Meet the future halfway

Excerpts from the speech of HE Ali Bin Masoud Al Sunaidi, Minister of Commerce and Industry, at Oman Debate 2012.

Let me first thank His Highness Sayyid Tarik bin Shabeeb and the organisers of this event for lining up such a distinguished list of panellists. And let me first refer to what I have seen as I drove to Al Bustan Palace Hotel today. I saw a young Omani drive a gas cylinder vehicle and I thought he would not have delivered cylinders on time and with this punctuality had he been an employee of a gas company. In his case, owning and managing a company which is a truck made the difference. And many people would subcontract from big producers of gas. This is a an example of good partnership.

A few days ago, I was talking to my friends about a finance institution. They said at 2 o clock in the night they have noticed something suspicious going on electronically at one of the floors of the building. That institution has subcontracted its software security to a company made of 15 intelligent people.

My friends called the guards and asked them to check what was happening on their fourth floor. They came back saying that nobody was there. Apparently what had transpired someone in that institution had forgotten to switch off a printer and someone from outside had managed to hack into the memory of that printer and tried to read the accounts details. It was only because the company had such a specialised partner that it was able to stop it immediately while everybody was asleep.

Similarly I heard about banks who don’t want to own any equipment further. They would like to subcontract that. But partnership is a better word than subcontracting because it’s basically a relationship or exchange of service for a price. But it will also add to efficiency, productivity and capacity building.

Today we have more challenges than we had in any time. Markets all around the world are doing funny things. Important companies are being sold for less while some rewarding companies are sold for high. And we saw unemployment level rise and resources deplete. What is there to do in terms of cost cutting and in terms of being efficient? But I think that this is a very narrow-minded look. I feel we are in an era where collaboration is much more meaningful than competition.

Yesterday we had a brilliant speech by Nawras CEO. He talked about a new partnership between Nawras and WhatsApp. Why on earth he wants to do that? WhatsApp is looked up as a creature eating into their profit. But I think you understand at one point of time that if you have to fight it out, you tend to be the loser.

You may make money out of the value chain, as opposed to making money by making people miserably pay more for their phone calls. People are willing to pay more, if they get more. But they don’t want to pay more if they are getting less. And if you start giving to them new ideas, new items and new ways of life, people would tend to pay more for them as long as they see there is something more in it for them.

And as inflation rises, people demand to be compensated. Otherwise, they change the habit. If your restaurant is expensive, because things are expensive, you would prefer to do fewer trips. But if they give you Internet and Wi-Fi, sometimes you would say I will go and I will do something while at it.

This is collaboration between telcos and restaurants. I think the most expensive bread and coffee ever is not the ones in the gardens but in the small cafeterias by the beach in Al Qurum. Why do you buy the bread and coffee today for RO5/a piece while you could buy at merely 200 baisas? Because they are not selling you goods any more, but they are selling you a behaviour, a way of life.

Why would a bread manufacture like Oman flourmills sell internet? Their job is to sell bread at most competitive prices. But it’s somebody else who wants to mix that into a behaviour which would make people drive to a place, stay there for two to three hours and spend more money. So people are becoming smarter and smarter and cautious. It is only those who collaborate to deliver a package of services that will win and survive for the future. And it is very much related to what were are doing here.

If you think of His Majesty’s speech on the 12th of November, he underlined very clearly the importance of private sector and he did so by saying that it’s not a partner in the development but a partner in our social activity. So private sector does not only sell the services, but it changes the pattern and behaviours. And therefore it gets rewarded by selling hardware and software, items and services and while so doing, you are really finding the way how our market behaves.

Although we still need more infrastructures such as ports and services like airport, we need to concentrate more on what the next five-year plan looks like. The next five-year plan which will start developing form next year will look into the issue of integration, maximising the use of what we have. And what’s coming up is phenomenal. Muscat International Airport is undergoing an expansion by the end of 20014 or 2015 from 6mn to 12mn and with a small modification it would jump to 26mn and with the next terminal it would jump to 46 million. Similarly Salalah is doing an expansion. It will go up to 1mn and with small interference in terms of warehousing and in terms of conveyer belts and some other system it could go up to 2mn. In addition, four other ports will account for half a million each.

