N OVEMBER T WENT YSIXT EEN I SSUE FOUR
The Public Authority for Investment Promotion & Export Development
The Circular Economy: Living Waste-Free Public Sector Innovation Unwrapping Packaging
NOVEMBER TWENTYSIXTEEN ISSUE FOUR
Formed in 1996, Ithraa is Oman’s award-winning inward investment and export development agency.
Ithraa News Doing Business in Oman A series of 12 Sector Films Doing Business in Oman is a series of 12 films showcasing people, businesses and sectors that are helping shape the Sultanate and drive the economy. From manufacturing, education, agriculture, tourism, logistics to the creative industries, this collection highlights Oman’s outstanding offer as a place to live, invest and do business.
Scan the QR code with your smartphone to watch the films http://bit.ly/1QRWgr8
We are an ambitious organization committed to promoting the business benefits of Oman to a global audience. Our experience, expertise and global reach helps companies of all sizes realize their potential.
Public Sector Innovation
Upside Down - Inside Out
The Circular Economy
On The Move
Welcome to our fourth and final issue of Ithraa News for 2016. The importance of sustainable consumption and production patterns came under the spotlight at Ithraa’s recent Inside Stories sessions. Our distinguished panel of experts highlighted the fact that our default economic model of ‘take-make-consume-dispose’ is expensive as well as environmentally damaging. In our ‘Living Waste Free’ roundtable interview with Dr. Nadiya Al Saady, Executive Director, Oman Animal, Plant & Genetic Resources Center and Sheikh Mohammed Al-Harthy, Executive Vice President, Strategic Development, be’ah we discuss the circular economy and how products should be designed, reused, recycled and remanufactured. Another way to view the circular economy is through change of ownership. For example, Omani consumers become ‘users’ rather than ‘owners’. They lease a product, such as a washing machine, mobile phone or car and a company provides the related services. Costs are cut for both parties, the recycling of the product is secured and a high level of efficiency is achieved. The circular economy is just a different way of seeing things, but in reality, it’s a reminder of how natural cycles function. Innovation in the public sector is also on our agenda, we carry an article by Azzan Al Busaidi, Ithraa’s Director General of Planning & Studies who suggests the standard narrative about government is that it stifles innovation, whereas the truth is it enables innovation at a depth business can’t reach, and the entire society, including business, gains as a result. We think that puts government and innovation in a new light. We’d like to hear what you think about that. Product design and packaging is crucial to the success of Omani manufacturers and we take a quick look at what’s involved in creating attractive packaging that convinces consumers in 10 seconds or less to buy your product. We also have a round-up of Ithraa news that includes feedback from our recent Inside Stories sessions, the UN’s International Trade Centre visit to Ithraa, Omani marble firms exhibiting at Verona’s Marmomacc and the launch of our new website. We hope you enjoy the read. Team Ithraa
Credits Editorial: Taleb Al Makhmari Sajda Al Ghaithy Nadia Al Lamki Dave Pender Design: Lamahat Print: Al Anan Printing Photographs courtesy of Ithraa.
Editor-in-Chief Senior Editor Editor Advisor www.studiolamahat.com www.alananprinting.com
NOVEMBER TWENTYSIXTEEN ISSUE FOUR
Giving business the tools to export
Omani Marble Popular in Italy Oman’s leading stone and marble producers recently exhibited at Marmomacc International Trade Fair for Stone, Design & Technology in Verona, Italy. Led by Ithraa, nine Omani firms joined stone and marble industry exhibitors from over 150 countries for the four-day Italian international trade show. Remarking on the importance of the Verona show, Mrs. Nasima Al Balushi, Ithraa’s Director General for Export Development said: “Marmomacc is the leading global event for the natural stone industry and represents the entire supply chain, from raw material to semi-finished and finished products, from processing machinery and technologies to applications of stone in architecture and design. It’s a high-profile trade event that always delivers strong commercial returns for participating Omani firms and this year was no exception.” Marmomacc exhibitor, Mr. Mohammad Musheer of Services & Trade Marble and Mining LLC (FZC) said: “We’ve participated in Verona before and it has helped us build international awareness of our products and brand. It’s also given us the opportunity to connect with key trade representatives. It’s without doubt an important trade show and one that has consistently delivered strong results for our company.” Omani companies exhibiting at Marmomacc were: Hamood Al Rashidi & Bros Trading Company LLC; Gulf Stone S.A.O.G; Services & Trade Marble and Mining LLC; Al Shanfari Marble Company LLC; Al Nasr Trading & Contracting; Al Ajmi Marble; Al Rawas Marble & Granites; Aram for Modern Technology LLC; and Al Tamman Trading Establishment LLC.
