Wednesday, February 10, 2010

The huge screw up that is the Ministry of Manpower's latest adventure in unintended side effects...And an interview with a local businessman.

Photo: Gulf News - a free visa expat getting the job done on an Omani building site

Some time ago the Ministry of Manpower started a crack down on so-called 'free visa' expats. So far it seems around 70,000 Indians have been deported and a load more are due to be deported too. Or they may be graciously allowed to leave of their own accord without first having to go to prison and pay a fine (which the law normally is if they get busted). This has been praised in both the Government Controlled press and the "Government are always totally awesome" private press Times of Oman. There was an excellent and more balanced story about this in the Gulf News in November last year.

The economic consequences are, however, starting to come home to roost. The story of how the crack down is dramatically impacting the earnings of taxi drivers published (again, unfortunately in the UAE papers) was a good example of how interdependent the economy is, and the side effects ill-considered legislation can have.

For a start, hundreds of building sites around the city are now silent, as noted by Muscato and others.

You see, it's not like these so-called 'illegal expatriates' were spending their day lying on the beach sipping ice-cold mango juice. They were the ones washing cars for a rial or two in parking lots around the capital; being part-time or full-time maids for Omani and Expats alike; or doing manual labour for around 5 rials for a 12-16hr day, especially on the capitals many, many building sites. I've heard reports that on a lot of big jobs with major contractors, up to 80% of the guys on site were 'free visa' lads. (Fortunately the standard Omani construction method of rebar, form-work and rendered concrete block is not rocket science as long as you've got a few construction managers who know what they're doing to supervise).

And we all know how many Omani are lining up for those jobs don't we?

Zero. In fact, if anyone knows where I can hire an Omani part-time maid who will actually do the housework and can read and write English I'd love to know.

Once again we are seeing a law that has not been properly thought through, because its easy and appears to do something about a problem.

I have here an interview with an anonymous businessman, we'll call him Mr.X, who was willing to give us his view on the whole free visa issue, and the impact on SME business in Oman.

Some background. What are free visa expats?

OK. Lets say you are an Omani and you have a farm up the coast. What you do is apply for visa for say, 10 Bangladeshi farm labourers. You keep 2 of them for the farm, where they will live in a small hovel and work your farm all day. The other 8 you charge say, 500 - 1500 rials for the original visa plus 20 rials a month for their continued sponsorship and labor card, and release them to the wild. They then seek employment however best they can, doing the jobs described above. As their sponsor you pull in a nice lump sum up front (usually borrowed from family back home), plus get 160 rials a month for very little effort; they get to earn what they can and keep most of it. Truly entrepreneurial types can apparently pull in quite a nice bit of cash. Its a huge gimmick. Of course, some of that money will go to ensure you get the visas in the first place through people in the Ministry.

Here's the interview* with Businessman X [also an expat, BTW]. He's pretty clear that there have been some well known and ... shall we say... rather dubious practices involved with obtaining visas from the Ministry of Manpower... Muscat Condifential does not endorse his opinions. They are presented as his personal opinion and observation.

Muscat Confidential: why is it hard to get a visa for the expats you need?
Businessman X: OK. For example. It been 10 years since my friend's last official labour visa clearance. He needs expat staff for loading and unloading goods. However, his PRO said that he will get clearance only if he have a strong contact/friend in the Ministry. Whenever he has have applied for helpers, their reply is that he has sufficient expat staff. His current staff is 5 Omani girls and 2 Omani men (men are elderly and have been working at the company for more than 15 years). Expat staff is 1 sales manager and 1 accountant. Now within 6 months these two Omani men are going to retire. And of all the interviews that he has taken, no Omani male wants the job of a helper/loader. If he mentions this fact to the Govt. official, his/her reply would be to apply for employee helpers via the Government office. It has been 3 years since my friend applied for 3 Omani drivers. Still no luck. Just imagine the difficulties of running a business without a driver and helper. If you want more examples, please visit Mattrah Souq and have a chat with the local businessmen there who have been in Oman for the past 3-4 generations, esp. the lane right behind the NBO Bank.

