Oman is facing possibility of local, expatriate brain drain

As the global oil price crisis starts to bite deep in the economy, the Sultanate is on the verge of losing its most skilled talents as both Omanis and foreign workers are considering their options to move in other countries in the region.
The top destinations are the United Arab Emirates and Qatar where the low oil prices have very little impact because of the strong market fundamentals. Years of genuine economic diversification in those two countries are paying off now. Oman, which has been shuffling its feet for too long on diversification, now may pay the price of losing its skilled workers.
The country does not have large fiscal and external buffers and is now unable to reduce negative spillovers to neutralise oil income decline. Oil revenues still make up about 75 per cent of the Sultanate’s total income. Staff wages both in the public and private sectors are among the lowest in the region.
In the current oil price crisis, the government has already frozen promotions, bonuses and other incentives. The private sector is following suit. Such financial motivations keep the staff loyal to their employers and the lack of it will force them to look elsewhere.
The brain drain will severely hit the economic recovery and kill off the rudimentary diversification efforts which are already in place. Talented young Omanis in the middle management positions are restless and need to see the expansion of their careers.
To lose them to neighbouring countries that promise better pays and remunerations will severely hamper the 30-year old Omanisation drive. On the other hand, losing expatriates who are playing a key role in the private sector will reduce the market competitiveness. The void created by the departures of the skilled workers, both Omanis and expatriates, cannot be filled by fresh graduates who lack working skills and years of experience.
On the question of graduates, youngsters armed with degrees, are now finding it tempting to cross the border to expanding economies that don’t depend on oil volatility. In this trend, the void left behind will be difficult to plug in when all venues of talents start to depart systematically. For the government, it always has been a case of finding quick remedies when its back is pressed to a wall. The example of this was evident last week when it was announced that the cabinet is considering removing some restrictions on foreign investment laws. Non-Omanis may be allowed to own businesses without the minimum requirement of having a capital of OMR150,000.
It is a desperate decision in the middle of an oil price crisis that tries to mend a collapsing wall with a handful of pebbles. That amount of capital will not get the business owner far in a very unpredictable market that is riddled with a maze of red tape and endless bureaucracy. You don’t diversify the economy with corner shops, cafes or the sale of vegetables. In the past, many opportunities to encourage large business integration with multinational companies have been lost. Lack of researches that would have led to programmes for the utilisation of business skills is one factor that has not taken off.
International trade partnerships, create not just employment opportunities, but pay well to keep workers happy to stop them from leaving the country. Such partnerships also transfer knowledge and technology, which are much needed in a merging economy like Oman.
The brain drain, once it has started, will be difficult to reverse. Oman will no longer be able to compete with countries that have ‘poached’ its skills when oil prices are high again.
Structural adjustments are badly needed for long-term brain gain. But serious efforts are needed to reverse the past slipups. The learning curve have many bends but if Oman cannot find a true path to latch on, then the word ‘diversification’ will continue to be elusive.