ITC & Ithraa Hold Talks She went on to point out that it's this rapid urban growth that interests many Omani stone and marble producers. And Marmomacc gave local firms the opportunity to network with the international building trade and capitalize on the stone and marble required to fuel the urban growth we’re witnessing, particularly in Asia Zand Africa. Mr. Habibur Rahman Farooqi, Assistant General Manager, Al Tamman Trading Establishment remarked: “It was our first appearance at the Verona show and we were very impressed by the number of visitors to the pavilion, and the interest shown by customers from countries such as Mexico, Korea, China, Libya, Italy, Ukraine and Russia.” Ithraa’s Director General of Export Development concluded:
We predicted the Omani pavilion would prove popular, and based on early exhibitor feedback, the numbers of people visiting the stand, the meetings held and the business leads generated, we were absolutely right. It was a busy, exciting and productive week for everyone involved in this prestigious show.
A top-flight UN team from the International Trade Centre (ITC) visited Muscat recently to meet with Ithraa’s management and review export facilitation and investment services, and the organization’s overall operational and management capacity. Exploring international best practices and benchmarking also formed part of the week-long discussions. Research shows that businesses who export have greater growth prospects, more durability and higher profitability than companies who do not. And if you needed more encouragement than that, consider the fact that exporting businesses generate an average growth of 30% after exporting for just two years - a fantastic reason to consider trading globally. “International exports are bringing new dollars into Oman and are among the primary economic drivers propelling Oman’s economic fortune. Today, we’re exporting to 140 countries. However, to maintain and improve on this performance we have to ensure that we’re providing current as well as future Omani exporters with the right support and information. That’s why our discussions with ITC were so important,” pointed out Nasima Al Balushi, Ithraa’s Director General of Export Development. “Doing business overseas needn’t be difficult,” remarked Taleb Al Makhmari, Ithraa’s Acting Director General, Marketing & Media, adding: “Whatever country you’re considering, industry you’re in or stage your business is at, Ithraa can help. Our team offers impartial export advice to help Omani firms understand international business practices and export market opportunities. Working with colleagues at ITC will only help improve our offer to Oman’s business community. It’s a win-win scenario.”
Oman has significant deposits of gypsum, limestone, marble, laterite, chromite and kaolin, and the mining and mineral sector has experienced robust growth over the past few years. Many industry commentators expect the sector to remain strong particularly given the government’s economic diversification plans as well as the demand for Omani stone and marble in the emerging markets of Asia and Africa. “We’re witnessing phenomenal urban growth worldwide,” pointed out Nasima, adding: “In emerging market economies, the population of cities grows by 65 million people a year - the equivalent of seven cities the size of Chicago. And it’s estimated that over the next 15 years, 440 emerging market cities will generate nearly 50% of global GDP growth and 40% of global consumption growth.” Oman's Marmomacc pavilion attracts international interest
Proud Omani exhibitors at Marmomacc
International exports are bringing new dollars into Oman and are among the primary economic drivers propelling Oman’s economic fortune. Today, we’re exporting to 140 countries. Nasima Al Balushi Director General of Export Development
NOVEMBER TWENTYSIXTEEN ISSUE FOUR
Living Waste-Free When one tugs at a single thing in nature, he finds it attached to the rest of the world.
Dr. Nadiya Al Saady Executive Director, Oman Animal, Plant & Genetic Resources Center
Sheikh Mohammed Al Harthy Executive Vice President, Strategic Development, be’ah
John Muir (1838-1914) Scottish naturalist and preservationist
Ithraa News met with Inside Stories moderator Dr. Nadiya Al Saady, Executive Director, Oman Animal, Plant & Genetic Resources Center and panelist Sheikh Mohammed Al-Harthy, Executive Vice President, Strategic Development, be’ah to get their views on Oman’s transition from a ‘take-make-dispose’ linear economy to a re-use, recycle, re-manufacture circular economy. It was clear from discussions at Inside Stories that the transformation to create a more competitive resource-efficient global economy is under way and it’s changing how Omani businesses, large and small, approach what they do.
Rolls Royce, the world-famous aero-engine company, re-manufacturers marine engines and sells them to Thames Clippers who use the refurbished engines to power 20 water taxis that cruise tourists along London’s famous Thames River.
On the international front, General Motors claims that reused and recycled materials now add US$1 billion in annual revenue to the company’s bottom line. Interface, the world’s largest manufacturer of commercial carpet tile has diverted 154,000 tons of carpet from landfills as part of an effort to make all products from 100% recycled or renewable sources by 2020.