MC: Why can't you fire employees (Omani) who don't perform?
Mr. X: I recently met the Sales manager for a major company located in Ruseyl. He mentioned that to fire an Omani staff member which are not capable is a difficult issue. The same goes for all small business organizations. I heard this particular incident a long time ago from a friend who had to close shop because of the same issue. He had employed a Omani girl at his consultancy office. But when he found out that the girl was neither capable and stealing, he gave her 30 days notice to find another job. Now before the 30 days were completed, the girl stopped coming to office and soon the employer was faced with a court notice saying that he had made sexist remarks to the same employee. In the end of the court case, the employee won OMR 4000 in esttlement and my friend left the country for good. This incident is just what I heard. Don't know how far its true.

So Basically, one has to be very patient when it come to firing an Omani employee.

MC: who are these people hiring 'free' visa expats and who gets the 1000 rials?
Mr. X: Well I dont have much info on that. But only last month one expat just mentioned that he paid OMR 1500 for his brother to come and work in Oman. That was the last time I met him.

Please click on this link which caught my interest. Sue Hutton's 2003 article on Omanisation

One of the safest professions in the market (for getting visas) is that of an Investor (or Businessman). I am one and I know it is an advantage. Maybe 3-4 years ago, becoming an investor was an easy task. However an expat had to show OMR150,000 in working capital. Since 2006, many small business establishments have popped up with LLC certification. Now, one can wonder how these small shops, whose annual sales would not be more than OMR 20-25K, showed up with 150k in their bank accounts?

I am sure you would be aware of the many agents and corrupt bank officials who show 150k for any firm to enable them to convert them into an official LLC. That is done at a charge of OMR 3-5K. Many Bangladeshis pay the 3-5K and get their LLC done. With one Omani Partner and adding 6 unskilled workers as 'partners'. These low-skilled workers run small scale businesses like tailors, hair saloons, etc. And all they have to do is show 150k every 5 years when they have to renew their CR papers.

The Ministry of Manpower should have sited this problem and took necessary action. However, because of these actions against free visa holders, medium scale organizations like mine are also targeted.

According to many investors like me, who showed a capital of 150k and run their business in a clean proper manner, we should be given a preference based on annual audit/turnover, annual tax paid to government and contribution to society's needs and development. Now if a firm shows 150k capital, their annual turnover should be at the least OMR 1 - 1.5 million. Let these companies by upgraded in the system and attend to their needs in terms of real manpower requirements.

Another step would be to target Omanis who have farms lands in the interiors. Generally the locals hire 10 people on their farm (when only 2 are required) and send to remaining 8 for "Free Visa" jobs. These 8 expats have to earn their living, send money back hoe, pay for their own visa renewal (which i think is illegal) and pay their local sponsor OMR 10 - 20 per month. Now of the local it is income sitting at home. I know an Omani who had 20 expats at one point of time, working as "Free Visa." I guess he made from anywhere between OMR 200 - 400 per month.

Times of Oman on December 28, "Flexibility in labour market on the anvil"
This is a major step toward better expat worker management. Many were personally waiting for such an opportunity. Under this all three benefit: Sponsor, employee and employers. Now they have been given 2 months to register for the same. I am assuming after that they might have to line up and be packed off.

As far as promoting Omanisation here is an extract from the site I forwarded yesterday.

"His Majesty Sultan Qaboos’ address to the Council of Ministers on 28th September 2001 left no-one in any doubt that he had seen the future and that, without urgent action to encourage Omanis to take their own livelihoods into their hands, it was bleak."

“Work is no longer a personal hobby but it is indeed part and parcel of worship, and therefore it should be performed with sincerity, perfection and honour.”

