Monday, February 20, 2017
Monday, February 13, 2017
Monday, February 6, 2017
Tuesday, January 31, 2017
At the beginning of January 2016, Sultani Decree 1/2016 was issued approving the Ninth Five-Year Plan (2016-2020), i.e., the last of the Five-Year Plans included in the Government policy named Vision for Oman’s Economy (Oman 2020), which, in due course, will be followed by Vision Oman 2040.
Due to the economic and financial challenges caused by oil price volatility, the National Program for Enhancing Economic Diversification (“Tanfeedh”) was announced as one of the fundamental elements in the Ninth Five-Year Plan. Tanfeedh is an Arabic word that can be translated into English as “execution” (referring to execution of a project or of a plan). The aim of the programme is to accelerate diversification and reduce dependence on the oil and gas sector, both by developing a series of projects in five crucial business sectors and by reforming some aspects of the local legal framework in order to facilitate the establishment and operation of businesses in the private sector.
The five business sectors the Sultanate elected to focus on are manufacturing, transportation and logistics, tourism, fisheries and mining. The two parallel “community and sustainability enablers,” aimed at improving the ease of doing business, relate to finance and the labour market. The Tanfeedh initiatives will initially focus on three of the five business sectors, namely manufacturing, transportation and logistics and tourism, with fisheries and mining projects to be developed at a later stage due also to the need of suitable logistics and transport facilities, particularly in connection with large mining projects.
A comprehensive list of the main projects proposed in the three initial business sectors is available in the official Tanfeedh website at the following link: http://tanfeedh.gov.om/en/overview.php. This article will not focus on the specific projects being implemented but on the proposed changes in the legal framework which should enable the implementation of these and other projects and generally encourage private-sector initiative and foreign investments. The information utilised derives from the documentation outlining the outcome of the Tanfeedh labs, discussion ‘labs’ which formed part of the Tanfeedh process and were attended by approximately two hundred decision-makers from the public and private sectors. The Tanfeedh labs represented the second of the eight steps of the process and were followed by open days, during which the general public was invited to express its opinion on the Tanfeedh proposals.
The two main issues addressed by the research relating to the finance sector were: (a) the need to increase the participation of the private sector in funding large projects; and (b) the best way to improve the business environment and attract investors. In 2016, the Sultanate ranked 70th overall in the Ease of Doing Business Index (The World Bank – Doing Business Report 2016) and such ranking must improve in order to attract foreign investors. The initiatives envisaged in this respect include new legislation on foreign investments, the integration of all Government entities in the ‘Invest Easy Platform’ and the unification of the national investment promotion efforts.
In particular, the new Foreign Capital Investment Law, which, in accordance with the Tanfeedh recommendations, should be issued during the course of 2017, should allow for 100% foreign ownership of companies in Oman, subject to the power of the Ministry of Commerce and Industry to restrict certain business sectors by reasons of national interest. This, once implemented, will represent a radical change in the Omani business environment. Other measures include the establishment of a Credit Bureau and the integration of all Government entities in one tendering platform, which will allow a full overview of all aspects of public procurement, the latter to be coupled with more incisive intervention in order to increase accountability and transparency. In this respect, it has been proposed that all Government-owned companies will be subject to the Code of Corporate Governance (the “Code”) issued in 2016. The Code, for the time being, applies only to publicly listed companies. Finally, Tanfeedh proposes that a number of Government-owned enterprises be privatised and listed on the stock market.
With reference to the labour market and generally to employment, Tanfeedh includes various strategies to create employment opportunities in the private sector and, in particular, the manufacturing, logistics and tourism sectors. The Tanfeedh reports quote restrictive labour regulations and low productivity of the labour force as two key areas that require improvement. The keyword appears to be flexibility: part-time work, temporary work and flexible movement of employees (in particular between companies belonging to the same group) are some of the proposed new initiatives.
From an educational point of view, the Government wishes to form a closer relationship between the business environment and the education providers and to improve the quality of the training programmes proposed to the Omani youth. At the same time, measures shall be taken to attract young Omanis to seek employment in the private sector and to encourage the establishment and operation of small and medium enterprises.
The following has been proposed to assist entrepreneurs and employees alike and to encourage employers, inter alia, to invest on the local workforce:
- The creation of a specialised and dedicated Labour Court, which should assist in reducing the duration of lengthy and expensive court proceedings.
- One-window process for obtaining Labour clearances, i.e., the permission to employ a foreign employee in a specified position. This bureaucratic process involves different Government authorities and can be extremely time-consuming; the proposed new process is aimed at reducing the total time required to five working days.
- Dedicated Labour Solution Packages for specific sectors such as the construction sector.