These are compelling business stories. Indeed, there can be no doubt that a collective move to a circular economy is essential for a sustainable world. Moreover, there’s a growing awareness among Oman’s business community and consumers that the circular economy isn’t only here to stay, but that it’s gaining traction.
Elvis and Kresse, an emerging Scottish luxury fashion brand turns industrial waste into innovative lifestyle products and returns 50% of profits to charities related to the waste. Its first line was made from decommissioned fire hose, 50% of the profits were donated to the Fire Fighters Charity.
To understand the circular economy, should we think along the lines of the old saying: “One man’s trash is another man’s treasure?”
Sheikh Al-Harthy: It is a sad fact that Oman, like many countries around the world, follows a linear economy where we take natural resources and make products only to dispose of them towards their end of life.
Dr. Al Saady: The world economy currently promotes a culture of consumption and waste. An approach that’s simply unsustainable. We take resources from the ground, make stuff with those resources, throw that stuff away and repeat. The circular economy is a radically different business model from the linear one we are used to and a compelling concept. Keeping resources in the economy for longer means diverting valuable materials from landfill and reducing the energy, land and water use necessary for primary production. And as a scientist, my interest in the circular economy is about protecting and nurturing Oman’s genetic resources, boosting our economy in a sustainable manner and promoting the benefits of an eco-friendly lifestyle - living with intent, if you will. The intent is focused on not creating harm to the environment.
We need to promote the circular economy in its simplest form and discourage excess waste by pushing the smart purchase of products on an as and when need basis. We have to encourage and provide opportunities and schemes for people and businesses to reuse products and encourage recycling initiatives. An intensive public awareness campaign would help us achieve these goals.
Sheikh Al Harthy: In simple terms, the circular economy concept looks at nature’s cycle of life where things get recycled back into the biosphere naturally and nothing goes to waste. It’s about managing resources starting at the design stage where abundant material and resources such as alternative energy are used to make parts and products.
The circular economy is one where everything is re-used and nothing is wasted. It’s the antithesis of the current “build, buy, bury” model of a one-way stream of raw material to factory, to user, then landfill. How do we promote the circular economy to Oman’s public? Dr. Al Saady: Promoting the circular economy is a must – it’s a practical solution to the planet’s emerging resource problems. According to Eurostat data, the EU loses annually around 600 million tons of materials contained in waste which could potentially be recycled or reused – in fact, only about 40% of European household waste is being recycled. However, rising food demands, limited availability of arable land, greater demands on fresh water sources plus the impact of climate change are all pressuring us to modify our linear economy. Moving to a circular economy is inevitable. We need to minimize the generation of waste and maintain the value of products, materials and resources in the economy for as long as possible. That’s a mindset we need to encourage. Without doubt, the transition to a circular economy is going to be challenging for Omani businesses and citizens alike and to succeed it will require long-term involvement at all levels, from government, business and the public.
And despite the relative small size of Oman’s industrial base and market, we could use this to our advantage and work closely with industries and academic institutions to increase knowledge of green production and build capacity in our youth and become experts in this field.
Why did you decide to participate on the Inside Stories Circular Economy panel? Why was that important to you? Dr. Al Saady: To kick-off with, it’s an incredibly important topic, one we should all be talking about. Apart from the moral argument, the transition to a circular economy will be driven by the promise of over one trillion US dollars in business opportunities. This will include material savings, increased productivity, new jobs and products and the creation of new industries. All in all, the circular economy will lead us towards a future in which 9 billion people in 2050 can live well and sustainably. That’s something worth talking about. Sheikh Al Harthy: The circular economy is at the heart of what we do at be’ah and it’s our responsibility to promote such important concepts. Indeed, concepts that will help us achieve our vision of conserving Oman’s beautiful environment for future generations.
NOVEMBER TWENTYSIXTEEN ISSUE FOUR
Switching to a circular economy isn’t going to happen overnight, but we do need to get started as soon as possible and plan for the future. How do we build circularity into Oman’s DNA? Dr. Al Saady: We certainly need to make sustainable choices easier, more accessible, attractive and affordable for Omani businesses and the public. Let’s face it, most decisions are based on a range of factors, including the behaviour of others, the way people receive information or advice, the costs involved, as well as the benefits of the choices they make. We can influence people’s decisions by making discrete changes to their environments, in their communities, schools and offices. Simple examples could include encouraging colleagues to carpool, to recycle toys, phones and furniture. It’s this kind of positive influence that can help people transition from being a ‘consumer’ to a ‘user’ and from an ‘owner’ to a ‘sharer’. Sheikh Al-Harthy: A move towards a circular economy requires certain building blocks including, though not limited to, having a proper legal framework, establishing core competencies and skills in the manufacturing sector, building skills and capacity for reuse, remanufacturing and recycling sectors, encouraging collaboration between different sectors within the supply chain, and access to finance.
