Omani Training Institute NHI driven to half-year loss by failure of Ministry of Manpower to pay its bills or train Omanis

This is a sort of 'good news/bad news' story.

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 useless high-performing civil servants at the Ministry of Manpower, nice and safe in their highly paid part-time Government desk jobs, could only send 80 trainees, even though NTI has capacity to train 500.

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.

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.

2008 Human Rights Report and Oman decides it needs expat

Yes, yes, I've been busy. So sue me for a refund.
(And the ever deepening global depression is just too depressing to comment on right now).

Stories today: US State Dept issues its latest report on global Human Rights, and the Ministry of Labour has un-banned new expat visas for several professions just a few months after banning them for expats in the first place. Surprises!

Here's Oman's 2008 Human Rights report card as written by Essa's favorite the US Dept. of State. I think it's pretty accurate, if a bit generic and overly generalised.

(There's a highly edited version of the reports interesting highlights at the end. The internet freedom part is left in full, FYI.)

Good news: (as far as the US State know, which is a lot), in 2008 there were:
- no reports that the [Omani] government or its agents committed arbitrary or unlawful killings.
- no reports of politically motivated disappearances.
- the law prohibits (Torture and Other Cruel, Inhuman, or Degrading Treatment or Punishment), and there were no reports that government officials employed them.
- no reports of political prisoners or detainees.
- [although] the law does not require police to obtain search warrants before entering homes, the police often obtained warrants to do so anyhow.


Plus, it passed a comprehensive law to combat trafficking in persons.
and established an independent human rights commission with membership from both the public and private sectors. And is keeping a firm watch on the immams.

On the downside:
- The government monitored private communications, including mobile phones, e-mail, and Internet chat room exchanges. [UD: OH, MY, GOD!]
- The authorities tolerated a limited degree of criticism of policies, government officials, and agencies, particularly via the Internet; however, such criticism rarely appeared in traditional mass media. [UD: OH, MY, GOD, AGAIN!]




Perhaps that's the self censorship. But a striking thing is the extent to which self censorship is evident in many spheres, not just publishing. Sometimes for the good, undoubtedly, but the overall image the report portrays of intellectual sterility, at least in public, should be of worry (ie: no books published, academics forced by threat to keep quiet (thats one of the good ones, unfortunately), critical reporters not published, media censorship, etc. (Its a good job the overall quality of public debate is apparently not considered an affront to some sort of inalienable human need, or we would suffer somewhat, including some of my occasional comments' readers of late).


Meanwhile, its heartening to know the Omani Government can change its mind, and do it in public too. Reported today in the always insightful and hard-hitting Times of Oman, its now OK (again) to hire new expat mechanics to repair cars (which I can understand), and to sell retail clothes (which I can't).

Bizarre.

Ban on eight professions for expatriates lifted
Times News Service
Sunday, March 01, 2009

MUSCAT — The Ministry of Manpower has lifted the restrictions in place on a number of professions effective from this month. Sayyid Hamad bin Hilal Al Busaidi, undersecretary for labour affairs in the ministry, said the government, after intensive studies, had decided to grant permission for the recruitment of expatriates in eight professions out of the 15 banned last year.
...
The eight professions covered by the lifting of ban comprise car repair and affiliated works, hair-dressing and beautification, sale of carpets and furniture, sale of readymade garments and textiles, gents and ladies tailoring, carpentry workshops, smithy and aluminium works.

The ban will continue on the other seven professions, including import, export and commercial representation; cleaning works, barbershops, laundry, sale and repair of electronics and sale and repair of mobile phones, and health clubs, said Sayyid Hamad, adding that the revision of earlier decision conforms to the actual needs of the community, particularly in the densely populated areas.
...

What??? But, but, what about all those 1000s of new Omani carpenters trained over the past few years, at great Government expense? And what's with a reversal on 'beautification or readymade garments'???

Ahhh, I know, all the Omani carpenters must all be off fixing mobile phones and working out in the gym as fitness instructors.


Photo: A newly re-designated critical skill in Oman: retail. Its a brutal world folks, and another 40000 female high school graduates have been saved from a life of occasional till ringing and mobile phone talking.


Here's the Human Rights report.

2008 Human Rights Report: Oman
Bureau of Democracy, Human Rights, and Labor
February 25, 2009

The Sultanate of Oman is a hereditary monarchy with a population of approximately 3.3 million, including approximately 900,000 nonnationals, ruled by Sultan Qaboos Al Bu Sa'id since 1970. Only the sultan can amend the country's laws through royal decree. The 84-member Majlis as-Shura (Consultative Council) is a representative advisory institution that can review legislation. In October 2007 approximately 245,000 registered voters participated in generally free and fair elections for all of the council's seats. The civilian authorities generally maintained effective control of the security forces.