Monday, January 16, 2017
Wednesday, January 11, 2017
Monday, January 9, 2017
Wednesday, January 4, 2017
Board Members in Public Joint Stock Companies: Amending their Responsibilities and Election Provisions
- S/he holds 10% (ten percent) or more of the shares of the company, company’s parent company, or company’s affiliates or sister companies.
- S/he is a representative of a corporate body holding 10% (ten percent) or more of the shares of the company, company’s parent company, or company’s affiliates or sister companies.
- In the two years preceding candidacy, s/he used to hold an executive position or was an employee in the company, company’s parent company, or company’s affiliates or sister companies, was employed by any party contracting with the company (including independent auditors, key suppliers, and NGOs that received finance representing more than 25% of its annual budget) or used to hold about 20% of the shares of any of the abovementioned parties.
- S/he serves as a member on the board of the company’s parent company, affiliates, or sister companies.
- S/he is a first-degree relative to any of the board members in or key management personnel of the company, company’s parent company, or company’s affiliates or sister companies.
- S/he has a material, economic or financial relationship with the company or any of the company’s sister, affiliate or owned entities.
Monday, January 2, 2017
Monday, December 19, 2016
What is PASI?
The Social Security Law and its amendments promulgated by Sultani Decree 72/91 came into force on July 1, 1992 (the “Social Security Law”). Article 5 of the Social Security Law provides that a public authority shall be formed under the name of Public Authority for Social Insurance (“PASI”) with administrative and financial independence, and is responsible for the implementation of the Social Security Law.
The Social Security Law aims to provide security against old age, disability, death or occupational injury and disease, thereby ensuring a social stability for the insured and their dependents. The Social Security Law only applies to Omani nationals employed in the Sultanate of Oman.
What are the employer’s contribution and obligations?
Under the Social Security Law, the employer is solely responsible for the payment to PASI in respect of each relevant employee, and the payments must be made on the basis of the actual wage drawn by that employee. Currently, the employer is required to contribute a total of 11.5% to PASI (10.5% of the employee’s gross salary, plus an additional 1% for occupational injuries and disease). The employee is required to contribute an amount equal to 7% of its gross salary.
Each company in Oman has online access to the PASI scheme (which sets out the details of each Omani employee and his or her salary). As a standard practice, in January each year, PASI updates the contribution that the employee and employer are required to make based on the standard minimum 3% increment to the gross salary. However, if the employer grants an increment of more than 3%, it is the employer’s obligation to notify PASI of the new salary by updating the employee’s salary details online. Generally, PASI would require the company to amend and notify PASI of the employee’s salary within a period of one month from implementing the revised salary.
Is it compulsory for companies to comply with the rules under Social Security Law? Or can companies provide their own scheme?
Article 16 of the Social Security Law requires the employer to undertake payment of the full social security subscriptions to PASI, and the employer is solely responsible for payment of these subscriptions, and may deduct the employee’s contribution from the secured employee’s salary.
However, if a company has a workers savings fund scheme by which the Omani employees receive more than the PASI entitlement that the employer is required to contribute (i.e., the contribution made by the employer is equivalent to, or more than, the 10.5% of the gross salary to be contributed by the employer), then such scheme is acceptable and the employer is exempted from making PASI contributions on behalf of its employees. However, if it falls below what is defined under the Social Security Law, then it is important to note that the company may be foreseen as breaching the Omani Labour Law and the Social Security Law.
Article 7 of the Social Security Law provides that an employee has one year from the date of leaving to bring any claim regarding PASI. In such case, the concerned employee will have one year from when he or she leaves to raise a grievance against the company.
What happens if the employer defaults?
Article 17 of the Social Security Law provides that the employer who is subject to the law, but does not pay the contribution according to actual wages of the employees, or does not pay the insurance contribution for all or some of his employees, or does not pay the end of service benefits or refuses or delays the payments of the due contribution at the time, then the employer shall be obliged to pay to PASI an additional amount estimated at 13.5% of the contribution which the employer failed to pay, or of the amounts which are due for end of service benefits, unless there are unavoidable reasons, to be evaluated by the Board of Directors of the PASI.
In addition to the penalty imposed under Article 17, PASI also sets out an additional penalty under Article 74 of the Social Security Law, whereby if the employer violates any of the provisions of the Social Security Law, the employer shall be punished with a fine of not less than OMR 100 and not more than OMR 500, and the limits of the punishment will be double in case of repetition of the violation, and the fine multiplies according to the number of the employees with respect to whom the employer commits one or more violations.
Therefore, it is important for a company to comply with PASI rules. If the company has revised the employee’s salary, it is the responsibility of the company to notify PASI of the new salary and undertake to pay the full subscription to PASI accordingly.