Most circular economy evangelists point to two primary selling points. First and foremost, material efficiency can save money. Drastically cutting waste can shrink a company’s environmental footprint in a big way. How do we sell this message to Oman’s manufacturing community? Dr. Al Saady: It’s estimated that reusing old products, eliminating waste and improving recycling could add US$780bn plus to the global economy, but as we know, many manufacturers don’t have an end-of-life plan for what they make and sell. In fact, our ‘buy-cheap-and-throw-away’ mentality is deeply ingrained. At the end of the day, it’s the bottom-line that will convince most manufacturers. In this regard, they need to see success stories. Consider Renault, which recovers about 43% of its car parts for remanufacturing. Annually, it refurbishes 30,000 engines, 20,000 gearboxes and 16,000 fuel injection systems. What’s the result? Parts are 30 to 50% cheaper for customers. That’s a strong circular manufacturing story, one that will get companies thinking. Sheikh Al-Harthy: Actually, efficiency alone isn’t enough and having a very efficient process will only result in products that are brittle in nature. One has to work towards balancing efficiency and resilience where a product is designed to last longer using renewable resources. This could happen via joint efforts among different stakeholders including academia to promote clean or green production concepts within Oman’s manufacturing community.
Today, there’s still a heavy focus on the reduction of waste, rather than the ‘designing out’ of waste. How do we change that? Dr. Al Saady: Sadly, environmental sustainability and business don’t always go hand-in-hand, especially when it comes to product design and packaging. Some of the most common household packages like pizza boxes, crisp packets and toothpaste tubes often aren’t recyclable. The main problem with packaging is that most companies focus on two priorities: how will this drive consumers to buy my product and how much does this cost. In simple terms, we typically design something with a particular intention: for profit. We rarely design for eco-efficiency. Design has to be at the heart of the circular economy. Omani businesses should be encouraged to work with designers to develop new design briefs for products and services that take into account lifecycle thinking. However, there’s little point in designing a product for disassembly, reuse and remanufacture if the take-back mechanisms aren’t in place to recover those component parts effectively. To help achieve that we’ll need new government policies and market levers to incentivize Omani businesses to design out waste. Sheikh Al-Harthy: This will only work if we show the benefits of a sustainable approach. Highlighting financial, social and environmental benefits of designing out waste is key. Furthermore, we need to build demand for long-lasting, green products and a system that encourages product leasing and take-back schemes. With products of a technical nature, a restorative approach should be taken where waste is designed out at the production stage and products designed in a way that they last longer, reused and when required, repaired easily. Then towards the end of their life they’re dismantled easily for a more efficient recycling process. This concept also extends to where products are leased by customers for as long as is required and then leased to different customers. Products of a biological nature could be regenerated by designing toxics out at the design stage. They could have different uses throughout their lifetime and towards the end of life go through a chemical feedstock extraction process or an anaerobic digestion process where biogas and a nutrient rich byproduct are generated. On a final note, taking back and reusing isn’t a totally new concept to Oman, even though it only happens on a small scale. That said, we need to work on changing perceptions towards used items and see how we can improve the quality of these products so they become acceptable society-wide.
What are some of the challenges Omani business could face in implementing a switch to the circular economy? Dr. Al Saady: Let’s focus on the positive here, what could we be doing to support Omani SMEs migrate to the circular economy? I’ve three suggestions:
1 Offer grants and loans to SMEs who are providing and seeking to provide products that will reduce the consumer’s impact on the environment. 2 Offer grants, loans and tax incentives to SMEs who want to integrate
elements of the circular economy into their organization through energy efficiency measures, waste reduction schemes, sustainable travel / logistics options and green procurement.
3 Set-up a support structure to encourage repairing, remanufacturing
and fixing including physical spaces, access to finance and support for start-ups.
Sheikh Al-Harthy: The main enablers to a circular economy are the building blocks I mentioned earlier and it all starts with having a proper legal framework supported with an effective enforcement system and public awareness campaigns to promote the concept.
Big challenges and looking at things differently was the focus of three Inside Stories sessions organized by Ithraa in September at Bank Muscat’s Head Office in Airport Heights. Generously supported by BP Oman, the three sessions debated local manufacturing, urban logistics and the circular economy.
