2.6 With the ruling families growing dependence on British ‘outsiders’ to remain in control and the countries continual decline into political and economic stagnation, came an ever-escalating deterioration of relations with the people. This came to a head in 1970 when the Sultans son, Qaboos, led a bloodless coup against his father. It was denied that the British had had any involvement however, the fact that Qaboos had recently trained at the Royal Military Academy at Sandhurst and British officers commanded the Oman army at the time seems to suggest differently.
2.7 Sultan Qaboos has subsequently led his country out from a backward position, modernising Oman’s semi-feudal economy and repealing his father’s oppressive social restrictions. Although Britain formally withdrew from the Gulf region in 1971, it has still maintained an uncommonly strong relationship with the country of Oman.
3. POLITICAL CLIMATE
3.1 Oman is not a democratic country with absolute power in the hands of Sultan Qaboos. There is no constitution but the Sultan rules based on the advice of an appointed cabinet and council, all of whom are directly appointed by the Sultan himself. There is no legislature or any political parties and the country has limited freedom of speech.
3.2 Under the leadership of Sultan Qaboos, Oman has entered the Arab League and the United Nations.
3.3 The judicial system in Oman is largely based upon Sharia law. The word sharia denotes an Islamic way of life that is more than a system of criminal justice. Sharia is a religious code for living, in the same way that the Bible offers a moral system for Christians. Most Muslims adopt it to a greater or lesser degree as a matter of personal conscience. Sharia law in Oman does not invoke the severe punishments of stoning, lashes or the severing of a hand as some countries do. The law is mainly used to govern areas such as inheritance, banking and contract law.
3.4 The Iranian revolution and invasion of Afghanistan by the Soviet Union in 1979 led the Sultan to realise how vulnerable the country was militarily in being able to protect its oil wealth. In 1981, partly in response to these concerns, the
Gulf Co-operation Council (GCC) was formed with 5 other like minded and worried countries, Kuwait, Bahrain, Qatar, Saudi Arabia and United Arab Emirates. The purpose of this organisation was to provide a unified regional defence as well as co-ordinate policy on trade and economic issues. Although various members of the GCC have increased their military capabilities, the region is still reliant for its protection by western powers.
3.5 In 1989 a Co-operation Agreement was ratified between the GCC and European Commission (EC) whereby GCC and European Union (EU) foreign ministers would meet once a year at a Joint Council/Ministerial Meeting to facilitate trade relations with the EU. This agreement was also intended to strengthen stability in this strategic part of the world. Working groups were established in the fields of industrial, energy and environment co-operation and expanded in 1996 to include university, business and media co-operation.
3.6 The Co-operation Agreement contained a commitment from both sides to enter into negotiations on a Free-Trade Agreement between the GCC and EC – a Free Trade Agreement overview is detailed at Annex A. These negotiations have been hampered with the EU council insisting that, prior to signature, the GCC must establish an agreed Customs Union. A GCC Customs Union was finally agreed and signed at the annual GCC summit in November 2002 with its full introduction across GCC countries from January 2003. The Customs Union:
3.6.1 Converts all 6 GCC countries into a single customs zone whereby all duties, fees, taxes as well as any other charges or procedures that hinder trade between GCC countries are removed.
3.6.2 Maintains a common external policy on foreign imports, implementing a 5% import duty on imported goods, on the principle of payment on the first point of entry into the GCC.
3.6.3 Maintain a common internal policy on goods and commodities produced in any GCC country where they are to be treated as national products and not subject to custom tariffs when moved between member states.
3.7 With the way now open for a satisfactory conclusion to the Free-Trade Agreement, a successful conclusion should cover not only trade in goods but also trade in services, government procurement, intellectual property rights etc.
3.8 In international politics, Sultan Qaboos tends to follow a moderate line oriented towards compromise and peace. He has managed to maintain friendly relations with post-revolutionary Iran and diplomatic ties with Egypt after it signed a peace treaty with Israel. In 1993 he also welcomed Yitzhak Rabin, the Israeli Prime Minister, during a brief visit and remained a supporter of the Israeli-Palestinian peace process throughout the late 1990s, following the Oslo Agreement. Most recently, Sultan Qaboos allowed Omani military bases to be used as a stepping stone for British and American forces to launch and recover from attacks on Iraq during the 2nd Gulf conflict.
4. ECONOMIC CLIMATE
4.1 Oil exploration began in the gulf during the 1930’s and 40’s with oil first being discovered in Bahrain and Kuwait. World War II delayed any further exploration and development of oil fields and it was not until well into the 1950’s that it recommenced. Oil was not discovered in Oman until 1964, and then only small reserves have been found. Oman did not begin exporting oil until 1967.
