Oman needs to attract more investment into the construction sector in the country, end bureaucratic red-tapism and make labour laws more flexible to enable its construction sector overcome the impact of fall in oil prices and continue its healthy growth rates, says Dr. Hatem Al Shanfari, noted economist.
Making a presentation at the second annual OSC Conference at Muscat on Monday, Dr Hatem Al Shanfari, who is also on the board of directors of Central Bank of Oman and Galfar Engineering and Contracting, etc. said uncertainties arising of low oil prices may hit construction sector significantly. Two important steps need to be taken to help the construction industry weather the storm. These are ensuring cash flow into the industry through new projects and ease in doing business, he told OER on the sidelines of the function.
Construction sector in Oman has recorded a high annual growth rate of more than eight percent during the period between 2012 and 2014, he said. The growth was facilitated by a spurt in government expenditure during the period enabled by high oil prices. That enabled the sector to reach a size of more than RO 2 billion. It was the government investment that drove the growth in the sector, he added.
He noted that contribution of the construction sector to Oman’s economy rose from 7.1 per cent in 2012 to 8.2 per cent in 2014 in real terms. The number of employees in construction sector is more than 600,000. There has been a slight drop in the number of expatriate employees in the construction sector of late and it will come further down in the coming days, he added.
He also pointed out that in terms of output, size, value added and contribution to employment, the contribution of construction sector is significant. The total credit provided by the banking sector to the construction sector in Oman is RO 1.8 billion which means stability of on construction sector is important for the healthy growth of banking sector also, he added.
The forum is being held to provide potential solutions, ideas and suggestions to help contractors face the challenging times, said Shahswar Al Balushi, CEO of Oman Society of Contractors. He pointed out that apart from usual issues the fall in oil price is creating new challenges for the construction sector.
He said OSC has already formulated classification of contractors. “We will continue to engage with the government. We need to understand their challenges also as they need to understand ours and devise ways as to how to move forward together,” he added.
Hans Erlings, CEO of Galfar Engineering and Contracting who made a presentation said volatility in commodity prices and intense competition resulting from increased project activity had marked the construction sector in Oman in the recent years.