What did we learn? The Circular Economy Moderated by Dr. Nadiya Al Saady, Executive Director, OAPGRC. The Panelists were Sheikh Mohammed Al Harthy, Executive Vice President, Strategic Development, be’ah; Dr. Mahad Baawain, Associate Professor, Sultan Qaboos University; Dr. Steve Halls, Senior Advisor, Ministry of Environment & Climate Affairs; and Saleh Al Shukaili,Permitting Advisor, BP Oman.
What advice do you have for Omani businesses wanting to pursue the circular economy model? Dr. Al Saady: A good first step is to explore the reuse, remanufacture and refurbishing of materials within the value chain, this could potentially lead to substantial cost savings and less dependence on the need for resource inputs made from virgin materials.
of attendees rated the Circular Economy panel as either good or excellent.
of attendees said the Inside Stories discussions positively impacted their views on the circular economy.
In my view, the circular economy creates opportunities for all of us to move away from the “take, make, dispose” production system to one that restores the environment and generates value from materials that had previously been waste. That’s got to be a cause worth supporting. Sheikh Al-Harthy: I would like to stress the fact that we’re committed to a greener environment in line with the circular economy concept. That said, we all have to contribute in putting the required framework together that takes the circular economy forward in Oman. We at be’ah keep our doors open to all entrepreneurs and companies who require support in the field of waste resource management.
NOVEMBER TWENTYSIXTEEN ISSUE FOUR
The Circular Economy
Dr. Steve Halls Senior Advisor, Ministry of Environment & Climate Affairs
Creating Employment & Value from Waste: Challenges & Opportunities Dr. Steve Halls Senior Advisor, Ministry of Environment & Climate Affairs Once we decide to eliminate the concept of waste, as industrial ecology proposes, we open a new vision of economic development. When companies see that they now pay to produce and discard an often amazing number of unmarketed products they start seeking the ways to either market them or stop producing them. When communities see that they pay high costs to gather and store the discards of households and commercial businesses in landfills, they seek opportunities for recycling and reusing this resource stream. In the 1970’s many small businesses sprang up to fill this resource recovery niche. Many states in the U.S. have mandated “aggressive” solid waste reduction goals - 30 to 50% reductions by 2030. However, the city of Canberra in Australia has taken all-out leadership by setting the goal of zero waste by 2020 (Australian Capital Territory 1996). While the Second Law of Thermodynamics still holds in Australia, a zero waste goal challenges business people, householders and government planners to abandon the assumption that high levels of wasting is acceptable. In Canberra and around the world this redefinition is opening cost saving and revenue generating opportunities for businesses. Businesses that operate more efficiently are stronger financially and more likely to stay in business. Defining waste out of existence is creating economic development opportunities for communities and entrepreneurs. More efficient and less polluting use of resources benefits the environment while it improves the economy. In addition, the UK has recently adopted the concept of the circular economy. A circular economy, in the UK is based upon increasing the re-use and recycling (i.e. resource recovery) the resources it already has and that such an approach could help generate 50,000 new employment opportunities with US$12.2 billion investment, boosting GDP by US$3.67 billion. The opinion of the UK government is that the circular economy is the best long-run approach to return the UK to sustainable growth.
Waste management is a challenging issue for the Sultanate of Oman because of its adverse impacts on environment and public health. With population of almost 3 million inhabitants, the country produced about one million tons of Non-hazardous waste in 20121. The per capita waste generation is about 1.2 kg per day, among the highest worldwide. Solid waste in Oman is characterized by very high percentage of (potential) recyclables which represent about 50% of total municipal waste, primarily paper and cardboard (15%), plastics (21%), metals (1.8%) and glass (4%).2 However the country is yet to realize the environmental and employment benefits from recycling of its municipal waste stream. Currently most of the solid waste is sent to authorized and unauthorized dumpsites for disposal which is creating environment and health issues. Solid waste management in Oman is marked by lack of collection and disposal facilities. Solid waste management is among the top environmental priorities of Oman government which has mapped out a robust strategy to resolve waste management problem in the Sultanate. However, to realize this strategy investments totaling US$6.49 billion are required to put this waste management strategy into place3 ; and this strategy does not take in to full consideration the issue of resource recovery and employment opportunities that can be created. In January 2013 a report from the European Union (EU) stated that full implementation of EU waste legislation would save US$78.39 billion a year, increase the annual turnover of the EU waste management and recycling sector by US$45.73 billion and create over 400,000 employment opportunities by 2020.4 EU Environment Commissioner Janez Potocnik said: “We need to see waste as a resource – and to bury that resource in the ground is worse than short-sighted. This report shows that waste management and recycling can make a big contribution to economic growth and job creation. If the existing legislation was implemented properly, we could avoid costly clean-up operations, pollution and health problems. And let’s not forget that recycled materials are cheaper than virgin ones – and that they reduce greenhouse gas emissions and our dependence on imports.”
