Is unfair competition affecting survival of SMES?

The number of small and medium enterprises (SMES) in the Sultanate is increasing because of the importance of these institutions in the economic system on one hand and the opportunities they provide for job-seekers to move towards self-employment, especially with lack of employment opportunities in government institutions which drives some of them in this direction.

According to the data published by the National Centre for Statistics and Information, there are currently over 33,000 SMES, operating mostly in Muscat Governorate (more than 30 per cent). This requires support and help for SMES to enable them to face challenges and difficulties and overcome them with least possible losses, as well as to develop practical solutions that would increase their contribution to the Sultanate’s GDP.

Moreover, development of SMES requires concerted government efforts by updating the system of laws and legislation and creating a business environment to encourage these institutions to thrive, and enable them to enter into partnerships with top companies to add value to the national economy. SMES significantly contribute to the GDP of the world’s major economies with 60 per cent in China — for example — 54 per cent in Germany, 52 per cent in Japan and 50 per cent in the United States.

Accordingly, national efforts continue to overcome the difficulties and challenges facing SMES, which are not very different from those faced by similar institutions whether in the region and beyond.

As the name says, SMES mean enterprises owned by small investors and entrepreneurs seeking opportunities to own and manage small businesses that they can later turn into large enterprises. This can only be achieved if large commercial enterprises stop competing with emerging SMES to enable them to stand on their feet and go ahead with their plans. Unfortunately, this is not the case in the Omani market, where giant companies set up small enterprises under different names to compete with emerging SMES in their own backyard, rather than rely on them for needed supplies.

A local research study on the main challenges facing SMES in the Sultanate shows that 93 per cent of entrepreneurs believe that large companies are monopolising the market to negatively affect their business growth. This is not the case in Japan, where Toyota Motor Corporation does business with over 40,000 SMES to acquire vehicle accessories, spareparts and other industry requirements, supporting the growth of these small enterprises to become future large enterprises.

On the other hand, SMES in Oman are still suffering and facing huge challenges and difficulties in their operations. This could go on for years, causing the owners of these SMES to abandon their businesses which are stalled not only under the pressure of unfair completion by large enterprises, but also from hidden trade practices by some expatriates in ventures involving Omani partnerships.

These issues are discussed by stakeholders at various levels, such as Oman Chamber of Commerce and Industry and “riyada” organisation, who show great interest in helping SMES to overcome challenges by forming committees specialising in identifying challenges and difficulties as well as achieving positive results that support the survival of these SMES to enhance the labour market.

A study on the main challenges facing SMES shows that 93 per cent of entrepreneurs believe that large companies are monopolising the market to negatively affect their growth