yesterday, just prior to the 37^th IOSCO annual meeting in Beijing.  Joining the MMoU gives the Sultanate the capacity to benefit from deeper consultation, cooperation and information exchange. 

This is extremely significant for the Sultanate.  According to the Capital Market Authority’s CEO, Abdullah bin Salim al Salmi, the Sultanate’s capital market sector will now be able to take advantage of a better developed legislative and regulatory framework, while gaining global recognition and regulatory credibility that the Authority has approved.  In addition, the region has every chance of becoming a hotspot for international investment which can benefit from globally-approved high quality audit. Further, it will be much more attractive to outside investors as it will be seen as having the capacity to provide a safe financial working environment for them, that it has, until now, somewhat been lacking. In addition, it will be much easier to access data on regulatory bodies in the member’s countries as well as how they undertake investigative work vis-à-vis market manipulation.

MMoU’s Strength

Indeed, the strength of the MMoU is being hailed as extremely impressive.  It is being regarded as a new standard for global enforcement cooperation and information-sharing.  To date, it has anyway provided tools to combat cross-border fraud and misconduct that in general is able to sever the strength of global markets, which of course has a domino effect of undermining confidence from outside investors.  Thus, the Sultanate’s move is only going to be beneficial and encouraging for investors. 

As well, there is now the possibility for the investigation of cross-border cases, that, prior to the MMoU, was not possible.  With such checks and balances in place in the Sultanate and the economy looking attractive for investment options, there should be fewer concerns about using this region to make a business investment.

Organized by Oman’s Information Technology Authority (ITA), the ‘Sultan Qaboos Awards for Excellence in e-governance,’ – named after Oman’s ruler – is, for the first time, being opened to the private sector.  Until now, it has only been accessible for government organizations so this is a huge change and a very positive move for Oman’s private businesses.  It is hoped that bringing this opportunity to businesses throughout the country will increase competition, and thus quality for customers.

Private and public sector companies will now be given a chance to take part in the competition and, at the same time, compete for a coveted award.  According to the CEO of ITA, Dr. Salim Al Ruzaiqi, opening the competition to this new sector will enable private companies to take part in boosting the efforts to establish a developed digital environment in the Sultanate, by “providing electronic services to different segments of society.”  Two additional parts of the competition have been added for the first time this year: Best Public eService and Best Public Mobile Service.  There will still be the regular competitions too, that are always in place for the government sector — Best eContent, Best eServices, Best eProject, Best eEconomy, and eReadiness.

There has been a substantial profit escalation for Oman’s insurance companies compared to last year.  The figure for 2011 was 12.2 percent in gross premium income – an increase of 30.66 RM million from 2010.

Which companies are the main players in this growth spurt?  In first place, comes the Dhofar Insurance Company, boasting a gross premium of RO52.23 million; second, National Life Insurance with RO35.21 million and third, Al Ahlia Insurance with RO29.52 million.

Infrastructure Projects Boost Insurance Demand

What might be leading this boost in profit margin for Oman’s leading insurance companies?  There are different reasons for each of the companies, but for Al Ahlia Insurance it seems that the huge infrastructure development projects that are being undertaken in the country have been influential. Infrastructure projects currently in progress are: railway plans; developments for ports and airports and more.  Of course, with such extensive projects in place, insurance will be required.  Indeed, as the CEO for Asia and the Middle East of the RSA Group (that has a major stake in this insurance firm) said, there will be an increase in demand for insurance both during the construction and throughout the entirety of the project.

Medical and Auto Insurance

Then there is the increased demand for both medical and auto insurance.  According to the GM of National Life Insurance, S. Venkatachalam, since the economy was improving so that salaries increased and there was a reduction in unemployment levels, people had more disposable income. This resulted in them being able to buy more cars and thus requiring insurance for that.  However, Venkatachalam does not believe that this is necessarily the reason for the major demand increase.  He said that most years the growth is just as high – standing at around 12 percent for the automobile market.

In addition, it seems that a recent report has shown that people living in Oman are quite satisfied with the medical insurance available in their region. This could be due to the fact that governments under the Gulf Cooperation Council (GCC) umbrella, have poured significantly more financial resources into the healthcare industry in the countries riddled with serious chronic health issues such as diabetes, obesity and heart problems.   Coming just behind Qatar and the UAE, was Oman, boasting a satisfaction rate of 78 percent. While indeed there are other issues to be overcome in this industry – such as staffing and quality control – this should still be good news for those living in Oman and indicative once more of how the country’s economy is improving.

