In the next 12 months, there will be a level of optimism but it can go down and the key question is for how long the prices will stay low, T. Ganesh, chief financial officer (CFO) at Bank Muscat, said at the OER Finance Summit at Crowne Plaza Muscat on Tuesday.
The summit, which discussed managing finance in an uncertain business environment, also featured the presentation of the OER Top 20 Awards 2015 to Oman’s largest companies listed on the Muscat Securities Market (MSM).
The event was attended by guest of honour Sayyid Hamid bin Sultan Al Busaidi, who is the director general of support and services and in charge of Oman Centre for Governance and Sustainability, Capital Market Authority (CMA).
The summit brought together chief executive officers (CEOs) and CFOs of a number of companies to discuss a range of issues including managing business risk, negotiating financial uncertainty and striking a balance between short-term objectives and long-term sustainability.
Better preparation
During a panel discussion, the Bank Muscat CFO compared the situation in 2015 with that of 2009, saying that the government had been better prepared this time. “If you look at 2009, within three to four months of low oil prices, there was a significant impact on business conditions in Oman,” Ganesh said.
He added that government spending, which plays an important role in the economy and business, has not come down significantly in the last one year.
Cautious optimism
Another panelist Aftab Patel, CEO of Al Omaniya Financial Services, also said that he is ‘cautiously optimistic’ and noted that those companies which can craft innovative and smart strategies will have opportunities.
The need for economic diversification was highlighted by Avinash Patodia, head of finance at Jindal Shadeed Iron & Steel, who said that such a practice would help strengthen the economy.
PDO’s efforts
Haifa al Khaifi, finance director at Petroleum Development Oman (PDO), said that the situation is difficult for the industries, especially the oil and gas sectors, but said that PDO is determined to continue its efforts to increase production and contribution to the economy through various initiatives, such as enhancing efficiency and optimisation.
However, unlike the panelists that expressed ‘cautious optimism’, R K Mehta, Group CFO at MHD Group of Companies, said that he is not optimistic as challenges are ‘all over the place’. The panel also included Jorgen Latte, CFO at Ooredoo – Oman and Shahid Rasool, chief investment officer at Ominvest.
Economic vision
In a presentation at the summit, Alfred Strolla, managing partner of Deloitte Oman, commented on the sustainability of financial prospects in the short term, saying, “As a general trend, we are optimistic due to the sound vision of the Omani government in diversification of the economy.”
He also said that the encouragement of the tourism industry in Oman, the introduction of the railway project, the strategic position of Duqm and investments in mining and minerals are factors that would help boost the economic landscape in the Sultanate.
In addition, Strolla said that a survey conducted by Deloitte within the region, showed that the top priorities of CFOs include cost reduction, organic growth and increasing cash flow.
Oil revenues
Khalid Ansari, managing partner, KPMG Oman, discussed the challenges for business due to falling oil prices, saying that the drop in oil prices from $75 to $50 results in 33 per cent reduction in oil revenues. The gradual weakening in economic conditions will adversely affect the banking industry, he said but noted that banks in Oman in general have not felt the pinch yet.
According to Ansari, cash management will remain a corporate priority for at least next 12 to 24 months. “Those companies that continue to thrive through all economic cycles are those that recognise that ‘cash’ never loses its appeal,” he said.
The other experts who delivered presentations at the summit were Charlotte Duke, partner at London Economics; Paula Ramada, partner at London Economics; and Sanjay Kawatra, audit partner at E&Y Oman.