However, to change the path of waste management in Oman an initial situational assessment of current conditions is necessary to begin changes. This assessment should focus upon the development of a secondary waste management industry oriented around resource recovery and the development of the circular economy. Whilst the assessment should address the opportunities it is clear that it is necessary to look at some of the barriers that need to be researched so that the environmental benefits and employment opportunities can be actualized. The success or failure of such initiatives depends upon identifying, assessing and evaluating challenges (gaps) in knowledge of science and technology and their limitations, policy and regulatory inadequacies, lack of skill and expertise in the work force, community rejection of ideas (aka. NIMBY syndrome5). Therefore, the following potential barriers to the sustainable development (SD) of the waste management sector need to be evaluated.6 The main SD topics where careful identification, assessment and evaluation of the barriers are in the following areas: Science Technology Political/Regulatory Economic Social
For without understanding these barriers the development and implementation of a resource recovery industry and circular economy will falter and invariably fail – thus exacerbating the deleterious impacts on the environment and also not realizing the employment opportunities. The ultimate goal of creating employment from waste would eventually lead to awareness on waste minimization, reduction and recycling which will pave the way towards the achievement of the Oman Vision 2020 and beyond, which would generate economic benefits to the country such as through job creation, export of recycled and new products.
NIMBY = Not in my backyard By addressing these challenges support will also be garnered for the promotion and implementation of cleaner production and sustainable consumption in Oman as required under the United Nations Conference on Sustainable Development (Rio+20) June 2012 10-Year Framework of Programme on Sustainable Consumption and Production (10YFP). 5
Excluding construction & demolition waste and waste tyres Waste Quantification and Characterisation, be’ah 2012 http://www.bioenergyconsult.com/waste-oman/ “Waste – a short cut to job creation and lower costs” (http://europa.eu/rapid/press-release_IP-12-18_en.htm)
1 2 3 4
We need to see waste as a resource – and to bury that resource in the ground is worse than short-sighted. This report shows that waste management and recycling can make a big contribution to economic growth and job creation. If the existing legislation was implemented properly, we could avoid costly clean-up operations, pollution and health problems. And let’s not forget that recycled materials are cheaper than virgin ones – and that they reduce greenhouse gas emissions and our dependence on imports. Janez Potocnik EU Environment Commissioner
NOVEMBER TWENTYSIXTEEN ISSUE FOUR
On The Move Oman’s Urban Logistics Today, 54% of the world’s population lives in urban areas, a proportion that’s expected to increase to 66% over the next 30 years. Projections show that urbanization combined with the overall growth of the world’s population could add another 2.5 billion people to urban populations by 2050, with close to 90% of the increase concentrated in Asia and Africa. Managing urban areas has become one of the most important development challenges of the 21st century, and as cities like Muscat, Sohar, Salalah, Duqm, Nizwa and Sur grow, their economic activities and consumption patterns become larger, more intense and increasingly complex. A topic which was placed in the spotlight at Ithraa’s recent Inside Stories session on Urban Logistics, held at Bank Muscat’s Head Office in Airports Heights. “Urban logistics is key to Oman’s economy, it ensures our shops, supermarkets and businesses are stocked, equipment is repaired, buildings and hospitals are supplied and waste is removed. However, rapid urbanization, increased traffic congestion, changing consumer behaviour and the emergence of new distribution channels are all challenging the sultanate’s transport and logistics industry,” noted Taleb Al Makhmari, Ithraa’s Acting Director General of Marketing & Media and organizer of the annual Inside Stories initiative. Generously supported by BP Oman, Al Wisal, Merge 104.8FM, Al Roya, Bank Muscat and The Times of Oman, the evening session was moderated by Shabib Al Mamari, Communications & External Affairs Manager, BP Oman and the panel included: Imad Al Khaduri, General Manager, Business Development, Oman Global Logistics Group SAOC; Chris Clark, International Development Manager, MedServ; Ali Thabet, Country Manager, DHL; and Mohammed Sadek Sulaiman, Head of Investment, Private Markets, National Investments Development Company SAOC (TANMIA). “The growth in Internet shopping, for example, is resulting in changes to transport requirements, particularly in final mile deliveries,” says Al Makhmari.
