Fueling Growth
“If the tide of the time is against you, keep marching on.” This was the motto of Mohsin Hani Al Bahrani when he took over as CEO of the Automotive, Construction Equipment and Renewable Energy (ACERE) cluster of Oman’s Mohsin Haider Darwish Group (MHD). Now, his resilience and judgment are paying off.
What was the situation like when you assumed the role of CEO at MHD ACERE, and what changes have you overseen?
I joined MHD as the Director of Automotive. After a year, I was promoted to CEO, at a time when the pandemic was challenging the economic health of Oman. However, drawing on my business acumen and resilience, I was able to bring in niche brands such as McLaren Automotive, ABB EV Chargers, Varta Batteries, XCMG, and Weir Trio. This created much needed employment opportunities for the country and contributed to socio-economic development. Beyond the pandemic, I have also expanded the sales and aftersales network for MHD ACERE, setting up seven new sales facilities across Oman and increasing our aftersales facilities from three to 12 in the space of two years. I was also instrumental in merging together the Tyres and Batteries division with Automotive to ensure the growth and expansion of brands such as Michelin, BF Goodrich, Riken, and Eneos. Where automotive is concerned, I have also been active in promoting MG Motors in the sultanate. In 2019, the brand ranked 15th in terms of local sales volume, according to the MEAC Report. Now, it occupies third position, behind Toyota and Nissan.
What role has e-commerce played in helping you navigate the challenges of the COVID-19 pandemic?
My approach to handling business in the wake of the ongoing COVID-19 pandemic is to turn these challenging times into an opportunity to assess and restructure our approach to customer service. I have deployed a number of innovative ideas through which MHD ACERE has overcome challenges. One such initiative has been the launch of e-commerce operations for MG Motors, where consumers can purchase a car in just three clicks. This launch was intended to help MG reach a wider customer base and maintain a continuous relationship with current customers and partners. In addition, to provide a premium, personalized experience to our niche customers, I enhanced the e-commerce platform of Jaguar Land Rover. These moves have enabled MHD ACERE to achieve its goals of delivering utmost customer satisfaction and improving overall brand awareness.
How have you helped your country during the pandemic, and how important is it to you that MHD ACERE supports Oman’s broader socio-economic development moving forward?
It’s very important to me. After helping MHD ACERE regain leadership status in the commercial vehicles market with Ashok Leyland, I didn’t think twice about converting Ashok Leyland buses into mobile covid testing units to help curb the spread of the pandemic.
Meanwhile, as a commitment to my country, I have also been a champion of Omanization within the organization and I have ensured that the target of 65% Omanization set by the Ministry of Labour is successfully adhered to within MHD ACERE. Last year alone, I was directly involved in hiring 107 Omani employees into the company.
You have received numerous awards and accolades for your achievements to date. How do you feel about this recognition?
I was awarded a certificate of appreciation by SAIC Motor Middle East for outstanding sales where MG is concerned, and I have received recognition and awards from multiple publications and institutions in the region. I was also recognized amongst the top 50 prominent personalities in Oman who have contributed directly towards the growth of the nation, and I was the only person under the age of 30 to achieve this feat. I am proud of these achievements and feel like they are a testament to the immense amount of work I have put in to take the business to new heights. Looking ahead, I am committed to continuing that hard work for the benefit of the company and of Oman. Guiding my work is my belief that economic diversification and tourism promotion are extremely crucial for the economic progress of the nation.
What is your strategy where business diversification is concerned? What sectors are currently of interest?
I have diversified our business operations into new verticals by setting up MHD Leasing L.L.C, which caters to the tourism industry within the country. The newly formed Healthcare division is under my remit too, and we have partnered with some of the leading global brands in the medical sector such as Spark Meditech, Comen, Schrack Seconet AG, FUJIFILM, and Sonosite, to bring some of the best medical equipment and practices to the sultanate. This HospiCare division of MHD ACERE also supplies intra-aortic balloon catheters, hernia repair meshes, and other vital equipment to top medical organizations and hospitals in the country.
Renewable energy also falls under the ACERE umbrella. What are you doing to drive innovation, promote renewable alternatives, and support the battle against climate change?
