Oman eyes Pakistani market

On April 21, a high level delegation of Omani businessmen wrapped up a five-day visit to Pakistan, a visit that further served to whet the investment appetite of the sultanate's private sector.

Pakistani Prime Minister Shaukat Aziz called for the signing of a free trade agreement with Oman last year, a proposal to which Omani officials reacted favourably. Though formal negotiations towards such a trade treaty have yet to open, Oman's private sector is actively investigating the Pakistani market, reflecting the increasing awareness of its strategic location, serving as a door into China and the Indian subcontinent.

With the Omani delegation containing representatives of sectors ranging from information technology to mining, tourism to energy and manufacturing through to construction, the visit gave an indication of the wide scope of economic co-operation and opportunity that Oman is seeking in Pakistan.

Speaking on his return to Oman, Salim bin Said al-Ghattami, the chairman of the Oman Chamber of Commerce and Industry (OCCI), said the results of the trip had been encouraging.

"We found Pakistan a moderate and investment friendly country with a strong economy and warm people, who make Pakistan a good mix for lasting business co-operation between many sectors of the two fraternal countries," al-Ghattami said.

Other Omani companies are well on the way to transforming words into deeds. The Oman Oil Marketing Company (OOMCO) is one of the top contenders in the privatisation of Pakistan State Oil (PSO), the country's leading fuel distributor.

The sale of the 51% stake in PSO, which is expected to raise around $500 million, has experienced delays, with a court on 6 April overturning an order from the Pakistani government blocking one of the bidders from taking part in the tender. However, these delays have not diminished OOMCO's enthusiasm for the deal.

"In the first bidding for Pakistan State Oil, OOMCO emerged as one of the top six consortia to have succeeded among international competitors," Omar Qatan, chief executive officer of OOMCO, said on 13 April, after it had been shortlisted for the tender. "Being part of such ventures is proof that the hard work put forth into the company by the staff has been internationally recognised."

One factor that helped foster business links between the two countries was the founding of the Pak-Oman Investment Company (POIC) in 2001, jointly funded by the Omani and Pakistani governments with start up cash to the tune of $25 million each.

One of the best known examples of the company's work was the setting up of Pak Oman Microfinance Bank last year to assist low income earners in Pakistan with project financing in the industrial and agricultural sectors, lease finances, investment banking and money market operations in addition to establishing subsidiary companies.

On 16 April, the Pak Oman Microfinance Bank opened its twelfth branch, located in the town of Mahmudabad. Since starting operations less than 12 months ago, the bank, which has a capital of $500 million, has built up a client base of more than 19,000.

Another arm of the joint Omani-Pakistani venture, the Pak-Oman Asset Management Company, serves to facilitate investment in Pakistan's economy by Omani firms. One such instance was advising the Oman Oil Company (OOC) in its successful bid to acquire a 49% slice of Pakistan's Orient Power Company last September, thus buying into a project to construct a 450 MW power station outside of Lahore.

OOC's deputy chief executive officer Mulham Al Jarf said they were delighted to be buying into Orient Power, which was the Omani company's first foray into Pakistan.

"This project represents a ground-breaking investment for OOC in Pakistan especially when it meets our international investment guidelines," he said on 10 September.

The first stage of the plant is due to come on line in 2008, and has a construction budget of $180 million.

Another tie that binds the two countries are the remittances from Pakistani workers employed in Oman, with more than $130 million making its way to Pakistan in 2006. With its liberalising of banking and investment laws, Oman has been actively encouraging foreign workers to buy into the sultanate's economy, thus keeping some of this cash flow at home.

(C) Oxford Business Group - www.oxfordbusinessgroup.com

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