There’s a strong indication that e-commerce in the GCC is growing rapidly, in keeping with the worldwide trend of consumers and businesses preferring digital payments over cash. According to research, the Middle East’s e-commerce market was valued at US$4.9 billion in 2015. “While the rapid growth in e-commerce is great news for business, the flipside is an increase in urban freight deliveries, CO2 emissions, pollution, congestion and noise,” pointed out Al Makhmari. Based on data from developed urban areas, a city generates approximately 300 to 400 truck trips per 1,000 people per day, and each person consumes around 30 to 50 tons of goods per year It’s estimated that in excess of 70% of Oman’s population live in cities today. A growing urban population combined with other demographic, social, commercial and technological trends will lead to increased density and a greater need for goods and services, this will place greater pressure on the sultanate’s logistics and supply chain industry.
Inside Stories panel - Urban Logistics: The Final Mile
Inside Stories attendee asks a final mile question
What did we learn? Urban Logistics
“Finding solutions to manage the last mile of deliveries that work for businesses, consumers and the environment will require an integrated understanding of Oman’s transport, environmental and socio-economic aspects,” pointed out Al Makhmari.
Moderated by Shabib Al Maamari Communications & External Affairs Manager, BP Oman.P Oman
The panelists were Imad Al Khaduri, General Manager, Business Development, Oman Global Logistics Group SAOC; Chris Clark, International Development Manager, MedServ; Ali Thabet, Country Manager, DHL Express; and Mohammed Sadek Sulaiman, Head of Investment Private Markets, National Investments Development Company SAOC (TANMIA).
Ithraa’s Acting Director General of Marketing & Media added: “It was clear from the evening’s discussion that there are significant opportunities for local start-ups to create mobile apps that help streamline supply chain delivery systems for smarter, eco-friendly Omani cities.” Besides the substantial investment in infrastructure and the positive contribution this is making to the success of Oman’s logistics sector, the Inside Stories panel also discussed urban freight strategies, along with an assessment of their effectiveness, the local talent needed to support Oman’s ambitious logistics plans as well the creation of logistics areas, and the opportunities for small businesses in the sultanate’s logistics and supply chain sector.
of attendees rated the Urban Logistics panel as either excellent or good.
of attendees expect the information and analysis obtained at the Urban Logistics session to be useful in their work.
of attendees rated discussions at the Urban Logistics session as either excellent or good.
NOVEMBER TWENTYSIXTEEN ISSUE FOUR
Public Sector Innovation
Azzan Al Busaidi Ithraa's Director General, Planning & Studies
Azzan Al Busaidi Ithraa's Director General, Planning & Studies Innovation in the Public Sector A number of technologies in Apple’s iPhone wouldn’t exist without the public sector. It created the Internet, WiFi-connectivity, mp3-files, voice management, the microchip, the micro hard drive, Siri, GPS, cellular technology, signal compression, parts of the liquid crystal display and multi-touch screen, and the lithium-ion battery. Indeed, all of these are the result of public-sector investment in research and development. However, the standard narrative about government is that it stifles innovation, whereas the truth is that it enables innovation at a depth that business can’t reach, and the entire society, including business, gains as a result. Don’t you think this puts government and innovation in a new light?
Doing It Better Innovation in Oman’s public sector is essential if we’re to thrive in today’s highly competitive and connected global economy. Innovation in government is also a powerful engine for development and tackling social and economic challenges. Yet, the whys and how of innovation in government remain poorly understood. While our business community has an extensive amount of business literature and consulting practices to turn to, there’s little shared knowledge or best practices on innovation in the public sector. Things are changing though, and there’s a notable shift underway, particularly since the drop in global oil prices, and government is beginning to scrutinize the services it offers and how they’re delivered. This change is also being driven by the emergence of millennials, new waves of interactive communications technology, environmental, health, education, urban and employment challenges and the need to address these issues with fewer resources. This is what’s driving government to reflect, experiment and innovate. Let’s be clear, top-flight civil servants do a great many things in a day. They review and allocate budgets, attend briefings and international events, lead trade and investment missions; and chair important committee meetings. They also design, direct and put policy into practice. But the thing that makes the most difference in the lives of the people they serve is the way in which they provide services that meet the needs of citizens.
Indeed, the recent Tanfeedh event was a conversation catalyst, giving many of us the opportunity to embrace the entrepreneurial spirit that’s sweeping Oman and re-assess how we can best meet the needs of our communities, empower business, enhance co-ordination and our quality of life, improve public sector efficiency and Oman’s national competitiveness.
Trialing Public Policy We all know that pharmaceutical firms carry out clinical trials to determine whether a new drug works. In business they use focus groups to help with product development. In Hollywood they field-test various movie endings in order to pick the one audiences like best. But in the world of public policy what type of trialing goes on? In this regard, the British government’s Behavioural Insights Team (BIT) was set-up to scientifically test multiple approaches to a public policy problem on a limited, controlled basis through randomized controlled trials.
