Sultan Qaboos reviews Oman’s cooperation with China

Oman’s banking system to remain stable, says Moody’s

Sultanate ranks fourth on index of Arab market competitiveness

Oman expects spending to grow to more 9 Omani rials this year

His Majesty Sultan Qaboos Bin Said of Oman received at Bait al-Baraka palace with Chang Qow Lee, Member of the Political Bureau of the Central Committee of the Chinese Communist Party and Secretary of the Party Committee of Tianjin City in China, and the two sides discussed aspects of cooperation between the two close countries in light of the friendly ties binding them.

HE Yousuf Bin Alawi Bin Abdullah, Minister Responsible for Foreign Affairs, received Chang and his delegation last week.

The meeting discussed bilateral relations and exchanged views on a number of international and regional issues of common concern.

The meeting was attended by HE Sayyid Badr Bin Hamoud Al Busaidi, Secretary-General at the Foreign Affairs Ministry, HE Ahmed Bin Yousuf Al Harthy, Undersecretary at the Ministry for Diplomatic Affairs, HE Talib Bin Miran Al Ra’eesi, Head of the Economic Affairs Department, HE Ali Bin Ahmed Al Isa’ee, Head of the Minister’s Office Department, HE Riyadh Bin Yousuf Al Ra’eesi, Head of the East Asia Department, a number of officials at the ministry and the delegation accompanying the guest.

The volume of trade between Oman and China was $10.7 billion in 2010 and $6 billion in the first half of 2011.

This was stated by Chang during his meeting with HE Sheikh Sa’ad Bin Mohammed Al Sa’adi, Minister of Commerce and Industry, on Sunday.

After Sa’ad Al Sa’adi received Chang Qow Lee and his delegation, the two discussed relations between the Sultanate and China in economic, trade and investment sectors, besides trade between the two countries.

He said China accords special attention to the economic and trade relations between two countries as China is considered the largest third importer of Omani oil. He said China has been working on executing the 12th five-year plan for economic development, while the Sultanate is executing the Eighth Five-Year Plan in the same area.

They discussed cooperation in infrastructure and Small and Medium Enterprises, training and rehabilitation, technology transfer among other fields.

Chang Qow Lee said there are a number of cooperation opportunities with Chinese companies, such as CNBC, Senok and SINOPEC for setting up bilateral projects with Oman Oil Company (OOC) in the industrial estates, as well as building up two storage centers in Xingang Port, which is considered the world’s fifth biggest port.

Sa’ad Al Sa’adi welcomed further boosting ties in economic and trade fields. He urged the Chinese side on the significance of establishing investments in the Sultanate particularly in the industrial estates in Sohar, Salalah and Duqm.

Sa’ad Al Sa’adi, as Head of the Omani side in the Omani-Chinese Joint Committee, stressed the importance of activating the committee’s meetings that were suspended in 2005. The committee touched on issues within the scope of economic, trade and investment cooperation through which the agreements and Memoranda of Understanding were signed for regulating the bilateral cooperation.

Eng. Ahmed Bin Salim Al Wahaibi, Chief Executive Officer (CEO) of Oman Oil Company, gave a brief on current Omani investments in China, particularly in oil and petrochemical fields. He praised Chinese officials for cooperation in this area, explaining that the company intends to make more investments.

The meeting was attended by officials from the Ministry of Commerce and Industry and Oman Oil Company.

HE Darwish Bin Ismail Al Balushi, Minister Responsible for Financial Affairs, received Chang and his delegation.

The two sides discussed topics related to enhancing fields of existing bilateral cooperation in number of joint economic and investment fields.

Darwish Al Balushi stressed the importance of enhancing fields of joint cooperation and the efforts being exerted by the government of His Majesty Sultan Qaboos Bin Said to serve the economic development through projects of the Eighth Five-Year Plan that aim at diversifying sources of income.

He added that the Sultanate is going ahead in implementing development projects of the Eighth Five-Year Plan in roads, ports, shipping, electricity, water, oil and gas sectors and other services. He hoped that this plan will achieve growth rates up to 6 per cent.

He said the economic relations with China is growing and the volume of trade exchange was rising with increase in the volume of joint investment in various sectors. He stressed the importance of increasing the participation of Chinese companies in the projects being implemented by the government and benefiting from the policy of the Sultanate’s government that encourages foreign investment.

Al Balushi highlighted the efforts and plans of the government in encouraging the small and medium enterprises, as well as the importance of cooperation between the two countries to benefit from the Chinese expertise in promoting and enhancing the role of these enterprises.

He underlined the importance of Duqm port’s location to serve the international trade and efforts of the Sultanate government to make best use of its strategic location from industrial and commercial aspects. He stressed the importance of participation of Chinese companies in the projects included in the layout of the region, which also includes various projects, such as the industrial, trade, oil and energy sectors.

Chang Qow Lee hailed the accomplishments achieved by the Sultanate in various development sectors as he said the high growth rates and low inflation affirm that the Omani society is harmonious and safe.

He said the diverse development strategy pursued by the Sultanate in implementing its development plans and programs is achieving the goals set by the Sultanate’s government in reducing the dependence on oil as the primary source of income.

The Chinese official affirmed that the Sultanate is an important economic partner for his country as the volume of trade exchange between the two countries during the past two years stood at $1.7 billion, therefore the Sultanate is the third largest economic partner with his country in the Arab world.

