Sheikh Salim bin Ahmed AlGhazali, Chairman, Golden Group Holding, shares his plans for the group and thoughts on Oman’s economy
How was Golden Group Holding’s performance in 2016?
Major global changes, particularly the international financial crisis which led to a continuous fall in oil prices, have had a direct and indirect impact on the local economy. To cope with these challenges during 2016, I’m pleased to say that we managed to redesign our structures and redefine our goals in a way that will better serve our strategy and mission for the future and our group’s overall performance was more than satisfactory considering the challenges. Certainly our mission of sustainable development has never been more relevant.
As I said 2016 was a good year for our group as we managed to deliver a number of projects in different sectors. For instance, we opened in the last Khareef Intercity Hotel at Salalah business district, a three-star hotel operated by Steigenberger – a renowned German hotel operator and in the area of real estate development, we opened The Oasis Mall in Madinat Qaboos and The Jasmine Complex in the Al Khuwair area. In the logistics sector, we opened a large logistics and storage facility at Barka, where currently the Group owns and operates more than 250,000 sq. mtrs storage facilities all around the Sultanate, i.e. Muscat, Barka and other cities of Oman.
As we are starting a new year, we can take nothing for granted and our business strategies and tools are elastic enough to fit into any situation and surely the alternative would be to jeopardise the hard-fought achievements we have made in the past.
What are your plans for 2017? Are there new opportunities that you are looking at as a company?
As we wind down the year 2016, it’s never too early to get a jump-start on our actions for the current year. Nor is it ever too late to get a handle on some of those ‘homework assignments’ that we may have kept aside, but can have a profound and positive effect on our business. Yes, 2017 will be a bit of a challenging year, but we are fully prepared to take it head-on. Our kitchen never stops working and surely opportunities are always there. As one of the leading groups in the local market, we tune our strategies to go in parallel with the government ones.
The Golden Group is currently implementing an ambitious expansion plan and in terms of the group’s tourism development and investments, none of our projects have been put on hold. Investing in hospitality and mixed-use development today makes good business sense. Tourism will be one of the most important sectors on which the ninth five year-plan (2016-2020) will focus, to achieve diversification. The group will open two major hotel projects in 2017 i.e. Shaza Hotel & Resort at Salalah, a five-star hotel with more than 300 rooms and Shaza Hotel at Al-Mouj Muscat, a four-star with 200 rooms. It is worth mentioning that the Golden Group has recently launched and signed a set of quality mega projects in tourism and the hotel sector, which include the Mercure Hotel by Accor Group, a four-star hotel in the Al Khuwair area which is now in the design stage. The group has also signed with Rotana, the renowned operator, to manage and operate 1,500 hotel rooms in different categories i.e. three, four and five star hotels across Oman (Muscat, Salalah and Sohar respectively). All these units are being designed now. The group has also signed a usufruct agreement with the Duqm Authority to develop and operate an integrated tourism project and the project is now under design stage. Apart from tourism sector, the group will be having other projects in logistics, real estate and many other sectors that we operate in.
With oil prices moving up in the wake of OPEC cuts, do you expect Oman’s economy to grow at a rapid pace?
Oman is an oil producing and exporting country, where oil revenues still make up an average of nearly 75 per cent of revenues and we believe the recent oil price rise shall have a moderate positive impact on the economy in the long run. Nevertheless we all have witnessed the serious moves by the government to diversify and I believe the future economic policy takes into account the vulnerability in international oil prices, and all possible precautionary measures have been taken to tackle the situation.
I believe the government fully backs the policies adopted to promote the diversification strategy towards an export-oriented economy. This in turn can play a major role in driving economic growth, and in incentivising Omanis to take up positions in the private sector by creating a range of jobs. This policy change, which has established a roadmap for a sustainable economy rooted in diversification, has already been translated into certain key components and proposals in well-defined high-priority sectors such as tourism, logistics, manufacturing, fisheries and mining. The uniqueness about the ninth five year-plan of the Sultanate is that it will be the first plan that has an executive action strategy and it will start applying the decisions of the National Programme for Enhancing Economic Diversification (Tanfeedh) in January 2017. Taking into consideration such serious efforts, I can confidently say that Oman’s economy shall continue to grow at a rapid pace.
Are there any major trends that you foresee in Oman and in the GCC region in 2017?
Distinguishing clearly between cyclical and structural trends can always be difficult. In the GCC, where the oil cycle appears to determine the fate of so many sectors, it is especially hard. When oil prices are high, our region booms. When it is low, it is hard to do anything but react to a cut in investment. Yet our region, perhaps more than any other, is at the epicenter of the megatrends reshaping the world. Understanding how these structural trends will impact us – both separately and together – is vital to get a clear picture of how to tackle the challenges we face successfully and to uncover opportunities we may have never considered. I see five megatrends impacting the world, our region and surely Oman over the next few years’ i.e. demographic and social change, urbanisation, resource scarcity and technological breakthroughs.
What are the major challenges that you foresee in the coming year and how do you plan to negotiate them?
Certainly this year will turn out to be a year of extreme challenge, not only for Oman, but for many of the oil exporting nations. As we all know, oil and gas revenues constitute close to 75 per cent of the gross revenue and, hence, drastic declines in oil prices translate into drastic falls in revenues. I believe business people have to be very creative and change their tools whenever it’s required. You may be inclined to let things continue to run as they are; however, it’s actually time to plan again and again.
The government is doing everything it can to strengthen the role of the private sector, as an important partner, and active and positive as well, in order to achieve economic and social objectives of the plans and programmes for national development. The challenges noted in 2016-2020 plan will be sustainable, effective and well-developed growth. Moreover, lower revenues and lesser profits necessitate corrective measure and re-orientation of spending and leakage of funds control. In nutshell, various adjustments and strategies need to be introduced in order to cope with the situation.