LATEST ECONOMIC BRIEFINGS
THAILAND | 05.02.2010
Thailand is looking to overhaul the country's rail network, planning to combine state spending with private sector investments to revamp a system that in recent years has been overtaken by road transport as the economy's primary freight mover.
OMAN | 05.02.2010
Investors will be hoping the steady recovery posted by the Sultanate's equities last year will continue into 2010. Already, early signs of confidence are becoming apparent, with initial public offerings (IPOs) expected to resume shortly and a degree of bullishness prompted by resurgent oil prices.
SAUDI ARABIA | 05.02.2010
As the Gulf Cooperation Council's biggest economy closes the books on 2009, it may well be remembered as a year of caution and mixed fortunes. Economic growth was positive and inflation fell, but lower oil prices caused the state budget to drift into deficit territory. Nevertheless, with the government clearly committed to supporting the economy through stimulatory spending, higher growth is already expected in 2010.
ROMANIA | 04.02.2010
Having been one of the driving forces in the Romanian economy up until the end of 2008, the construction sector has had to take a back seat over the past 12 months, with workers being laid off, many new projects put on the backburner and ongoing developments halted as funding and demand dried up.
LEBANON | 01.02.2010
Lebanon continued to defy the expectations of many in 2009, being able to not only weather the worst of the global financial crisis but also post solid economic gains while undergoing another period of political tension.
COUNTRY COVERAGE
Caps and Props
Oman, Volume 158
11.03.2008
11.03.2008
Oman going flat out to try to curb rising inflation, is planning to implement a ceiling on rental increases, looking to limit price hikes on a basket of staple goods and boost agricultural production to ensure self-sufficiency.
Oman's inflation rate hit 8.29% at the end of December, a 16-year high, with the consumer price index being driven by rising food and rental costs. Increasing costs of food, beverages and tobacco accounted for nearly one third of Oman's consumer inflation, while rents rose by an estimated 11% last year.
On March 10, a member of a committee set up by the government to examine measures to ease the burden of climbing rental costs announced new legislation would shortly be introduced to cap annual rent increase at 7%, the same figure as that adopted in Dubai.
The major overhaul of rental laws would bolster the rights of tenants and set a minimum lease period of four years for residential properties and seven years for business premises, according to Khalil Bin Abdullah Al Khonji, the chairman of the Omani Chamber of Commerce and Industry (OCCI).
The government was also planning to provide land just outside Muscat to private developers for constructing affordable residential property as a means to increase housing stocks and bring down rental pressure brought on by supply shortages, Al Khonji said.
However, the sultanate's overheated construction sector is under pressure to complete the orders it already has on its books.
Oman's rental market has being hit by soaring prices for construction materials, with the cost of cement and steel having recently been increased by 20% and 11% respectively. With the price of pre-fabricated concrete also having gone up by 25% in the past month, driven by shortages of supply and higher demand, some construction projects have been delayed, further tightening the housing and office market.
The OCCI's Contractors' Association has called for the state to act to rein in price rises or face even longer delays in completing projects.
The association's chairman, Sheikh Ali Bin Abdullah Al Badi, also put part of the blame for skyrocketing prices and shortages on the government itself.
"If the government is not able to find alternatives and ensure sufficient supplies then why has it approved projects worth billions of rials?" Al Badi was reported as saying on March 10.
Though not directly affecting rents, Oman's continued pegging of its currency with the US dollar has been a force behind rising inflation, pushing up the costs of imports, in particular foodstuffs.
In his role as OCCI chairman, rather than as a member of the rent committee, Al Khonji called for Oman's food suppliers and distributors to cap prices on a number of staple food items.
"The idea is to cater to the needs of the lower middle class and those sections of society for whom the slightest price can cause a major dent in their budget," Al Khonji told local press on March 10.
The basic items included on the OCCI's list are rice, wheat flour, sugar, lentils, cooking oil, tea, milk powder, evaporated milk and ghee. The chamber has established a group to oversee the scheme and keep the prices of these goods down.
The government is already moving along similar lines, with a ministerial committee unveiling an action plan on March 6 outlining a series of proposals to curb price rises and overcome shortages of supply for some commodities.
Oman's minister of commerce and industry, Maqbool bin Ali Sultan, said the committee's recommendations included increasing quotas for local fishermen and lifting seasonal bans on the importing of some fish species and the catching of some varieties in local waters.
The committee also recommended boosting agricultural output by providing technical and financial assistance to primary producers, including establishing projects to increase cattle, sheep and poultry farming, he said. At the same time, imports of live cattle and goats from neighbouring countries should be allowed, as long as health standards were met, said Ali Sultan.
