Thursday, January 31, 2008

Oman Gov gets deeper into the shipping business

Recent press reports of the Oman Government buying 10 oil tankers. For around 600 million rials. Of course, the Gov are already in the LNG tanker business (which was an excellent decision) and the tanker business (in partnership with Iran) via Oman Shipping (owned through the Ministry of Finance).

Its a strange decision. OK a tanker currently goes for around $100k per day to rent. But payback must be more than 12 years, assuming half the rent is in costs. Must do more research on this.

What I find frustrating is the Government never actually justifies any of their investments. Just these self-serving announcements reprinted in the press. Anyone out there have any scoop on this with real data/knowledge?

In other news, it was interesting to note the Gov changed out the Chairman of Omantel following the crazy deal to buy a useless and expensive Pakistani business from a well connected Omani businessman. Of course, no explanations.

Tuesday, January 29, 2008

Income Tax and Business in Oman

I was intrigued by the article in the hard-hitting Times Of Oman on the Majlis Al Shura debating a draft law on Income tax in Oman Income Tax Law debated
Al Shukaili explained that the income tax draft would not include individuals or personal income.

I must admit I was a bit disappointed with that. I would have thought that a mild tax, say 10%, on high-earning individuals would be a good idea for Oman to start with now, so that the Government has levers to pull later if required. There are a lot of people making some serious money lately, as the record oil price and the Government's investment-lead boom feeds through the economy. And given the resulting increased gap perceived by average Omanis between the so-called 'haves' and the 'have-nots', this would have been a good opportunity to start the debate on these individuals paying their fair share. Of course, a the side effect would be perhaps to just push them to living outside Oman, but that could be covered by making it a tax on international income required of all citizens of Oman resident here or not, as is done by other countries such as Australia and the USA.

But, no, its just a revision and consolidation of Company taxation. At the moment this is predominantly 12% for normal companies registered in Oman (but 32% for Foreign registered companies – more on that later). For those interested, this usually doesn’t apply to the oil concessions, or big capital intensive projects, as the agreements with the Government will normally explicitly exempt them from any changes in the tax law. This is to stop the Government waiting until the investment have been made and then changing the law to take all the profits, and is completely normal. The Private Shareholders in Omans biggest oil company, Petroleum Development Oman, effectively pay a tax rate of around 85%, which is pretty high compared to comparable international deals. Most Omanis don’t know this, and think that Shell (the main private shareholder in PDO) is taking an unfair amount, but they’re wrong. Oman gets a really great deal. The real tax rate they pay is more like 93%. The newer concessions operated by the likes of Occidental and BP pay a lot less tax, by the way.

The big difference in tax rate between an Omani registered company and a foreign one is a big driver that helps the 'big families' and other well connected businessmen and women in Oman. An Omani registered company has to have an Omani sponsor, and of course, he or she will require a share of the spoils. But as the alternative is a 32% tax bill vs 12%, it's obviously in the interests of the foreign company to do a deal and register locally. This usually entails a 'carry deal' of some kind, whereby the foreign owners take all the risk and effectively the sponsor gains a risk free 5%-10% take. Sweet eh? In exchange, the sponsor will be able to facilitate connections for Government, other businesses, contracts, arrange logistical support, distribution, import/export assistance, arrange a friendly bank to supply financing (usually one in which the sponsor is a shareholder, heh heh), provide offices and suppliers (and hence take a cut from that side as well, or even be the owner or sponsor of those companies too!). It’s a great racket. As sponsor you can also then get the company to employ family members, or the family members of other well connected people. A virtuous circle.

And with the large influx of new business lately, and the booming economy, you can see why the number of nice new Lexus, Porsche and big palaces is also skyrocketing.

Saturday, January 19, 2008

Business Opportunities in Oman

Business Opportunities in Oman

OK you entrepreneurs. Here is the first set (of hopefully many) good business opportunities for Omani, courtesy of Dragon Consulting.

Fancy Water.
There is a market for Omani water in a fancy (Bombay Sapphire blue seems fashionable) glass bottles, for both tourists, snobs and the Chedi [refer recent post of Suburban]. In addition, make a sparkling version too please, by simply injecting it with CO2. Your only competition is high priced Pelligrino and Perrier.

Salad greens
so called spring salad mix aka mesclun mix aka field greens aka spring mix. Did you know that Oman is importing (airflown) fancy baby salad greens all the way from France, Australia and California? It retails at more than 4 rials/400g bag, and still the expats fight for it. This stuff must grow like wildfire here with a bit of decent hydroponics. But note, it's got to be triple washed, nicely packaged (probably with a nitrogen fill) and actual baby greens, not the monster rocket (aka arugula) we normally get locally. Commercial mixes usually include arugula, mizuna, tat soi, frisee, oakleaf, red chard, radicchio, mustard greens, and radicchio. See here for a how to on spring mix.