At the same time, something phenomenal is happening in Sohar and Duqm and Salalah and while those are happening a train from Sohar to Muscat to Duqm is being designed. How can we cope with all these? The very narrow-minded thought of working in competition will not take us anywhere. The narrow-minded divide between government services and private sector will not take us any further.

And most importantly, this inward looking family business will also not take us anywhere either. The silos where people have protected their businesses, where the government has protected itself against the private sector’s intrusion survived for 42 years and may survive for another four years but it cannot take us anymore. It simply cannot take the burden any more.

What’s coming is far more immense and far more complicated. Today when we need to make a decision on the fisheries port in Duqm, many questions come out: Is the road ready? Is the private sector interested in fresh fish; and if so, will they use the port in Duqm? Are we ready to give enough people to maritime business? What about sea-land relationship? Look at what is happening in the Gulf? Almost all the projects require a combination of knowledge about the land and the sea. Corrosion is a big issue.

Almost all plans are coming up by the sea because we cannot produce electricity without water. People who know about excavation know nothing about corrosion. They wasted all their life by digging mountains. They need to bring a new set of people who know about corrosion, instead of wasting money by thinking that they will be the most intelligent agency and know it all- and there is not know-all agency anywhere in the world now- neither government nor private companies. And the only way you could bid is by being more intelligent.

In the beginning of the year, I was in Silicon Valley. When I went to a university, I saw a company which did a presentation on a project in the gulf where they were able to reduce the amount of the steel in that building by $5mn. And therefore I hope that we would discuss these issues in the debate. As regards interlinking the government and private sector, we would have to be honest to each other and we would have to say what would streamline both ends of the equation.

Where is the inefficiency of the government or its short falling? For example, should the Ministry of Commerce privatise the one-stop shop? May be they should. May be some of the government services are not to be meant to stay any more with the government. And similarly, should every one of you have your own trucking fleet and kitchen? Shouldn’t we let smaller companies concentrate on such issues? I think this multi-tasking, multi role playing either between government and private sector or among private sector entities need to be addressed, if you need to stay competitive.

I would think this debate would look into the issue of how to retain Omanis within a company, as opposed to finding ways to convincing the Ministry of Manpower that Omanis do not stay. Statistics show that Omanis do not stay. But there is a company in Sohar who has 700 Omanis and 300 non-Omanis who stayed. They must be doing something there or they must be fools. But I am sure they have proved themselves to be efficient. This company is one of the hardest place for one to come to work, but their accident rate is almost zero and absenteeism near to zero. So statistics are dull.

It only tells how inefficient you are in dealing with the situation. Recently I talked to the CEO of a company. They don’t have a driver in their payroll. All the drivers own the truck and they look like the owners of the company. And I think you feel proud to say that I am an owner of the company because nobody asks you whether your company is a truck, just like the guy I saw this morning selling cylinders. Nobody would make an attempt to ask him: If you are an owner of such and such a company, how many things you have? How many cars you have? And I tell you, if he makes a thousand rial per month I don’t think he will continue to drive a truck. I think he is making much more than you or the government can give him in terms of salary.

We could go more and say how we encourage young entrepreneurs to do things that we otherwise used to do. The number of unemployed in Oman is not shocking and soon the figures will be released. You would see that is not a big issue. Training and education are to be readdressed. If you say for so many years that the government was not able to deliver the right number of people at the right time with the right quality, why don’t you own and manage your own training institute? Haven’t we done so well in the banking sector because of their institute? Haven’t we done so well in healthcare sector because of their institute? Why don’t transporters have their institute? And why don’t logistics have their institute? And why don’t manufactures in every industrial estate own or co-own with government their institute?