4.2 Oman’s economy is dominated by the oil industry and accounts for almost 50% of the countries Gross Domestic profit (GDP). Omani crude oil is extracted and processed by the Petroleum Development Organisation (PDO) which is 60% government owned and 34% owned by Royal Dutch Shell with the remainder by other oil companies. Oman is not a member of OPEC.
4.3 Omani citizens enjoy good living standards but the future is uncertain with oil reserves likely to last less than 20 years. The Omani government is keen to pursue policies that will allow the country to diversify its economy and allow them to rely less on these diminishing oil reserves. However, the country is rich in other mineral resources such as copper, chromium and gypsum but these have yet to be exploited. Areas for economic diversification are likely to lie with oil refining, petrochemicals, fertilisers and plastics, and cement as well as shipbuilding and repairs.
4.4 In 1970 there was only 10km of paved roadway and 1 700km of unpaved track in the country. Since Qaboos has come to power, he has substantially improved this situation and there is now over 7 000km of paved and 25 000 of unpaved road and track. Attention is currently being given to widening existing highways and linking towns and villages of the interior with local road schemes.
4.5 There is no railway system in Oman. There are several seaports and an international airport close to the capital and the country has a large array of airfields, mostly dirtstrip, which the Omani Airforce use to distribute aid or assistance to outlying or hard to reach areas in the interior.
4.6 The Sultanate of Oman became the 139th member of the World Trade Organisation (WTO) on 9 November 2000, allowing it to access a Multilateral Trading System.
“Oman's forthcoming accession is a new vote of confidence in the WTO”, said Mr. Moore. “No nation, large or small, can secure its future alone, and the Multilateral Trading System provides a stable and predictable framework for economic engagements between nations and for the business community. That in turn promotes growth, employment and prosperity”.
The WTO Director-General Mr Mike Moore on signing the protocol of Accession.
4.7 Oman is committed to set-up monetary union in 2005 with its GCC partners and for the establishment of a single currency in 2010.
5. CULTURE
5.1 Arabic is the official language of Oman, though English is widely spoken in business circles. Since 1970, the government has given high priority to education to develop a domestic work force. In 1986, Oman's first university, Sultan Qaboos University, opened. Other post secondary institutions include a law school, technical college, banking institute, teachers training college, and health sciences institute.
5.2 Although the capital area gives an impression of modernisation, the country remains intensely traditional. In the countryside hamlets and coastal villages, day-to-day life has changed little in centuries. In a country that gave us Sinbad-the-Sailor and the Genie, myth and legend are still socially intertwined, with the population, including otherwise highly educated and senior figures believing in the reality and power of the ‘Gin’ or Genie.
5.3 Oman has a diverse geography that includes rugged coasts, placid beaches, craggy mountains, salt flats, lush green oases and deserts. Oman has one of the world's most rigorously green governments, and a fascinating array of animals thrives in the protected areas. Sanctuaries have been set aside for rare Arabian oryx, giant sea turtles (which come to Oman to breed), the Arabian tahr (a wild goat which nearly became extinct but is now flourishing), Arabian wolf and leopard, striped hyena and the sooty falcon. The sultan has devoted much attention to the country's plant life: coastal areas are preserved and there are National Protected Areas scattered around the country.
5.4 Its varied geography means Oman has a wide variety of climatic conditions. Muscat is hot and humid from mid-March until October and pleasantly warm from October to March. In the southern Salalah area, humid weather with temperatures approaching 30°C (90°F) is common even in December. The Salalah area gets drenched by monsoon rains from June to September.
Lonely Planet – Destination Oman.
www.lonelyplanet.com/destinations/middle_east/oman
5.5 The Omani population has a reputation for being the most pleasant Arabs in the Gulf region and it is a reputation they wear with pride. A warm welcome can be guaranteed the length and breadth of the country.
5.6 The working week is Saturday to Wednesday from 6:30 until 1pm. With a 3-hour time difference, it leaves only a small window for direct communication with the UK.
5.7 The Omani Muslims are called to prayer 5 times per day by the sing-song chant of the Muezzin from the Mosques. Each Mosque has at least one Minaret and a balcony where the Muezzin calls out to all Muslims to stop their worldly tasks, face Mecca and pray.
6. TENDERING
6.1 Tendering for non-Gas and Oil projects can only be accomplished by pre-registering with the Ministry of Commerce. Contractors are then graded according to their capabilities. Tendering is sometimes selective and sometimes open but in the main it is very competitive but straightforward. The lowest bidder usually wins but there is much scope for post-tender price negotiations.
6.2 Oil and Gas projects are subject to a different set of criteria and to a large extent outside the ordinary structures of business and law. It is largely conducted outside the private sector by central government through the government controlled Petroleum Development Organisation (PDO). The rules for tendering and contracting are based on PDO policy and are available in the bid package itself. Most significant contracts are awarded on the basis of either public or limited tenders. In some cases there are formal prequalification and/or contractor classification requirements for bidders. The standard tender procedure requires a bid bond in an amount of 1-5% of the contract value (normally closer to 1%). Award of a tender requires a performance bond, usually in the amount of 10 -15% of the contract value, and there may be a maintenance bond of 5-10%. An example of a PDO Tender for Seismic Survey Services is at Annex B.
