OMAN - Economy
CEO, Renaissance Services
Stephen R. Thomas originally worked with Grand Metropolitan Group plc. He has served as chairman and a board member of the Oman Society for Petroleum Services (OPAL) and as a board member of National Hospitality Institute SAOG. He has been with what is today Renaissance Services SAOG since 1988. In 2010, he was appointed OBE for services to business abroad and to the community in Oman.
How will the COVID-19 outbreak impact the Omani business environment in the medium term?
COVID-19 has had a huge impact on economies around the world, including Oman, as the lockdown measures will have a direct effect on the country’s GDP. The crisis will witness a first phase focused on saving lives and a second one geared toward kickstarting the economy, with job creation as its main priority. The low oil price environment is affecting all businesses, though it is being contained as much as possible. For Renaissance, although parts of our services have shut down, with extensive cost-cutting measures, the safety of our employees and customers has been the most important aspect of our initiatives. At the same time, we play our part in keeping the health services going by providing essential services such as cleaning and sanitizing, laundry operations, and feeding services to all public hospitals. For Renaissance, the major challenge has been maintaining a stable supply of personal protective equipment (PPE), though thankfully we never ran out. Finally, we have also leveraged our logistics reach and scale of people to prepare and deliver food supplies to quarantine, support, and outbreak centers all over the country.
How should Oman position itself with regard to the current low oil prices, and what is required from the private sector across the value chain?
Both public and private sector, including oil and gas, will need to look at how to drive down costs, which will likely lead to more outsourcing of non-core services. Working in a collaborative way ensures no one takes the brunt, and all players across the value chain will minimize the consequences from the current situation. The government needs to spend less, so the private sector must step up and find a way to keep the major projects going. Driving efficiencies will be the mandatory guideline for private companies like Renaissance as well, and few models offer a viable solution to meet this goal. We have been providing permanent accommodation to blue-collar workforces in remote oil and gas fields, showing it is possible to build low-cost, high-quality structures compliant with international labor standards through the economies of scale. Many labor facilities happened to be outbreak areas, as social distancing was not applicable. It is thus crucial to ensure people live with dignity at an appropriate cost.
What are your expectations from Vision 2040, and what is required to support the economic growth of the Sultanate?
The key issue is finding a way to scale the learning lessons from the crisis to allow Oman to compete on a global scale. Tanfeedh addressed all the right questions, recognizing that diversification of the economy is crucial; however, the process needs to be accelerated, perhaps with the inclusion of new elements of the sustainability agenda. More specifically, the national employment roadmap needs to be redrawn to support growth and not hinder it. For this same reason, deep austerity and cost-cutting measures would not favor the Omani economy. Instead, new legislations around FDI and privatization will reduce the government burden and, at the same time, support the economic development of the country. PPPs are also a viable solution, and Oman has a great opportunity to learn from both failed and successful PPP projects worldwide. Moreover, the traditional model of opening up tenders to a wide variety of players, when only a few will be able to deliver it, needs to be revisited in the name of transparency and efficiency. The private sector needs to be realistic instead of lowering down prices at all costs to win the tender. There are plenty of opportunities.