Satisfaction Not Guaranteed

But it’s not all that clear.  Just recently, around 500 Nagarjuna Construction Company employees tried to strike about how badly they are treated (but were prevented from doing so by ROP officials). One of their grievances is that even though the company is making large profits, their salaries are not increased (they get paid an average of between RO55 and RO75), and get no healthcare, insurance or quality food provisions.  If they get sick they do not receive any treatment from the company and they claim the food provided is unhygienic (which will also lead to sicknesses).  Although the actual profit margin of the construction company is somewhat hard to prove.  According to an article written last month in NDTV Profit, share prices for the company plummeted more than 10 percent.

Ultimately while at first glance it looks like insurance companies are faring well in Oman due to improved economic/employment conditions, there is a lot more going on than meets the eye.  Thus while Oman is on the right tracks, there is more work ahead to ensure improved insurance and customer satisfaction levels.

Global business news items are constantly filled with the doom and gloom of investing in Pakistan.  We therefore thought now would be as good a time as any to investigate just how true this is, or, if perhaps there has been some exaggeration in the perils of Pakistani businesses.

If you ask the country’s Foreign Minister, Hina Rabbani Khar, she’ll tell you that the country has a lot to offer potential investors abroad, but there again she’s probably just a little bit biased in favor of her country.  Chairing a business roundtable in the country with Alistair Burt, the England’s Minister of State for Foreign & Commonwealth Office, she explained about her government incentives for companies, pointing out how Pakistan is always looking to make things easier – and more attractive – for foreign investors.  She also pointed out the needs of the country vis-à-vis creating more business opportunities, especially in the field of energy.  Despite the country’s pitfalls however, Burt did comment that he found British businessmen making significant profits when bringing their businesses to Pakistan and indeed many more are set to start working there in the near future, given this environment.

Pakistan’s Problems

Talking of environment, even though the country hasn’t exactly got the best track record for natural disasters (like the high level flooding it encountered in 2010-11), terrorism, political crises and economic instability, it seems there is still reason to look to invest there.  But let’s look at the stats. Let’s look at the good news: between 2001-7, there was a 10 percent reduction in poverty levels, but an increase in unemployment in 2008-9.

Nonetheless, this still doesn’t have to discourage British investors.  Clearly, the political relationship between Pakistan and the UK are in a good place.  For example, as noted by Tweeter glenoglazaSky, Pakistan's Foreign Minister, meeting William Hague, expressed his gratitude to the UK for giving "650 pounds sterling" to the country’s education aid, although the Tweeter did note that she probably meant 650 million pounds sterling!  So if Pakistan likes the Brits, it could be a pleasant place for them to take their businesses.

Global Pakistani Business: Pros and Cons

In the middle of last year, Helen Coster of Forbes took a trip to Pakistan, meeting with members of the Lahore chapter of The Indus Entrepreneurs, an entrepreneurs networking group.  She discussed the pros and cons of conducting business in the world’s sixth most highly populated country. There are problems for sure: legalities don’t seem to be implemented – there is somewhat of a free-for-all-anything-goes mentality which certainly doesn’t bode well for foreign investors unfamiliar at best with the workings of the country.  It seems there is a large gap in knowledge on who will be there cracking the whip when a contract is broken or business ideas stolen.  Further, it’s not easy finding quality workers since many choose to go abroad for jobs. As well, getting a commercial loan is virtually impossible and all this culminates in huge frustration.

Moreover, if you’re Indian, don’t even think about trying to strike it rich in Pakistan. The Reserve Bank of India has forbidden Indian nationals from investing in Pakistan's manufacturing sector.  It seems to have made no difference that New Delhi is sticking by its claim that no Pakistan-specific Non-Tariff Barriers (NTBs) have been imposed. It seems a bit bizarre, especially given the fact that those in India are not restricted vis-à-vis making investments in any other part of the world.

Pro-Pakistani Profits

So what other hope remains for those seeking to invest in Pakistan?  There are some great stories actually.  One just has to take a look at what Concentrated Solar Thermal Power has achieved.   Head of the company Samir Hoodbhoy initiated and successfully directed the creation of the Central Design Bureau of Pakistan Steel Mills in 1988-92. It wasn’t easy back then, but over the last two decades-plus, he has been able to establish the groundwork for three leading educational institutions in the field of ICT and been on the Board of Advisors of several other civic and educational organizations.  In the field of wind power and solar energy, Concentrated Solar Thermal Power technology has been hugely successful, providing an alternative to Photovoltaic cells; boasting conversion efficiencies of 30 per cent.  And that’s all in Pakistan – the region we seem to be led to believe is not the place to invest in without a whole lot of trouble and strife.

In conclusion, it seems that yes indeed, there are challenges in Pakistan; no-one can deny that, but as the Chinese symbol of “challenge” states “challenge is the same as opportunity.”  Clearly as we have seen, there are plenty of business opportunities in Pakistan as well.

In order to help people in Oman land better jobs, the Sultan Qaboos University along with the highest research body in the Sultanate – the Research Council – has started a study to ensure higher education is more catered towards the current labor market.  One particular focus will be on how to find jobs in the private sector with the use of English language skills. 