One other recommendation of the committee was that basic foodstuffs, mainly those also identified by the OCCI, be subject to price control and support, along with cement, and reinforcing bars for the construction industry.
Though subsidies will help keep prices down in the short term, they will prove a drain on the state's coffers, while there is only so much inflation the private sector will be prepared to soak up before passing it on to consumers. Past attempts to police a rent cap have not met with outstanding success either, with landlords often allegedly able to get around restrictions.
The committee's longer-term recommendations to boost food availability hold out promise for the future, but it is in the here and now that Omanis are being hit in the hip pocket. For that pain to ease, a number of stars must align, with the weakening of the US dollar needing to regain some of its lost strength or be decoupled from Oman's rial.
Oman's inflation rate hit 8.29% at the end of December, a 16-year high, with the consumer price index being driven by rising food and rental costs. Increasing costs of food, beverages and tobacco accounted for nearly one third of Oman's consumer inflation, while rents rose by an estimated 11% last year.
On March 10, a member of a committee set up by the government to examine measures to ease the burden of climbing rental costs announced new legislation would shortly be introduced to cap annual rent increase at 7%, the same figure as that adopted in Dubai.
The major overhaul of rental laws would bolster the rights of tenants and set a minimum lease period of four years for residential properties and seven years for business premises, according to Khalil Bin Abdullah Al Khonji, the chairman of the Omani Chamber of Commerce and Industry (OCCI).
The government was also planning to provide land just outside Muscat to private developers for constructing affordable residential property as a means to increase housing stocks and bring down rental pressure brought on by supply shortages, Al Khonji said.
However, the sultanate's overheated construction sector is under pressure to complete the orders it already has on its books.
Oman's rental market has being hit by soaring prices for construction materials, with the cost of cement and steel having recently been increased by 20% and 11% respectively. With the price of pre-fabricated concrete also having gone up by 25% in the past month, driven by shortages of supply and higher demand, some construction projects have been delayed, further tightening the housing and office market.
The OCCI's Contractors' Association has called for the state to act to rein in price rises or face even longer delays in completing projects.
The association's chairman, Sheikh Ali Bin Abdullah Al Badi, also put part of the blame for skyrocketing prices and shortages on the government itself.
"If the government is not able to find alternatives and ensure sufficient supplies then why has it approved projects worth billions of rials?" Al Badi was reported as saying on March 10.
Though not directly affecting rents, Oman's continued pegging of its currency with the US dollar has been a force behind rising inflation, pushing up the costs of imports, in particular foodstuffs.
In his role as OCCI chairman, rather than as a member of the rent committee, Al Khonji called for Oman's food suppliers and distributors to cap prices on a number of staple food items.
"The idea is to cater to the needs of the lower middle class and those sections of society for whom the slightest price can cause a major dent in their budget," Al Khonji told local press on March 10.
The basic items included on the OCCI's list are rice, wheat flour, sugar, lentils, cooking oil, tea, milk powder, evaporated milk and ghee. The chamber has established a group to oversee the scheme and keep the prices of these goods down.
The government is already moving along similar lines, with a ministerial committee unveiling an action plan on March 6 outlining a series of proposals to curb price rises and overcome shortages of supply for some commodities.
Oman's minister of commerce and industry, Maqbool bin Ali Sultan, said the committee's recommendations included increasing quotas for local fishermen and lifting seasonal bans on the importing of some fish species and the catching of some varieties in local waters.
The committee also recommended boosting agricultural output by providing technical and financial assistance to primary producers, including establishing projects to increase cattle, sheep and poultry farming, he said. At the same time, imports of live cattle and goats from neighbouring countries should be allowed, as long as health standards were met, said Ali Sultan.
One other recommendation of the committee was that basic foodstuffs, mainly those also identified by the OCCI, be subject to price control and support, along with cement, and reinforcing bars for the construction industry.
Though subsidies will help keep prices down in the short term, they will prove a drain on the state's coffers, while there is only so much inflation the private sector will be prepared to soak up before passing it on to consumers. Past attempts to police a rent cap have not met with outstanding success either, with landlords often allegedly able to get around restrictions.
The committee's longer-term recommendations to boost food availability hold out promise for the future, but it is in the here and now that Omanis are being hit in the hip pocket. For that pain to ease, a number of stars must align, with the weakening of the US dollar needing to regain some of its lost strength or be decoupled from Oman's rial.