A Casino.
Really. I know, traditionally seen as somewhat Haram, but hey, just ban Omani Muslims! But, remember one thing Dubai doesn’t have (yet?) is a casino. Tourists love casinos. Hey, we all do. And they are a licence to print money. Maybe site the thing in Buraimi or even better Mahdah (that little piece of Oman in the UAE, between Musandam and main Oman). Not only will you get tourists from UAE and Oman, but think of money you can take off the Saudi, Kuwaiti and UAE Princes and Sheikhs! Serve lots of booze, and never close 24/7.

There is a world shortage of good hops. Prices are now around $50 a kilo. It should grow well with sun and irrigation, and would make a good export. See here. Do a deal with a big regional brewer for support and long term contracts.

Which leads us to...
A brewery
Oman imports a lot of beer. It’s about time there was a local brew, using the fantastic water and the local hops (see above). It could be exported to the UAE and Bahrain etc, as well as sold alongside the imports here (especially if there was a bit of a tax discount). It could also be easily smuggled across into Saudi for a healthy profit.

Date Liquor
The tourists would buy it in half bottles as a present for the folks back home. Yum.

Go Oman!

Tuesday, January 15, 2008

Bush. How could it happen?

Awful. The pictures of UAE dignitaries and Bush all lovey dovey are really terrible press, pretty much for everyone. Gives me that shiver. For an almost unending stream of rubbish on Bush's Gulf visit, the Gulf News has helpfully collected it all here Gulf News Bush Special. Yuck. And he went to Saudi after all, or at least a really good double. The pics look like a rodeo clown meeting Jabba the Hutt.

It really makes you wonder. How could it happen? How could the US re-elect him? Are all Americans nuts? I mean, once, and against Gore, and effectively stolen by his brother in Florida, OK. I can understand that. But twice?

Well, the reason is:
- most Americans (not the ones you generally meet out here) don't really give a hoot or a thought to those parts of the planet outside the USA, and at the time the economy seemed to be going fine. And when all is basically OK, why bother voting?
- he got the vote out, by scaring people, by pandering to the extremist Christian right, and successfully character assassinating Kerry.
- most Americans didn't actually vote for Bush. Really. Only about 30% of those who could have voted did so for Bush. You could say 70% of America didn't vote for Bush. Washington Post.

But in the end, the ones who could be bothered to vote pipped those who wanted Kerry. It all came down to a margin of just 1.5% of the voters. Such is the problem with Democracy.

Thank goodness for term limits (not that he'd win again...)

Its got to be Obama this time. Please. A great nation deserves so much better than this.

Sunday, January 13, 2008

Why Oman needs to be friendly to the USA

Well, everyone can bitch and moan about Bush (and I agree he’s an idiot and has done significant damage to the USA and the world in terms of his Foreign policy, Economic policies, domestic agenda, and many other areas) as per recent comments on the Oman Community blog, but let's first get our facts straight and take some perspective.

The USA remains the country with, by far, the world's largest economy. The latest World Bank listing has the GDP of USA about the same as the combined GDP of Germany, China, UK, France, Russia, India, South Korea and Saudi Arabia. Really. California alone (if it were a separate country) be ranked 9th, just behind Brazil. See wikipedia. Even in terms of Purchasing Power Parity corrected GDP, its economy is still 60% bigger than China and India combined.

Oman is tiny – it ranks 77th just ahead of Lebanon. The USA economy is 540 times bigger than Oman. Take away the oil and gas, and Oman would probably be down around 116th place, being beaten by piddling Nepal. Oman needs economic growth, and a FTA that allows them to sell stuff mainly made in India, or made here by NRIs and Omanis, allows local businessmen access to a huge market with a cheap product. The biggest market in the world. Otherwise folks, its even more hotels and a future for Omani kids that involves serving beer to fat German tourists on the beach, or fishing, or digging up the place piece by piece to sell to the Chinese.

The Free Trade Agreement with the USA is worth far, far more to Oman's long term future than some deals with South Korea or the Chinese. Do you think the USA are in desperate need of tax free dates and goats? No, but they are willing to cut a well paying deal (cash, market access, intelligence sharing) in exchange for access to some good strategic areas of rock and sand (Thumrait, Masira Island, Jebel Ahkdar, Musandam) and to generally support the economy of a stable and friendly nation.

Oman will also in time learn, I hope, that the Asians are even more motivated by their self-perceived national self-interest than the USA. You think the Asians care about Omanis? What a joke.
China want to lock in long term strategic access to Oman's resources on the cheap and gain influence in the wider Gulf (and African) region.
Sth Korea want Oman’s (short to medium-term) development cash (infrastructure, LNG tankers, fishing vessels).
Japan and Taiwan want to take as much fish as they can as cheaply as possible until they run out.

The USA has many faults in terms of foreign policy, but they are actually generally very well meaning, albeit incompetent at times. People also sometimes forget what the USA could be like if they really wanted to fuck everybody up. Can you imagine what the world would be like if the USA's military and economic might was controlled by someone like Chavez, or Ahmadinejad, or Putin? It may be uncomfortable, but at bottom line the USA has the capability to turn the whole of Iran (or indeed the entire Middle East) into a radioactive wasteland within a few hours. Yes, it would be a terrible crime, but no-one in the USA would be that drastically affected. Yes, China and Russia would object, but the MAD doctrine would keep them at bay. In a few years men in plastic suits and some robots would get the oil out anyhow.

