Tuesday, November 25, 2014

What Classifies as an Omani Product?

Under Omani Law there is no clear definition of “Omani Product.” In practice for the purposes of considering a product as an Omani Product, many ministries including the Ministry of Commerce and Industry (“MOCI”) looks into a product’s (a) origin and manufacture; and (b) outsourcing prior to classifying the product as an “Omani Product.”

Origin and Manufacture
It is our understanding from MOCI that a product will be categorised as an Omani Product when the manufacturer is generally in control of the manufacturing from the beginning to the end. In other words, when the company is in control of the design of the product, its production, and its assembling.

Outsourcing the Product
The MOCI may grant the company the rights to label a product as an “Omani Product” when a company imports certain raw materials for manufacturing their own products. The company however needs to ensure that the raw material imported is used as a part of the product to be manufactured and thereby adds value to the raw material imported.

The Consumer Protection Law promulgated by Royal Decree 81 of 2002 (with executive regulations issued by Ministerial Decision 49 of 2007) entitles consumers to receive correct information about purchased commodities. The information consumers receive must contain label listing particulars in relation to:

  1. price;

  2. date of production and expiry;

  3. country of manufacture;

  4. conditions and instructions of application;

  5. basic components; and

  6. degree of effectiveness and after sale service.

Accordingly, the Consumer Protection Law also sets out penalties in case of consumer rights violations. Anyone who contravenes the provisions of the Consumer Protection Law is liable to pay a fine not exceeding R.O.5000 which may be doubled in the case of recurrence of the contravention. Additionally, the Omani Penal Code, as promulgated by Royal Decree 7 of 1974, under Article 294 further imposes a penalty which clearly states that “the sentence of one month to one year and a fine of R.O.10 to R.O.200 shall be applied to any person who cheats the purchaser whether in the commodity’s nature; essential descriptions; ingredients; quantity of useful elements therein, or type or source thereof of the identification of type or source is deemed, according to the agreement or to custom, the main reasons of the sale.”

Consequently, in order to safeguard the company’s interest and mitigate any losses that may arise in the future, it is recommended for companies to: (i) have a clear discussion with the officials at the MOCI prior to labelling its product as an “Omani Product”; and (ii) ensure that they are in control of the production of the product from the beginning to the end. Further, if any raw material is used within the production of the product, the company must ensure they have added additional value to the product.

In conclusion, Omani law does not directly consider what is meant by the term “Omani Product.” Accordingly, when determining whether a product is deemed to be Omani or not, both the origin and whether the product or part of it was outsourced may be taken into account. However, whilst the law is unclear on this aspect, manufacturers must ensure they do not mislead or “cheat” the purchaser regarding commodities offered to the public.