Citizens did not have the right to change their government. The government restricted freedoms of privacy, speech, press, assembly, association, and religion. Discrimination and domestic violence persisted for women. There was a lack of sufficient legal protection and enforcement to secure the rights of migrant workers. There were reports that expatriate laborers, particularly domestic workers, were placed in situations amounting to forced labor and that some suffered abuse.

On November 16, the government established an independent human rights commission with membership from both the public and private sectors. On November 24, it also passed a comprehensive law to combat trafficking in persons.


...
There were no reports that the government or its agents committed arbitrary or unlawful killings.
...
There were no reports of politically motivated disappearances. The law prohibits (Torture and Other Cruel, Inhuman, or Degrading Treatment or Punishment), and there were no reports that government officials employed them.
...
There were no reports of political prisoners or detainees.
...
The law does not require police to obtain search warrants before entering homes, although the police often obtained warrants from the public prosecutor's office. The government monitored private communications, including mobile phones, e-mail, and Internet chat room exchanges.
...
Various media companies reportedly refused to publish articles by journalists who previously criticized the government; however, unlike in 2007, there were no reports that the government maintained an alleged blacklist of journalists and writers whose work is not to be published in the country. The authorities tolerated a limited degree of criticism of policies, government officials, and agencies, particularly via the Internet; however, such criticism rarely appeared in traditional mass media.

The government continued to use libel laws and concerns for national security as grounds to suppress criticism of government figures and politically objectionable views.

There were no major publishing houses in the country and very little publication of books. The government restricted the importation, distribution, and publication of books as it restricted other media.

Internet Freedom
The law restricted free speech via the Internet, and the government enforced the restrictions. The government's national telecommunications company made Internet access available for a fee to citizens and foreign residents. Despite infrastructure increases, less than 5 percent of the population had subscription Internet access during the year; however, Internet access was widely available via Internet cafes in urban areas.

The government's telecommunications company restricted access to numerous Web sites considered pornographic, culturally or politically sensitive, or competitive with local telecommunications services. The criteria for blocking Internet sites were not transparent. The government placed warnings on other Web sites that criticism of the sultan or personal criticism of government officials would be censored and could lead to police questioning, which increased self-censorship. The government also monitored Internet communications and reportedly questioned some chat room contributors who were critical of government officials or policies, or whose postings precipitated criticism, after tracking the contributors through their Internet service provider addresses.

The country's former most popular chat room site, al-Sablah al-Omania, remained closed at year's end. In January 2007 police arrested the site's founder and 10 of his associates for publishing comments critical of government officials. After a four-month trial, a court of first instance acquitted the founder and three codefendants on charges of slander but fined the six other defendants and sentenced one defendant to one month in jail. Although several sites served as replacements for al-Sablah, all were rigorously cautious concerning content, and moderators reportedly quickly deleted potentially offensive material.


...

The government restricted academic freedom, particularly publishing or discussing controversial matters such as domestic politics, through the threat of dismissal. As a result, academics generally practiced self-censorship. There were no reported cases during the year in which the government dismissed an academic on these grounds.
...
The government restricted NGO activity. There were no registered domestic human rights NGOs or fully autonomous human rights groups in the country. On November 16, the government established a human rights commission to protect and report on human rights via the State Council to the sultan.
...
The government allowed several international organizations to work in the country without interference, including the UN Children's Fund, the World Health Organization, and the International Labor Organization (ILO).
...
According to a 2006 report by the World Health Organization, female genital mutilation (FGM) occurred in rural areas to a limited extent. There is no law prohibiting FGM, but the Ministry of Health prohibited doctors from performing the procedure in hospitals. The problem remained sensitive and was not discussed publicly. Planners at the Ministry of Health have not taken action to eliminate FGM.
...
There were no public reports of violence against children; however, FGM allegedly was performed on some girls ages one to nine.
...
There were no reports of discrimination against persons with HIV/AIDS.
...
Child labor did not exist in any formal industry.
...
The minimum wage for citizens of 140 rials (approximately $364) per month did not provide a decent standard of living for a worker and family. ...There is no minimum wage for foreign workers. There were reports that migrant laborers in some firms and households worked more than 12-hour days for as little as 30 rials ($78) per month. The MOM effectively enforced the minimum wage for citizens.
...
The penal code criminalizes homosexuality, with a jail term of six months to three years; however, there were no reports of prosecutions for homosexual conduct during the year.

...

Observant readers will pleased to note that frequent commentator Mr T was apparently not successfully prosecuted last year...

This view on things seemed appropriate...