Unrest aftermath containable - Economic scenario is robust
MUSCAT -- Awad bin Mohammed Bamkhalaf, Executive Chairman, Oman and Emirates Investment Holding CoOman and Emirates Investment Holding Co , expressed his optimism that Oman will be able to overcome recent protests, thanks to the wisdom and statesmanship of His Majesty the Sultan. He pointed out in an exclusive interview with Oman Arabic daily that the protest could have been worse, had it not been for the efforts exerted by the wise leadership of
His Majesty the Sultan with the contribution of all segments of the society. He added that the ongoing sit-ins in the region brought about a state of horror among the investors, and had its negative impact on asset prices, and this will badly affect the flow of liquidity and cause foreign businesses to shy away from investing in the region. But he also said the aftermath will not last long in countries that are blessed with wise leadership such as the Sultanate of Oman.

He hailed the success achieved by the Sultanate over the last few years saying that there has been a notable growth in almost all economic sectors helped by sound infrastructure and a package of incentives and tax exemptions offered to investing companies, besides a transparent administrative system, all these make Oman an investment-friendly destination.

Bamkhalaf stressed on the importance of providing the markets with adequate liquidity because being short in liquidity jeopardises the financial market and reduces the share prices.He said this in turn causes losses to the investors and plummets the middle class investments which is the biggest contributor to the financial market.

Bamkhalaf said that the Sultanate remained dependent on oil as a major component of its gross domestic product (GDP), however the industrial sector is witnessing a gradual growth over the past few years. The policy of expansion in non-oil sectors adopted by the state is expected to reinforce the process of growth and sustainable development in the long run.

Commenting on the wave of uprising in the Arab world, Bamkhalaf said it is natural because most countries were adopting a policy of consolidating the financial position which leads to austerity in expenditure so as to provide the requisite liquidity in an effort to protect the financial system against the risks of the global credit crunch, and this has cause the growth rate to slump.

He stressed on the importance of tackling the situation in a peaceful manner, because any break-down in the security situation could shake the economy and block the road for any reforms.

Speaking about the impact of the global financial downturn on the Sultanate, he said Oman is the best among the Middle East counties, it was ranked 34 according to the Global Competitiveness Report 2010, which included 139 countries, and it ranked 43 in the Economic Freedom of the World Annual Report which included 179 countries, it was ranked 41 in the Transparency in Investment Report which included 180 countries, it was ranked 57 in the Investment Environment Report which included 181 countries.

He added that the Sultanate has achieved first place worldwide in terms of human development over the last four decades, and the gross domestic product is expected to grow by 5 per cent in 2010, which is a high percentage compared with its peers in the region, the growth rate is expected to increase by 6 per cent year-on-year during the 8th development plan.

Bamkhalaf said a number of banks and financial institutions can go bankrupt as a result of a collapse of one institution in something resembling the domino effect.

But in the Sultanate, the financial situation is strong and the local banks are having capital adequacy of up to 15 per cent, and the Central Bank in co-operation with specialised British financial institutions conducts stress tests from time to time and the results of these tests indicate the ability of the local banks to face any future challenges.

Bamkhalaf also pointed out that we are safe from major risks and from the impact of the global financial crisis, but the post-crisis situation is different from that situation prior to the downturn, so there is a need to deal with the new reality in an effective way.

With more economic stability he forecasts a better position; the International Monetary Fund estimates 5 per cent GDP growth for the current year helped by return of activity in the construction and manufacturing sectors and underpinned by a health lending activity.

Bamkhalaf said that the aftermath of the unrest could have been disastrous, but it was contained thanks to the wise leadership of His Majesty the Sultan and the contribution of all segments of the society; we are now in the correct path of recovery and are gradually getting out of the bottleneck. -- Translated by Khalid al Kush

© Oman Daily Observer 2011