Published with modifications in Oman Economic Review, September 2003

Recently I meet a sales person from Fair Trade. This incident occurred maybe 4 weeks ago. An Omani driver was shifted from credit supplies to cash sales due to his poor collection. Now in cash sales there is no expat to help with loading. For two days he came to work on time and completed all his duties. On the third day he had to deliver 50 large bags of rice to a customer. On the fourth day he never showed up. He finally showed up after a week and went back to work. And then again disappeared for a week, after which he quit. I guess he forget the part where Work is no longer considered a personal hobby.

One more? The Oman Flour Mills located in Jibroo generally depends 7-8 pakistani helpers to unload a 10 ton vehicle. They get the job done within 3-4 hours. The same job was given to 7-8 Omani. It took 8 hours which included 90 mins of rest time.

In 2000-01, when Omanisation first started in earnest, there was a heavy focus on foodstuff outlets; Imports, exports, retail and distribution firms. Overnight I had to let go of 4 helper staff whose combined salary was OMR 300. In their place I hired 6 local staff with a combined salary of 720 rials. And hiring Omani staff was when the nightmare really started. Paying then OMR 120 per head, I hired around 52 employees in 1 month when I needed only 4. They would come for the first shift and then just disappear. Just imagine the same when it happens to large scale org. who had to hire 120 locals in the place of 80 expats. Hence inflation.

It is a difficult task when one has to push out expats and force jobs on locals. One should look at the capacity of the general local population and assign Omanisation targets accordingly. We dont have any local drivers, but to force Omani in to that particular field was the most difficult adjustment for employers and employees.

*Note: this interview has been edited for clarity and to tidy up the English.


  1. Thanks for this. Clears up a lot of things we've all been wondering about.
    I has the chance to speak to an Omani business owner who has a significantly large establishment here and he said the same thing about firing Omanis, that it's difficult. He couldn't explain to me why though.

    I still don't understand why it is so difficult. I can understand a woman's advantage when being fired but I don't quite get what a man can do if he is asked to quit.

    Also are there any laws that govern hiring and other human resource management issues to do with Omanis?

    (I haven't read Hutton's piece yet so excuse me if I am being redundant.)

  2. and oh as you have the weather, a blog roll, an archive list and news alerts, please do add a search this blog button. makes it a lot easier to find the exact post i (or anyone else) am looking for. feel free to not publish this comment.

  3. As always your blog is brilliant... :)
    Thanks - its a well written blog and needs to be said..

    Coming from RSA - where we have something similar to Omanization - I have seen the pitfalls - many of which you have listed.

    It's a tough issue to sort out - but sorted out it needs to be. Although I have no idea how :) and if Oman gets it right maybe they should sell the rights to RSA... ;)

    Oman is such a great country, and which, forunately doesn't have the "other" problems that RSA......

    Hopefully someone will wake up soon and smell the coffee..........

  4. Over the past six years, between myself and friends/colleagues, I've dealt with helping more than a dozen maids change or regularize their visa status.

    In every single case, which I suppose could be a coincidence, the original sponsor was a retired official of some entity attached to the court. It has been really depressing to see how grasping and generally unpleasant they and/or their reps were to deal with. These women put up with a lot to stay in this country.

  5. At least give credit for the picture...I think this was published by Gulf News with their labour related story...

  6. Thanks for the brilliant blog. I have been looking forward to my views being heard. To some extent I do agree with Ministry of Manpower in clearing out the illegal immigrants.

    However, the main issue faced by many business in Oman in regards to Omanisation, in the lack of commitment/interest from the local Omani workforce in the lower/unskilled level jobs.

    Businessman Mr. X

  7. Thanks anon - forgot! Now fixed.

    Thanks again Mr.X

  8. Until Omanis are exposed to the same expectations that any worker in any other country is, then the majority of Omani workers will see their job as merely filling Omanisation quotas in a company. However I don't think a culture that shies away from failing people or holding them accountable for their action will be changed quickly...



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