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09MUSCAT1105 2009-12-29 22:50:00 CONFIDENTIAL Embassy Muscat
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1. (U) SUMMARY: Embassy Muscat has engaged with both government and
the private sector in advancing entrepreneurship in Oman. Key
efforts include a recent roundtable hosted by the Ambassador and
Embassy outreach to the Ministry of Commerce and Industry (MOCI),
primarily via two constituent offices: the Small and Medium
Enterprise Directorate (SME Directorate) and the Omani Center for
Investment Promotion and Export Development (OCIPED). Overall, the
outreach has been well-received and stakeholders in Oman are
enthusiastic for further opportunities to engage on
entrepreneurship activities. END SUMMARY.


2. (C) COMPOSITION AND TOPICS: As part of engagement effort related
to the upcoming Presidential Entrepreneurship Summit, the
Ambassador hosted a roundtable with key members of the Muscat
American Business Council (MABC) on December 16. Six successful and
influential members of MABC attended. Each member either owns her
or his own business or has risen to the level of regional manager
for a multinational company. Discussion was wide-ranging and
informal, with topics including access to capital for
entrepreneurs, bureaucratic hurdles facing entrepreneurs, and a
general feeling among business people that government should do
more to support their efforts.

3. (C) ACCESS TO CAPITAL: Many agreed that the biggest challenge
facing Omani entrepreneurs, especially women, is the lack of access
to capital. Government-sponsored loan programs are restrictive,
requiring applicants to be of a certain age; bank loans require
that the debt be secured, and many applicants do not have
acceptable collateral. Further, if the applicant is a daughter or
son of one of Oman's elite businessmen, the bank directs them to
their father's line of credit rather than granting them their own,
regardless of the collateral they present or the proposed business
project requiring financing.

4. (C) BUREAUCRACY KILLS: Another hurdle is the numerous licenses a
new business must obtain from several different ministries. The
most onerous appears to be licensing by the Ministry of Manpower,
largely due to rapidly changing, inconsistently implemented labor
laws over the past several years and steadily increasing
requirements to hire Omani nationals, in support of the national
drive toward Omanization of employment.

5. (C) BUSINESS PEOPLE ABANDONED: A feeling of malaise regarding
perceived government neglect of the private business sector became
apparent as the discussion continued. At one point, when describing
the government's attitude, a member declared that "Omani business
people feel like orphans." Members cited the government's focus on
bringing investors into the country, rather than developing and
promoting Omanis in business, as the key element of neglect. They
also pointed to the government's minimal effort at promoting the
U.S. - Oman Free Trade Agreement as a tool for Omani exporters as a
further sign of neglect.


6. (SBU) SME DIRECTORATE SUPPORT: The Ministry of Commerce and
Industry (MOCI) is primarily responsible for SME development and
promotion in Oman; it has created the SME Directorate to lead its
efforts. The SME directorate is fairly new, underfunded and
understaffed. Currently, the Embassy is supporting Small Business
Administration (SBA) efforts at entering into a Memorandum of
Understanding with the SME Directorate. Targeted areas for
development within the SME Directorate are enhancing credit to
SMEs, enhancing government procurement from SMEs, and assisting in
providing SMEs feasibility studies (NOTE: The SME Directorate
already provides feasibility studies for potential entrepreneurs;
however, due to the SME Directorate's low level of visibility, this
service is seldom used. END NOTE.). Post is also working with the
SME Directorate in arranging for its upcoming SME Conference and

Exhibition from February 16 - 18. The conference is likely to
generate significant press coverage, thereby highlighting the
importance of SME development to a broad range of Omanis.

7. (SBU) COORDINATION WITH OCIPED: OCIPED is another department
within the MOCI with which the Embassy is working on
entrepreneurship promotion. OCIPED tends to favor the "investment
promotion" aspect of its work and neglect its "export development"
role. The Embassy hopes to use the FTA as a tool for OCIPED
outreach to potential Omani exporters/entrepreneurs, including
exploring the possibility of local MEPI grant funds for outreach

8. (SBU) COMMENT: Embassy efforts at outreach related to the
President's Entrepreneurship Summit have generated insights and
suggestions for USG engagement. Top priorities for entrepreneurship
development in Oman are securing start-up capital and reducing
bureaucratic hurdles. Both obstacles to starting a business are
largely dependent upon a heightened level of government attention
to promoting entrepreneurship and assisting aspiring entrepreneurs.
Post will continue to engage the government regarding this issue.