Monday, June 29, 2009

Focus on: Labor Unions

In 2006, an amendment to the Labor Law was issued that permits the establishment of trade unions in Oman. Since then, the number of labor unions in Oman has steadily increased. Currently, there are more than 55 labor unions across the Sultanate according to the General Federation of Oman Trade Unions (GFOTU). This represents a dramatic increase over 2007 and 2008 levels.

Trade unions are organizations of employees that work together to achieve common goals. In Oman, trade unions may work to defend employee rights, improve financial and social situations, and represent employees in work-related matters. The trade unions have also formed the GFOTU, which is an independent body that oversees labor unions in Oman established under the new law, and which promotes labor rights and the interests of unions.

As the number and visibility of labor unions increases in Oman, there are several issues for employers and employees to consider.

Employers should make themselves aware of the laws and what actions are permitted and prohibited with respect to trade unions. For example, it is unlawful for an employer to terminate an employee based on the employee’s membership or role in a trade union. In addition, employers may be subject to fines or imprisonment if they interfere with an employee’s right to carry out trade union activities.

Conversely, employers may look to trade unions as a resource for facilitating communication between the employer and the employee. Trade unions have the advantage of organization, which means an employer can communicate information about company policy, safety matters or other work matters to the union, which can disseminate this information to all employee members.

Employers have taken different approaches to the increase in labor unions in Oman. Some employers, seeking to gain the communication and policy benefits of labor unions, have actually sought to help employees form labor unions. Other employers have taken a more passive approach and waited to see the impact of the labor unions rather than actively promoting their formation.

Similarly, employees should consider the legal requirements for forming a union, as well as the rights and restrictions associated with trade unions under Omani law. For example, while trade unions have the right to bargain collectively or engage in peaceful strike action in order to improve their financial or employment situation, there are limits on what actions the employees may take. Specifically, employees planning to engage in a peaceful strikes must notify the employer at least three weeks prior to the date of the strike. Further, employees working at establishments that provide basic services to the public are not permitted to strike.

With the rapid increase in labor unions in the Sultanate, employers and employees should consult the law before taking any steps to form a union or before setting union-related policy. While labor unions can provide substantial benefits to both employers and employees, it is important to ensure that the correct laws and regulations are followed in order to achieve the maximum benefits.


Wednesday, June 24, 2009

Hot Topic: Microfinance

Visitors to Oman frequently remark about the hardworking and resourceful nature of their Omani hosts. The dedication and energy of the Omani people – Omani entrepreneurs and small businesses, in particular – may find new outlets thanks to the recent creation of the country’s first microfinance initiative (MFI).

The term ‘microfinance’ refers to financial services provided to low-income clients and may include savings, fund transfers and insurance. The best known form of microfinance is ‘microcredit,’ the practice of lending small amounts of capital to individual entrepreneurs and small businesses not served by traditional mechanisms of mainstream finance. While the loans are modest – sometimes as small as RO 80 – they can have a large impact, as banks do not typically lend to those with little or no cash income and few assets to serve as collateral.

Microfinance has been embraced by the international development finance community as a powerful tool for promoting entrepreneurialism and a key driver of economic growth. While microfinance has been popularized by the high-profile success of MFIs such as Grameen Bank in Bangladesh, the practice has gained only minimal traction in the Middle East. According to some estimates, only 15 percent of the demand for microfinance in the Middle East is currently being met.

The introduction of microfinance to Oman could mean that entrepreneurs and small businesses will find access to new fundraising opportunities at relatively affordable rates. If successful at supporting new enterprises, this effort could spur economic growth and job creation in Oman.

Oman is home to a wide array of small businesses that could serve as potential clients for MFIs. Particularly, makers of textiles and handicrafts stand to benefit, as do fishermen and those making a living in agriculture. Oman’s strong tourism sector also gives rise to numerous entrepreneurial opportunities that may be taken advantage of through the financial support microfinance provides. A further potential market for microfinance in Oman is women entrepreneurs. In other countries, women have generally been the main focus of MFI because studies have shown they are less likely to default on their loans than men.

But while the future of MFIs in Oman holds much promise, there have been problems and criticisms of MFIs in other countries. One problem faced in other countries is the difficulty of providing microfinance services to customers living outside of urban areas, as the low population density makes it difficult to meet the costs of a retail branch. Oman will face similar challenges, as some of the greatest beneficiaries of microfinance would be those living in the interior where population density is low and retail branch costs would be high.

Another issue is how Omani law will be applied to MFIs. Currently, it is likely that MFIs will be treated the same as other financial institutions in Oman and be subject to the same laws and the oversight of the Capital Market Authority and the Ministry of Commerce and Industry. It is also possible, however, that laws could be tailored to make it easier for MFIs to operate in Oman, and to respond to the unique needs and problems of these institutions and their clients.

Another problem that has emerged in other markets is how to evaluate potential borrowers’ credit in an environment where traditional metrics are not easily applied. Luckily, the first credit bureau in Oman was recently introduced, which should make it easier for MFIs to evaluate borrowers’ credit.

The Omani market presents unique issues for MFIs, though the untapped market of the interior as well as the recent introduction of credit bureaus provide encouraging evidence that they have the potential to succeed. Therefore, many in Oman are justifiably excited for new business opportunities on the horizon.


Monday, June 1, 2009

Focus On: Copyrights and Fair Use

Under the Law of Copyright (Royal Decree 65 of 2008), it is necessary to obtain the permission of a copyright owner in order to use, copy, publish, or broadcast a copyrighted work such as a book or audio recording. However, the Copyright Law does provide certain narrow exceptions to this rule which permit the use of a copyrighted work without the author’s permission.

For example, in the following circumstances it is permissible to use the copyrighted work without the owner’s permission:

  1. Individuals may quote from a publicly available copyrighted work for clarification, explanation, or criticism purposes but only to the extent necessary for the clarification, explanation, or criticism;

  2. Educational institutions may use a copyrighted work for clarification purposes during face-to-face instruction, but only to the extent necessary for the clarification and also provided there is no direct or indirect compensation;

  3. Public libraries, educational establishments, and scientific and cultural institutions may make a single copy of a published article or short work for study or research, provided there is no purpose of direct or indirect financial gain.
Although the above uses are permitted without the owner’s permission, the user of the copyrighted work must still mention the source of the work and the author’s name. Further, the above uses are permitted only if they do not conflict with the copyright owner’s normal exploitation of the work.