He expressed his hope that the trade and economic relations between the two countries will achieve further progress in various economic and investment sectors during the upcoming period.

The meeting was attended by HE Sheikh Dr. Abdulmalik Bin Abdullah Al Hinai, Adviser at the Finance Ministry and in-charge of the National Economy Ministry.

HH Sayyid Fahd Bin Mahmoud Al Said, Deputy Prime Minister for the Council of Ministers, received Chang.

After welcoming the guest and his delegation, Fahd expressed the Sultanate’s satisfaction over the level of relations with China, which reflects the keenness of the two sides to support prospects of bilateral cooperation to serve common interests between them.

Fahd said that the Sultanate has set a plan to develop human resources and introduce more scholarships abroad to promote skills of Omani youth in technical and vocational fields in coordination with China. The guest replied to this in a positive way.

The two sides discussed ways to enhance existing cooperation between the two countries in economic, trade, education and cultural fields, in addition to reviewing the current situations in the international arena.

The Chinese guest expressed his pride and that of his delegation over the civilizational and architectural landmarks and the comprehensive renaissance being witnessed by the Sultanate under the leadership of His Majesty Sultan Qaboos Bin Said.

He expressed the appreciation of the Chinese government for the efforts being exerted by the Omani leadership in the march of internal progress and construction, as well as cementing friendship and cooperation relations with the international community.

He commended the talks he conducted with senior officials in the Sultanate.

The meeting was attended by HE Sayyid Badr Bin Hamoud Al Busaidi, Secretary-General at the Foreign Affairs Ministry and Charge d’affaires of the Embassy of China.

Meanwhile, the Sultanate's total revenues rose by 29 per cent by the end of the first half of this year to RO 5.443 billion, compared to RO 4.220 billion during the corresponding period last year. In the meantime, the public spending rose by 12.1 per cent to RO 3.943 billion.

The monthly bulletin of the Directorate-General of Statistics, quoting data from the Ministry of Finance, shows that oil remained the main contributor to general revenues, even as international oil prices rose by 42.9 per cent. Oil revenues over the past six months stood at RO 4 billion (and 60 million), while gas revenues rose by 12.9 per cent to RO 503 million.

Customs tax declined by 28.7 per cent to RO 63 million, while income tax on companies rose by 2.1 per cent to RO 232 million. Capital revenues also declined by 25.7 per cent to RO 10.1 million, while other revenues decreased by 4.8 per cent to RO 575m.

While the volume of investment expenditures increased by 21.5 per cent to 1.39 billion, the developmental expenditures of civil ministries occupied the largest segment of these expenditures, followed by expenditures on oil production (RO 889 million), gas expenditures (RO 337 million) and ministries' capital expenditures (RO 10.6 million).

Meanwhile, current expenditures rose by 10.2 per cent compared to the first six months in 2010.

Following Royal directives, the government began last March to implement a package of financial procedures worth 1 billion to improve the living conditions of citizens.

Balushi said that the public expenditure is expected to reach RO 9.1 billion and this will entail a rise in deficit of RO 1.9 billion, which can be covered by additional returns from oil prices calculated at $58, while general oil prices are expected to range between $75 and $80.

The Sultanate ranked fourth among Arab countries in the index of mobile market competitiveness. The rating appeared in a report published recently by the Jordan-based Arab Guides Group on its website.

The Arab Guides Group is expected to unveil the details of its findings on the sidelines of the 8th conference on the Merger of Media and Communication scheduled to be held in Amman on June 6 and 7.

Oman achieved 69.52 points, compared to 76.1 per cent for Saudi Arabia, 75.37 per cent for Jordan and 69.61 per cent for Palestine.

The indicator in mobile market measures areas like mobile operators, number of new licenses, market share for operators, number of pre-paid and post-paid offers, 3G and competitiveness in international services.

Banks in Oman are expected to remain stable over the next twelve to eighteen months, with higher revenues and moderate credit growth, ratings agency Moody’s said in a report Thursday.

Lenders will benefit from an improved business environment, stable funding bases and high liquidity buffers, not to mention fewer non-performing loans, analysts from the firm said.

"We forecast that Oman's real GDP will likely to expand by 2.9 percent in 2011, fuelled by high oil prices and increased oil production, whilst accelerated public spending will also stimulate economic growth outside the oil sector," said Elena Panayiotou, a Moody's analyst and author of the report.

"The improved operating environment will support banks' asset quality, drive credit growth - likely to be between ten percent and fifteen percent over the outlook horizon - and increase bank revenues. “Moreover, non-performing loans will likely remain at low levels over the outlook period, at three percent – four percent of total loans."

Thus, for the time being, banks' earnings-generating capabilities will continue to be adequate, the report said.

However, analysts warn that the banks are not out of the woods yet, and could face high credit risks in the future, especially given their exposure to suffering real estate and construction industries.

They say the concentrated nature of private wealth in Oman and the small size of the banking system (valued at $41bn by the end of 2010) increases the risk of problems.

Another key structural weakness stems from Omani banks' having limited geographic diversification and high dependence on the domestic economy, reliant on a volatile oil sector.

Despite the government's long-term plans to diversify the economy, the hydrocarbon sector will continue to dominate the Omani economy over the medium term, leaving banks' earnings susceptible to volatility, the report concluded.