Shashwar Al Balushi, CEO, Oman Society of Contractors
2019 will be a continuation of 2018. Government spending in development projects will be limited. Projects from private sector will not be sufficient to drive the sector forward. An economic upturn is expected during the first quarter of 2021, says Shashwar Al Balushi, CEO, Oman Society of Contractors Your views on the current status of construction sector in Oman? How do you see the sector’s growth in the year ahead?
We anticipate that 2019 will be a continuation of 2018. Government spending in development projects will be limited. 2019 Budget allocation for development projects will seek to pay old outstanding and complete existing projects. Projects from private sector will not be sufficient to drive the sector forward. The sector will continue to shrink and we forecast more outflow of expat workforce and limited employment of local workforce due to lack of projects. More companies will continue to
leave the sector in 2019 and 2020. We anticipate to see economic upturn during the first quarter of 2021.
Does the sector lack the required economic stimulus from the Government? What perceptible changes are needed to boost the sector?
The economic condition is still low and we envision the economy will pick-up during the first quarter of 2021. Only then we might see aggressive government spending. To stimulate the economy in the present timeframe the government needs to expedite the process of passing the baton to the private sector. We feel this move requires simplification of procedures and processes and for the government to relinquish its role in the business and become more of a regulator.
In any case, all new projects will require preparation time before we can see action on the ground and usually the timeframe is 18 to 24 months. That is why we forecast 2021 to be the upturn year.
What are the issues facing the construction sector in terms of new business, investment, taxes, payment and labour issues?
The major concern at the moment is finding sufficient projects to support the sector. In 2019, we will see more negative labour movement. This means the workforce will continue to shrink. We will also see more and more companies heading out of the sector particularly from medium and small companies. We expect this to persist till end 2020. This will reduce investment in the sector and the sector will be less attractive unless we address all challenges head on.
Will technology lead to reducing labour in the construction sector?
Companies which will adopt new technologies from now, will be gearing themselves for better future. The investment made today in this area will show good result fast. Companies have to change the old building methods and push for more efficient less labour intensive ways. Very soon the Ministry of Manpower will implement the single nomenclature scheme. This will allow companies employ multiskill workers hence reducing expat blue collar workers. If this scheme is coupled with new technologies, it will help companies become more efficient, effective, and profitable.
What are the challenges and solutions?
The challenge is to get the sector to shift from the status quo. Another key challenge is how to clear the sector from the negative impact of hidden trade and freelance workers. The sector is infected with these issues, making it very difficult for the sector to develop and grow. We will begin to implement Companies’ Classification which aims at addressing this from within. Also the construction initiative which we presented during Tanfeedh in 2016 addresses these issues but it has not been implemented yet.
To stimulate the economy in the present timeframe the government needs to expedite the process of passing the baton to the private sector. We feel this move requires simplification of procedures and processes and for the government to relinquish its role in the business and become more of a regulator.