Oman 'has begun reform'



ABU DHABI // A government shake-up of Oman, including the dismissal of 12 cabinet ministers, was the beginning of a reform effort that would "utilise the energies" of youthful protesters, the country's foreign minister said yesterday ahead of a Gulf Co-operation Council meeting in the UAE capital.

"This development does not end here and it has no ceiling. It is the policy of the Sultanate of Oman," Yusuf bin Alawi said before the meeting, where the issue of regional unrest was expected to take centre stage.

The Sultanate announced yesterday evening that 12 ministers including the interior and education ministers had been removed.

"Development has begun with this strong package and will continue in the same strength in the years to come in order for us to utilise and benefit from the energies of the youth," said Mr bin Alawi.

The changes would enhance the government's administrative abilities, he said, adding the country would rely less in the future on foreign labour, a sign of what they might do to tackle unemployment.

Protesters in Oman have called for an end to corruption in government and the strengthening of the sultanate's advisory parliament.

In his opening remarks, Sheikh Abdullah bin Zayed, the UAE's Minister of Foreign Affairs, placed regional unrest at the forefront of concerns for Gulf countries. He said he was confident Oman could overcome its problems, praising its ruler Sultan Qaboos bin Said's ability to "treat these issues with wisdom and ability". "We are following with the utmost interest the latest developments in the brotherly Sultanate of Oman," he added.

He backed attempts by King Hamad of Bahrain to contain protests, with demonstrators calling for constitutional reforms and better living conditions. Crown Prince Salman bin Hamad is leading a dialogue with Bahraini protesters.

Sheikh Abdullah said King Hamad's attempts to contain the protests showed "wisdom" and said the interests of Bahrain and its people must be the priority.

"There is no doubt the GCC states are affected by what is happening in the Arab world," Abdul Rahman al Atiyyah, the secretary general of the GCC, said ahead of the meeting.

Successive protests have gripped Arab countries this year, with demonstrators ousting the long-time dictators of Tunisia and Egypt. Mr al Atiyyah said popular movements in Arab countries represented "a new dawn for the people of these brotherly countries".

Gulf officials stressed the unity of GCC nations in what were momentous times. Mr al Atiyyah said the council stood behind Bahrain and Oman during the ongoing unrest. "Our security is a red line," he said.

Gulf officials remained tight-lipped about the possibility of an aid package for Oman and Bahrain, but Mr al Atiyyah drew a link between greater economic co-operation between GCC states and political calm in the region.

He said Gulf nations were eager to embrace reform, and that reform efforts in Bahrain and Oman had been ongoing for years.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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At a glance

Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.

 

Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year

 

Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month

 

Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30 

 

Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse

 

Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth

 

Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances

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