6.3 Although it is possible, in some cases, to deal directly with Omani companies without representation or appointing an in-country representative, it is preferable to have local representation or a branch office presence to be on hand to progress tenders and overcome unexpected difficulties.
6.4 Omanisation will have an impact of some sort on tenders made. Built into the tender will be a requirement that certain positions will need to be filled by locally qualified people. Omanisation is a government directive and when applied in some areas can have a detrimental effect on a project.
7. ANECDOTAL EVIDENCE
7.1 Carrying out business in Oman requires Westerners to rethink their standard working practices. Simply dispatching the companies most highly qualified and intelligent staff without giving any thought to the wider implications of the character of the individuals is likely to cause the companies presence to fail. Patience and resilience are probably the first two qualities needed alongside professional competence by those being considered for employment in Oman. A willingness to change and adopt a more relaxed approach to local ways and methods is important as Omanis can be almost impossibly frustrating in business negotiations, in timekeeping or when bargaining on price.
7.2 There are many ‘never dos’ which may seem trivial but whose result is likely to be out of all proportion. Never lie (or be caught lying) to make a point. This will result in immediate distrust of you and the company. Never patronise or talk down and never show impatience or worse, anger during negotiations. These points will guarantee that you will go no further in that project. But furthermore, as the Omani social network extends in wide and diverse areas, you may find that you are unable to do business anywhere else as well! Equally, you may unknowingly be capitalising on that as well with your good trading practices being passed on.
7.3 The matter of ‘face’ and ‘saving face’ has a great deal of importance when dealing with Omanis. Westerners should be particularly cautious when dealing with a situation which might suggest a fault or limitation, especially if the matter is brought into the public arena such as at an office meeting. Quick offence can be taken and will almost certainly lead to immediate dismissal often from the country on that day! The threat of instant removal from the country should not be discounted as a hyped-up story. It is very real and can be invoked by Omani nationals and lead to you being flown out of the country on the morning or afternoon, that is within a few hours, of the transgression.
7.4 Lack of time keeping is a major cause of frustration for Westerners. Yet Omanis will always say that they are always available and access to them is simple. Westerners have no concept of the absolute duty that Arabs have towards family situations, which is far greater than those expected in Western societies. A phone call from a brother wanting to see them will take an overriding priority on the day. Unfortunately, a call to reschedule a meeting is unlikely to occur, they will just not appear. The Arab culture is so much different to Western priorities that they just simply cannot comprehend the Western fascination with the minor matter of ‘Time’. Patience and plenty of it is an absolute requirement.
7.5 Another source of irritation is the time it takes to get-to-the-point at meetings, even more so if ‘the point’ is likely to be contentious or controversial. Arabs will way up the mood and feelings of the decision-makers at the meeting and only bring up unpopular items if the mood is right. They see no point in advertising and bringing up these matters if the influential person or persons are not going to be receptive. Therefore, you may have to await several meetings before an item is discussed.
7.6 Arabs hate to be the bearer of bad news such as saying no. They will hesitate or defer continually, keeping your hopes alive, when they have no intention of agreeing.
8. CONCLUSION
8.1 Bidding for project tenders in Oman should not be seen as all doom and gloom. The country is extremely friendly to Westerners and the people keen to learn. Careful preparation by the company prior to bidding will ensure a successful tender bid and a subsequent well run project. Careful maintenance of a good relationship as well as quality of the project will ensure a long and prosperous presence in the country.
9. BIBLIOGRAPHY
UK Trade and Investment – www.uktradeinvest.gov.uk/building/oman/profile/overview.shtml
Department of Trade and Industry –
www.dti.gov.uk/ewt/gulf.htm
World Trade Organisation -
www.wto.org/english/news_e/pres00_e/pr194_e.htm
CIA World Fact Book -
www.odci.gov/cia/publications/factbook/print/mu.html
EU business –
www.eubusiness.com/afp/030926152914.wmvgddhb
Petroleum Development Organisation –
www.pdo.co.om
Lonely Planet World Guide
www.lonelyplanet.com/destinations/middle_east/oman/
Lexicorient –
http://i-cias.com
The British Empire by Stephen Luscombe -
www.britishempire.co.uk/maproom/oman.htm
American Memory – National Digital Library –
http://lcweb2.loc.gov
Gulf News –
www.gulf-news.com/Articles/news.asp?ArticleID=52598
(and) =67435
All Reference –
http://reference.allrefer.com/country-guide-study/oman/oman52.html
APTEC –
www.apteconline.com