MUSCAT: The integration of small and medium enterprises into the value chains of special economic zones (SEZs) can help maximise long-term gains to the SMEs and the broader economy, according to a recent report published by the International Monetary Fund (IMF).

In its report, titled ‘Fostering Entrepreneurship and SMEs to Support Economic Diversification in Oman’, the IMF highlighted the strategic role SEZs play in boosting SMEs.

“The diversity of industries across SEZs presents a unique opportunity for SME growth. Current pilot initiatives to facilitate the integration of SMEs in SEZs should be further expanded. Efforts should particularly focus on connecting large multinational enterprises operating in SEZs with SMEs, by identifying the needs of the former and helping the latter acquire the knowledge and skills to supply large foreign firms. Local SMEs in Oman would benefit from policies that enhance spillovers from multinational enterprises (MNEs) by strengthening linkages between them and by increasing local SME capacity,” the report stated.

A key recommendation by the IMF is enhancing SME access to technology, digitisation and research and development (R&D) through grants and business incubators, which will increase their competitiveness in both domestic and global markets. This is in addition to supporting SMEs to reach export markets, through various means such as financial assistance, marketing and connecting entrepreneurs with foreign enterprises and investors, it noted.

Another crucial area highlighted by the IMF is workforce development. The organisation stresses the importance of collaboration between universities and SEZs to identify future workforce needs, and adapting courses to business requirements. Incentivising internships of students in local SMEs and foreign multinational enterprises is also key to building human capital, it further states.

Additionally, the organisation recommends enabling SMEs to hire skilled foreign workers through wage subsidies or time-bound cash grants. Additionally, incentives may be offered to encourage high-skilled expatriates working in Oman to create SMEs within SEZs

Lastly, the IMF recommends linking SMEs with larger multinational firms to help SMEs “acquire the knowledge and skills to meet production requirements for foreign companies”. It suggests that the ‘Invest in Oman’ initiative could be used to facilitate connections between SMEs and multinational enterprises.

The Public Authority for Special Economic Zones and Free Zones (OPAZ) currently offers various incentives for SMEs including mandating the allocation of 10 per cent of the value of public tenders and procurements within its zones to SMEs. This is in addition to the introduction of a general business incubator and a specialised supply chain and logistics incubator.

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