The Ministry of Commerce and Industry is considering introducing a new legislation to tackle the scourge of ghost traders in the black market.
Hidden trading is a phenomenon, which involves an expat worker carrying out commercial activities using the name and identity of an Omani citizen.
Explaining further, the ministry said that hidden trading is “when a citizen allows an expat worker to use his/her name, commercial registration or licence for an amount. This also includes a foreign investor who allows another expat worker to work on his/her behalf.”
With regard to the economic consequences of such trading, the ministry said, “Hidden trade reduces employment opportunities for Omanis, which leads to an increase in the number of jobseekers, as figures indicate that expatriate workers employ workers from their own nationality, thus affecting the Omanisation policies.”
Additionally, hidden trade leads to an increase in commercial fraud, with expats monopolising some trade activities. “Most of the profits generated by hidden trade are transferred abroad.”
Working on a legislation that will specifically target hidden trading is important because this form of fraud “disrupts economic growth indicators and the rate; it also creates unfair competition for Omanis, especially small and medium enterprises (SMEs)”, said the ministry.
According to the ministry, hidden trading has negative impacts on the society. “The spread of hidden trade creates a class of dependents who agree to take small amounts of money to become a front man without contributing to the economy,” added the ministry.
Furthermore, if the employer is unaware, such trading could lead to him/her falling into a debt trap.
A large gap exists between the number of companies in Oman and the number of companies registered with the Public Authority for Social Insurance (PASI).
Mohammed Al Ansi, Chairman of the Committee for regulating the labour market at the Omani Chamber of Commerce and Industry, said, “The Public Authority for Social Insurance recently announced that the number of active institutions in the social insurance system was 16,617 by the end of December 2018, while the number of institutions and companies in total is thought to be over 270 thousand.”
Companies might avoid registration because of hidden trade, Al Ansi explained. “Hidden trade depends on an Omani national obtaining a commercial register and then giving it to an expat businessman to start a business in exchange for a monthly profit. This is the greatest danger to SMEs in Oman.” “It leads to a large gap in Omanisation,” he said. “Since a company that isn’t registered with social insurance will not care about Omanisation.”
Solving this problem, according to Al Ansi, begins with making companies register with the PASI and hire a number of employees.
Al Ansi added, “After that, these companies can be brought under the umbrella of Riyada, the Public Authority for SME development, so that they can be properly regulated.”