And incidentally, this was a discussion of yesterday’s meeting between government officials and private sector, and a few of people sitting now in this room were part of it and some of them have recommended this. I think instead of coming to say I will throw the ball at you and waste time worth two days, we need to say how we could do it better. And we need to put in black and white which time to do that. Because we don’t do it, we will do the same thing over and over again the next five-year plan. And now we are at a very good time, because we started to think of the next five years plan, and people concerned will start meeting next year.

How could we engage the public and private sector continue to have a fruitful dialogue? I think this is also something to be done. For a long time we had only one-way communication. I attended several sessions where private sector talked and government listened and many other meetings where government talked while the private sector had to listen. Until today one can say that this is a dialogue that is worth engaging in. But that was not a dialogue, but ‘I demand you give me’ or ‘you demand I give you’ kind of things.

And I feel this debate for the last few years has done just that- I mean engaging people on a dialogue where when you go back someone brings a piece of paper and say this is what people said and we think some of them are worth taking forward and some of them are not. Some filtering has to be there because everyone says what he thinks (and I know many people also want to be movie stars and they think because someone would want them to think so). Perhaps we need to rethink because that does not take us anywhere.

Issues like automation are very important. It actually breaks my heart when I see five men drag a rope to take five blocks of cement to the second floor. It’s not to say that productivity and efficiency are already thrown out of the window when you do that. People will pay slightly higher if they realise that most people do that way. So automation is an issue. It also breaks my heart when I see two people jump onto a big truck to take cartons on their backs, when the cost of the machine doing this – a lift or robot – is only RO2000. Compared with the investment of a truck of RO40,000 or RO30, 00, RO2000 is nothing.

It makes the guy who works in the truck happy and finally when you do automation you allow the person to change his designation. So he is no more called a driver and he is no more called a Hammal (porter) but he is called a sales agent or a distributor; we know that in the next three years many a designation will vanish from Oman. It’s already happening. Secretaries are no more called secretaries. Watchmen are no more watching. He is much more intelligent than that. He is analysing systems; checking the behaviours of equipment. It’s man and man-machine relationship. He is no more a guard. He uses much more sophisticated system. He uses his phone to track what is happening in the building. So could you call him a guard?

We are moving to a logistic centre. We are redesigning the north of Al Batinah and connecting it to the south of Batinah vis-à-vis a train system. The private sector will do things on behalf of the government while this system is in place. But the point is that if we do that, do we still need to bring more labour from outside? If that is the case, the issue of Omanisation will become a fallacy. I know that there are at least four companies in that area alone doing smart ware houses taking online orders and doing labelling, billing etc. and some of them can use robotics in this. They are thinking that things cannot go the way they used to be.

You should not underutilise space and you shoud not underutilise the capital and human capital. People are thinking again and again of being more productive and efficient more than ever, because the challenges ahead of us everywhere in the world would mean that you have to compete with other people who are far cheaper than you either in the delivery or in the experience of delivery. The only thing is that you have to control. I could not take an aeroplane to go to china to have a cup of tea and come back although it is cheaper. You still have to have your coffee here.

We need to seize this opportunity for rethinking what we should do in the next 20 years with this entire infrastructure that is underutilised, instead of saying we are not doing it right. With a new exhibition centre what we should do? I agree that the government will have to take certain blame because we need to get ourselves sorted out. As regards Omanisation of labours and drivers, do you think that when you take them out of your payroll you will fall short of the number and therefore the Ministry will not give you new labourers? We need to build trust among ourselves .

Why don’t the Ministry of manpower trust you and give you more labour because they see most of them doing job they should not do. So I trust you and you trust me so that I can understand that the you are asking for extra person because you need them. I think these are the issues we need to discuss- tools of building trust.

People would say that productivity, innovation, efficiency, worker motivation are mere luxury items so that they would only come to them from time to time, but the only things they concentrate on are expanding sales and cutting costs. But I think people want to stay ahead of the game. They need to think again. These are no longer luxury. So I think some of these issues will pop up in the first debate and some of them that relate to using and making better use of the ports, the big facilities you are building, will come up in the second session.
Thank you very much.

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