Recently His Highness Sayyid Tarik bin Shabib bin Taimur Al Said, Chairman of NHI - the National Hospitality Institute SAOG - released the company's 2010 first half year results.
You might recall my previous post on 1st May in praise of HH Tarik Al Said, after he publicly pointed out how useless the Ministry of Manpower were acting, with respect to their treatment of NHI, a private hospitality industry training institute.
Photo: NTI Chairman and Renaissance Director His Highness Tarik Al Said (from Renaissance website)Back then HH Tarik Al Said was quoted in Muscat Daily as saying:
"NHI is...requesting the following solutions:
- [Omani Government to] pay NHI all outstanding debt immediately, for all work successfully completed;
- remove the conflict of interest [MoM also run Oman Tourism College, a competitor];
- change the chronic processes for trainee allocation and payment; and
- quantify and confirm the scale of the [training] opportunity."
You can still read his full statement from Q1 2010 Chairman's Report, detailing the specific problems NHI has had with the Government's Ministry of Manpower here, on the NHI website. Probably only an HH would be able to get away with such a forceful and frank public statement criticising the Government.
So, what's new? First the bad news.
NHI made a loss of 125,000 rials [US$320k] in the first half of 2010, on revenue of 286k RO, compared to a profit of 47,000 rials on revenues of 531k RO in the same period last year. Trainees sent from the Ministry of Manpower were also pitifully low, despite huge demand from employers. Remember, this is in an environment where most Omani hotels are staffed by non-Omanis, despite in many cases being owned by the Omani Government, and in a country with a massive (and growing) youth unemployment problem.
Hell, the whole argument underpinning Oman's move to mortgage its natural beauty by building massive 5 star integrated tourist developments was to provide employment to Omanis!
In the latest Q2 report, the NHI Chairman states (highlights are mine):
...
With this same agenda, in my capacity as Chairman, I have visited every concerned Ministry to outline the plight and status of our company. Without exception, I have been extended every courtesy and been given a fair hearing by their Excellencies the Ministers and the senior officials involved in the process of payment and trainee allocations. In all cases, I have been assured that nhi shall be given full support to secure urgent payment of all dues.
We have reconfirmed that the supply and demand ratio for meaningful Omani employment in the industry is far greater than full capacity of existing training facilities. We have been assured that every effort shall be made to make full and continuous capacity trainee allocation to nhi so long as nhi’s recognised standards are maintained and supply of trainees and demand of vacant jobs are sustained. As a result of meetings with decision makers, some changes to the process has been agreed, which if adhered to should reduce payment delays.
...
On payment, at the start of the year Rials 822 thousand of overdue debt [UD: owed by the Government] and unbilled income was outstanding, due to the approval processes for completed training. In Q1 this figure increased to Rials 845 thousand. In Q2, this figure reduced to Rials 780 thousand.
On trainee allocation, in the first half of the year 80 trainees have been allocated to nhi (37 in Q1 and 43 in Q2). This is well below demand from employers requisitioning training from nhi for 350 identified jobs [UD: and well below NHI's capacity of 500 trainees].
...
On supply and demand, using government data concerning the industry, it is clear that 2,600 new trainees need to be trained every year to meet the growth of the sector. While we are grateful for the assurances we have been given and we appreciate some progress todate, which will show in our 3rd quarter report, there is room for urgent further progress in getting nhi fully paid up to date and getting nhi training capacity filled. We shall follow up these matters with urgency with the concerned authorities and hope to report that all these matters are fully resolved by the end of this current 3rd quarter.
As the nation celebrates the 40th year of the glorious reign of His Majesty Sultan Qaboos, we can justly look back at the achievements of nhi and the contribution it has made to getting Omanis into meaningful jobs in the hospitality sector. Looking ahead, nhi must work closely with the authorities empowered to implement the nation’s Omanisation objectives to ensure that together we rise to the challenge so clearly laid out before us through His Majesty’s leadership.
So despite this huge demand from both hotels and youth, the
Ouch.
So, NHI's parent company Renaissance Services continues to have to support the NHI training institute with loans. Meanwhile the Omani Government, flush with cash after higher than budgeted oil prices, seems unable to pay its outstanding bills. They owe NHI almost US$2 million.
Unfortunately this tendency of the Omani Government to be exceptionally tardy in paying what it owes people is not unusual. Almost every businessman I know who deals with the Government is owed money by the Government, and it is always a problem getting them to pay in semi-reasonable time. In fact, Geological time seems to be how the clocks run in the Ministry invoicing departments. Basic invoices are often unpaid for more than a year or even two years. Doing business with and getting paid by the Government is a constant headache I hear everywhere.
This may be OK for the large and deep-pocketed oligarch's; the Bahwans, Zubairs, Zawawis, Khimjis, et al. These guys can easily finance their businesses at good rates, and often through having control of their own banks! But for small businesses, this poor payment policy can be a crippling problem, as it means these smaller outfits struggle to have enough cashflow to actually run their business. Small businesses, especially in their early years, are typically under-capitalised and dependent on just a few contracts.
Of course, SMEs are widely recognised - even by the Ministry of Silly Walks - as perhaps the only hope Oman has of generating a robust, less oil and gas dependent economy that actually employs Omanis. As the Government still dominates the economy, their choice to not pay their bills on time is a huge drag on the private sector, and effectively a deliberate protectionist behaviour in favour of the big corporations. It even forces SMEs to borrow working capital from the same banks owned by the Oligarchs and the Government!
And in this specific case, the Ministry of Manpower are also failing to get Omani trainees trained in perhaps the one industry that in the short-term could adsorb significant numbers of hard-working, enthusiastic, but perhaps poorly educated youth.
Is this becuase they are deliberately favoring their own Hospitality Training Institute The Oman Tourism College? Or they are simply too incompetent to address such a fundamental problem even after it has been identified, communicated, accepted, and implementable remedies identified? This from the very Ministry that is supposed to being increasing Omani employment in the Private Sector. What a joke.
I think we all know who could be added to the ranks of the unemployed rather than letting them continue to add to those without work through inaction. Perhaps the Minister could have a chat to the Undersecretary of Technical Training and Vocational Training about the performance of his department and his staff?
Oh, you're probably wondering what the good news was.
Well, if someone as influential and well connected as HH Tarik Al Said can't get paid what he is owed by the Ministry of Manpower, after both privately and publicly trying to sort it out, maybe Oman is truly becoming less dominated by Wasta...
Once again, Muscat Confidential has to congratulate HH Tariq Al Said for standing up to the problem.
PostScript: He would get even more compliments if he helped Renaissance hire more Omani within its vast catering and cleaning businesses though, maybe by paying more and offering terms and conditions that Omanis would find acceptable.
It all comes down to a lack of accountability on the part of government officials. Also, just give certain government officials a 'financial incentive' and watch things happen. We have discussed this before.
ReplyDeleteMy father-in-law was declared bankrupt after being owed money buy the government and not being paid. He lived on good faith but now lives in penury.
ReplyDeleteNice to have you back, fella.
ReplyDeleteThe Half year report you have reported on is about NHI not NTI as you have mentioned once or twice. Though they are linked by Renaissance they are two completely seperate entities. NHI being a public company .On another note NHI celebrates 15 years of business this year and they have listed many of their success stories on their website www.nhioman.com.I for one would like to say congratulations to NHI and thank them for their incredible service to the the nation.
ReplyDeleteHH Tarik Al Said = HHHottie
ReplyDeleteJust caught this post - I would just like to say that, when I ask well trained, professional Omani staff in hotels where they were trained, the answer is always NHI.
ReplyDeleteThis college needs to be supported.