To tackle the immediate threat of global warming and climate change, I have introduced sustainable business practices to MHD ACERE. I have also established the Renewable Energy and Electric Vehicle Chargers Division. The aim of the division is to drive technological innovation, powered by clean energy. In addition, I have signed a contract with ABB, a pioneering technology leader focused on digital industries, for the supply of high-power electric vehicle chargers that will be installed across the country. There is no doubt that e-mobility is growing across the globe and my aim is to be among the pioneers providing the best green and sustainable solutions in Oman.
“I didn’t think twice about converting Ashok Leyland buses into mobile covid testing units to help curb the spread of the pandemic.”
New taxes
However, the biggest and perhaps toughest policy move would have to be the introduction of several taxes. Oman introduced VAT in April 2021, and is expected to become the first GCC country to introduce income tax on high income by 2022. The latter, which will target wealthy individuals, is expected to decrease the country’s deficit to 1.7% of GDP by 2024.
Oman was the fourth country in the GCC to introduce VAT, joining Saudi Arabia, the U.A.E. and Bahrain. It expects to amass $1 billion from VAT every year. However, in an effort to protect its most vulnerable people, Oman also announced a Social Security Scheme worth $259.8 million. It has also started removing utility subsidies from January 2021, with the aim of redirecting state subsidies to groups who need it, rather than subsidizing all users.
While the dual shocks took a heavy toll on Oman’s economy, its long-term policies aimed at sustainable growth, coupled with the roll-out of vaccinations and the easing of social distancing restrictions, are expected to ease its recovery process. The IMF expects Oman to experience a mild recovery of 1.5% in non-oil GDP growth in 2021, rising to 4% by 2026. Overall its real GDP is expected to grow by 1.8%, reaching a high of 7.4% in 2022, then 2% in 2026.
Vision 2040
Oman’s Vision 2040 is expected to be one of the main drivers of its recovery going forward. The vision focuses on creating a favorable environment to attract talent in the labor market, building a competitive business climate, and achieving comprehensive regional development through decentralization. With the aim of becoming a knowledge-based economy, the government will set about transforming several strategic sectors that will provide a competitive edge to Oman’s economy.
First and foremost, Oman’s strategic position in the Arabian Gulf makes its trade and logistics sector a crucial driver for growth. Stateowned logistics company ASYAD has been spearheading this effort, with Oman hoping the sector can contribute roughly $36 billion to GDP by 2040, up from $2.6 billion in 2016, while also creating 300,000 jobs. The sultanate’s ports have already increased its direct connections to 86 counterparts. Ports saw growth in operational and commercial business in 2020, with more than 9,000 vessels calling on Oman. Local ports processed about 54 million tons of general cargo and witnessed rises in liquid bulk and container volumes, as well as a nearly 40% increase in livestock imports.
Secondly, the country’s banking sector, specifically Islamic banking, has seen one of the fastest growth rates in the world, according to the IMF. Oman introduced Islamic banking in 2013, making it the last country in the GCC to do so. Since then, it has managed to increase Islamic banking and Islamic windows’ market share to 14.3% at the end of 2020 from 13.6% in 2019. Islamic financing in Oman grew by 9.5% in 2020, compared with the conventional banks’ loan growth of 2.1%, according to Fitch Ratings. The credit ratings agency also expects growth to continue into 2021/22, as a result of Oman’s Muslim-majority demographics and low banking penetration. Only 56% of the adult population had a bank account in 2016.
Finally, Oman is currently revamping its energy sector, with a renewed focus on regaining investors’ confidence. With the formation of Energy Development Oman, the Omani government will undertake hydrocarbon exploration and production operations, as well as invest abroad and deal in renewable energy. Oil-rich Gulf countries are diversifying their economies away from a heavy reliance on hydrocarbons by investing in renewable energy. Oman’s Vision 2040 has set a target that 20% of the country’s power generation should come from renewables by 2030, and almost 40% by 2040. Oman’s state-owned energy firm OQ, formerly Oman Oil Company, is currently developing a 25 gigawatt (GW) renewable energy project to produce 1.8 million tons of green hydrogen and up to 10 million tons of green ammonia per annum. This project is in partnership with Hong Kongbased renewable energy project developer InterContinental Energy and Kuwait Investment Authoritybacked clean energy investor and developer EnerTech.