Monday, March 12, 2007
They say that knowledge is a double-edged sword, and here's a case to prove it. Rents in Oman have been going through the sky for the past six months and the situation is now heading out of control. In the past month people have been getting notices from landlords increasing rents by unheard of amounts, and with immediate effect as well. I know people whose rent has doubled overnight. A lot of expatriates have been complaining to the press about this, and TheWeek decided to take up their cause. We all know that increases are capped by a 15% limit, right? Somebody has to stop these greedy landlords from sucking the blood of their tenants. Well TheWeek investigated and it turned out that we're all wrong. The 15% cap is not true. There is no rent increase cap in Oman. Oops.
Guess what, most land lords didn't know that. But now that the information is out, I've heard stories of landlords giving their tenants copies of that TheWeek issue along with their rent increase letters.
How's that for the power of information.
Sunday, March 04, 2007
It got me wondering if all the companies sponsoring the event were aware that they were sponsoring a Christian center? I bet many of them didn't even ask. For all they knew it was a fashion show co-presented by the South African embassy. I guess that's why it was never made clear that Al Amana was a Christian center or that Mr. Bos was a reverend. I have nothing against interfaith dialogue, nor do I have anything against Christian missionaries. Oman as a country should be grateful to them. They established the first hospital in Muscat as well as one of the first schools. The missionaries have generally been extremely decent folks who have had quite an impact on Muscat and formed a deep bond with its people. However, they haven't been very successful with converting Omanis to protestant Christianity.
I didn't want to write this post until I knew more about Al Amana Center, but there's very little information about them online. I sent Michael Bos an email asking him for information about what they do but I am yet to receive a reply. If he ever replies, I'll post it here.
On an interesting note, while searching for information on Al Amana Center online I came across the website of the Reformed Church in America which is the organization to whom Michael Bos and Al Amana Center belong. Here's the interesting bit: An Evening with His Majesty Sultan Qaboos bin Said written by the RCA's general secretary, Wesley Grandberg-Michaelson. It begins:
It is hard to imagine anywhere in the world where a head of state would spend two hours in open and engaging conversation with a delegation from the Reformed Church in America. But that is what took place last evening here in Oman. (read on)
Saturday, March 03, 2007
A revaluation of the Omani rial would mean that 1 rial would be worth more than its current peg of 2.59 US dollars. In other words, imported goods will become cheaper, particularly US imports, since we would be able to buy more dollars with our rials. On the other hand, the Omani rial would become more expensive, so Omani exports (not that we have many other than petrochemicals which would continue to be sold in dollars) would become more expensive and tourists might be put off by the currency's high value. Instead of getting 385 baisas for each dollar that they exchange, they'd get less. A 10% upwards revaluation would get them 347 baisas only.
According to Deutsche Bank AG, the UAE dirham and Bahrain dinar would be revalued by between 10 and 15 per cent while Saudi and Oman currencies could be revalued by 25 to 30 per cent. The bank did not rule out the revaluation of Kuwaiti dinar and Qatari riyal, but pointed out that they are estimated to be around fair value.
In its "GCC macro outlook" report, the bank said large current account surpluses in the GCC suggest currencies may have been overly competitive. However, the bank, noting that forex appreciation will not change the US dollar price of oil, said current account surpluses will be fairly unresponsive to any revaluation.
According to analysts, the immediate fallout of a dirham revaluation would be that euro-priced products will become cheaper, dampening consumer price inflation. "There would also be a one-off currency gain for the owners of local real estate. But on the other hand, the region would become more expensive for some tourists and the inflow of foreign money might falter as assets would be more expensive."...
The dollar's slide has driven up the cost of imports in the region, where some countries, such as Kuwait, pay for half their imports in euro and yen. (Link)
If you're an importer, especially a car dealer, a stronger rial would be something you wish for. But if you work in tourism or if you get paid in hard currency, the last thing you want is a rial revaluation. In some industries which are paid exclusively in dollars, a 10% upwards revaluation would entirely wipe out their profit margins.
It's been assumed that one of the reasons Oman opted out of the GCC currency union is because it wants to have a weaker currency to encourage foreign investments, tourism and exports. It makes no sense to me for Oman to revalue the rial. The IMF put immense pressure on Oman to devalue the rial in the mid 90's when oil prices crashed and our government stood fast against that. Has time come for a stronger rial?