The USA has its faults, but it serves Oman's long term interest to remain friendly. Fortunately, His Majesty is well aware of that. Soon Bush will be gone. But Diplomats play a longer game. And pissing off the world's only superpower is not what HM would ever do. He is way too smart for that.

But he may meet Bush in private...

Friday, January 11, 2008

Bush visits UAE - why not Oman too?

You'll have read that Bush is visiting Abu Dhabi, after he stops by Israel to remind them please stop building settlement (or else he'll keep sending them lots of aid).

Why UAE? Well, he's got o lot on the agenda. Plus he can't go to Saudi, so unpopular is he there.

1/ The UAE (and Abu Dhabi in particular) are raking in LOTS of money, and he wants them to send some more their way. The recent save of Citigroup by the Abu Dhabi Investment Authority investing $7.5 billion is hopefully just the start. Next to be hit are the big credit card companies as default on plastic will start to skyrocket too. A break from the dollar is something he will want to avoid at all costs this year with the US elections coming up.

2/ Bush wants to gauge the depth of support for Iran, and seek diplomatic help in combating the ease of relations between the Sunni states of the Gulf and the Shiite Iran. Iranian gunboats playing tag with US Battle Fleets, presumeably in the hope of triggering a response, will have reminded Bush how much he relies on the Gulf states to base operations. He'll also want to engage them in whatever plans he has for Iran (al least, those that he can share) now his own intelligence people have released papers behind his back showing a nuclear threat is not imminent.

3/ He also just wants to be seen by the folks back home in a Middle East country that is growing in prosperity and stable and will actually welcome him (at least that's how it will look on TV). Screw democracy. Those silly voters keep voting for Islamists!

4/ But, given reason 3 - why not visit Oman? OK, they don't have the cash, but they have half of the straights of Hormuz and are very US friendly with a nice stable economy and peaceful. I think he will drop by, and we'll only hear about it after he's gone. We'll see.

Tuesday, January 8, 2008

Yet again, No Moderate Islamic Response

Hey, Maybe its a measure of my readership, or my argument, but I admit I was surprised the previously 'vocal' Balqis didn't make any response to the Teddy Bear reprise story. Nor any one else... Especially those self-styled 'moderate' [but-please-don't-be-offended-that-I-also-want-to-cut-your-head-off -because-of-what-you-think] Teddy bear supporters at Sabla and Oman Forum.

It seems the Devil not only has the best music, but also the winning argument.

Double Standards in Saudi

Hey guys and gals, sorry for the lapse, but even Dragon's got to party...

So many things I want to blog about in todays riveting Oman Times its hard to know where to begin... I'll just have to pick two.

First, the strange ad actually apologising for not making enough water lately by the Public Authority for Electricity and Water. Emergency halts - whatever that means - meant they weren't making water at the Barka AND Ghubra desalinisation plants at the same time. My question is: Why? [don't know yet, give me a few days and I'll chase the real story]. But like, isn't that their job? To make water? Preferably all the time? Best bit was how they added the statement 'The Public Authority for Electricity and Water advises all customers to install additional water tanks to store sufficient quantities of water that can meet their water need [sic] for two days at least, in case of emergencies.' And, a mini lecture that YOU should save water all the time, not just when they can't get their shit together enough to make water.
So that it's like YOUR fault there isn;t enough water. Muppets.

And many other stories. But the best?

The Saudis apparently [pg 16, Oman Tribune] don't want Mr Sarkozy, President of France, to visit with his girlfriend because they're not married. And totally hot. LOL. So, naturally, they're also encouraging Bahrain Hotels to deny rooms to Saudi men who want to just fuck prostitutes. While drinking a bottle of whiskey. Luckily they are also making sure Saudi men don't go on sex holidays to Thailand. And of course, the Royal Family of Saudi would not visit France with more than 1 wife, given polygamy is illegal in Europe. It is really hard to put on type how much shit I think the Saudi rulers are full of...

And the Egyptians now also(apparently) are now noticing that they didn't like it that Sarkozy was visiting them and 'sharing a room' with a woman who wasn't his wife.

What total hypocritical arseholes.

Anyhow. I hope Sarkozy gives them a big French Finger. Or says she's just a cousin staying in the next room. heh heh heh.

Thank God I'm in Oman. A country surrounded by shit holes.

Tuesday, January 1, 2008

Happy New Year

Yes, its another year. I always find that its a bitter sweet thing - a new year offers new things, a top up of my holiday account, the possibilities for new friends, new countries.

But its another signpost toward the inevitable end of the show.

Still, that always makes me resolve to try harder to love my loved ones, write more letters, and generally enjoy every second of what is a generally wonderful planet.

So, have a great 2008 readers! And don't let the man get you down...