The two research bodies will be looking at how students can better develop linguistic skills, especially English, to increase their marketability in the job market since, as the project’s main investigator Dr. Rahma Al Mahrouqiya pointed out, English is Oman’s second official language.  She said, ““English holds the key to success to career development. It is also a significant tool for strengthening the Omani economy in view of the extensive quantity of foreign investment in the private sector.”

The United Arab Emirates is currently making great efforts to establish relations with China in: energy (clean and renewable); science; technology and trade.  Should it succeed in this endeavor, the next step could very easily be the connecting force between Europe, North Africa and Central Asia.

It was actually the UAE VP and PM, Dubai Ruler, His Highness Sheikh Mohammad Bin Rashid Al Maktoum, who began this train of thought. He pointed out how crucial it is to develop and pursue relations between China and the United Arab Emirates as much as possible.  In addition, speaking on behalf of the UAE, he said that from its point of view, this would effectively “widen the scope of its cooperation with the Asian giant.”  And of course ultimately, that just makes good business sense. 

The UAE leader thereafter added that from a personal standpoint, he had visited China quite a few times and enjoyed what he saw there, culturally and vis-à-vis its economic success.  In other words, he could take it as a lesson for his own country.  He said, “Dubai is like the ancient Chinese capital of Chang'an, a global cosmopolitan city, where people from 200 countries live and work together.  As we today follow the distinguished Chinese experience of development with great interest, we strive to strengthen cooperation between the two countries not only in trade, but also in the fields of science, technology, and clean and renewable energy.”

For a while now, Egypt had been unable to send natural gas due to damage.  But, according to MENA news agency, the problem was fixed last week and the country was able to resume its pumping. Israel for example, is now receiving gas again which is great, but the levels have been way below contractual obligations, which is problematic.  In other words, while gas supply has been restored, it is nowhere near at full capacity.

Unfortunately, the North Sinai pipeline has undergone some quite substantial problems following the deposition of Hosni Mubarak.  Indeed, it has been blown up 10 times, with the most recent attack occurring last month.  Such attacks have resulted in approximately $4bn worth of damage to Israel’s economy.

But, there is a small piece of good news.  Now that gas pumping has been resumed (albeit on a lower level), there was a 3.6 percent escalation on the Tel Aviv Stock Exchange of Ampal-American Israel Corp. (proprietor of a stake in a company that exports gas from Egypt to Israel).

The ROP’s task is to establish and maintain security throughout Oman.  It is constantly working to maintain, improve and expand on all the services and functions it offers to the people.  For example, new services are always being added, more modern methods are being added, etc.  Currently, its police force is well trained and new police establishments have been developed throughout Oman.  New cadres are being trained and a whole slew of job seekers joined ROP units too.

Oman’s oil is being very positive for the Sultanate.  Due to a huge increase in oil revenues, the Sultanate’s fiscal surplus has reached 8.2 percent of 2011’s GDP.  According to the International Monetary Fund, Oman’s projected GDP growth was 5.5 percent and 6.4 percent in non-hydrocarbon GDP.

There has also been an acceleration of economic activities in Oman which is significantly helping the economy.  This trend looks set to continue in the New Year.  In addition, Oman’s economy hasn’t been so impacted by problems in the international financial markets as well as the European crisis.  It seems that banks in Oman have not felt the regional unrest that is causing issues in general for other economies in Europe.  Close to 80 percent of Oman’s oil exports go to Asia limiting the impact of Europe’s crisis. Let’s hope things continue in this way for Oman and the Sultanate.

Yesterday witnessed the beginning of the Oman Islamic Economic Forum, at the Al Bustan Palace Hotel.  Organized by the Amjad Group, in attendance was Tun Abdullah bin Haji, Malaysia’s ex-Prime Minister, State Council honorable members, various ministers, undersecretaries and other political VIPs. As well, there were influential economic executives including those from Islamic banking institutions within and out of the Sultanate.

Finance Matters

The main crux of the forum was discussions on banking regulations in Oman; Islamic banking practices; finance products; Islamic capital markets; charitable endeavors, the development of an alternative Islamic economic system, etc.

At the forum, the Central Bank of Oman’s Chief Executive President, Hamoud bin Sanjour al-Zdjali, pointed out the importance of Islamic banks keeping up with various accounting standards that are accepted by the parties stock market trading, while being conducive to international standards that affect them.

Understanding Islamic Banking Practices

Islamic banking practices work alongside Sharia (Islamic law) and its application through Islamic economics.  In simple terms, this forbids fixed/floating payment or agreeing to specific interest or fees for monetary loans.  In addition, one is not allowed to invest in businesses that sell anything that would be antithetical to Islamic principles.