Changing Public Sector Culture As mentioned earlier, governments aren’t known for their innovation. Generally, the responses we hear to our inquiries include: “get in line,” “fill out the form”, “you need a licence for that” and “it’ll take at least a week to finish the paperwork”. But much of today’s literature on innovation treats its importance as a given. Joseph Schumpeter, the Austrian–American economist called it a “fundamental impulse that sets and keeps the capitalist engine in motion.” Innovation in the public sector is in my opinion, quite simply, an imperative if we’re to be a more competitive nation. Historically, however, the incentives to innovate in the public sector have been lower, and risks often higher, than in the private sector. Public service innovation may therefore be considered, at least in some cases, as an optional extra or an added burden. This has to change.
The approach used by BIT is known as “nudge theory,” a strand of behavioural economics based on the notion that the economic decisions humans make are just that - human - and that by tuning into what motivates and appeals to people we can much better understand why those economic decisions are made. In market economics, of course, nudge theory helps businesses tune into customer motivation. In public policy, nudge theory involves figuring out ways to motivate people to do what’s best for themselves, their families and communities.
Times are changing, Oman’s becoming increasingly diverse and citizens more demanding of their public services. New technology, new working practices and new forms of media are converging and creating a society 2.0. One consequence of this is the expectation that public services be 24/7. The old ‘8:00am-to-3:00pm’ civil servant availability is no longer acceptable to a client family where both parents work, and are increasingly able, for example, to run much of their lives online. Ultimately, the aim is to fit public services to the citizen, rather than vice versa.
Those designing and rolling out policies in the public sector are well-meaning but a non-scientific approach can often be a gamble which can lead to expensive and ineffective policy decisions. We suspect that some policy and spending is based on what people think is going to be successful rather than on evidence of what actually is successful. By comparing the results of various approaches – for example, trialing whether children who attend pre-school enter kindergarten with better pre-reading skills, richer vocabularies and stronger basic math skills than those who don’t. Policy-makers could use the results of such trials to hone in on the most effective practices before full-scale rollout. Pharmaceutical companies, filmmakers, tech firms and manufacturers that didn’t trial their products pre-launch would be considered reckless, shouldn’t we be deploying the same tactics with public policy?
To achieve the required innovation there needs to be a step-change in public sector thinking. A step change that ushers in a culture of openness. “Problems don’t get better with age,” said Colin Powell, former four-star Army General and US Secretary of State, and he’s right. But how do you get people to bring problems to senior public sector managers’ attention when the culture has rewarded just the opposite? The recent stories of the Big 3 in Detroit - General Motors, Chrysler and Ford - illustrate powerfully how a culture of openness, or the lack of it, can make or break an organization. Alan Mulally is the former President and CEO of Ford Motor Company. Prior to his appointment, he knew nothing about the motor industry having been Vice President at Boeing - but he knew how to create an open, candid corporate culture, which was exactly what Ford needed.
What did we learn? Made In Oman Moderated by Dr. Wail Al Harrasi, Corporate Technology Advisor, Petroleum Development Oman. The Panelists were Shadya Al Ismailiya, Founder, Deema Oman; Nicholas Barakat, CEO, Octal; Eng. Abdullah Al Wahaibi, Business Development Manager, Voltamp Energy S.A.O.G; and Shatha Abbas, Partner, The Nejd.
of attendees rated the Made in Oman session as either excellent or good.
of attendees rated discussions at the Made in Oman session as either excellent or good.
NOVEMBER TWENTYSIXTEEN ISSUE FOUR
Innovation is about how we choose to see what is around us in a community and to make choices and judgments about how to move forward. In other words, public innovation isn’t about something shiny or new or complex but about something that works better, leads to better results and creates a better pathway forward. Rich Harwood Founder, Harwood Institute for Public Innovation, Washington DC
One of Mulally’s early moves was to initiate a weekly Business Plan Review, where Ford’s senior executives met to review the previous week’s performance numbers. From the start, Mulally required openness. His mantra was, “I can’t manage a secret!” He repeated it continually. Everyone at these meetings was expected to discuss current and anticipated problems along with their plans to address them. After a few of meetings, someone brought up a significant challenge. Mulally said, “So-and-so has a problem. He’s not the problem. Who can help him with that?” Soon, everyone got the message: Your responsibility is to the team and the company; you’re expected to be open. Nobody is criticized for having a problem; you’re only in trouble if you don’t raise the problem early or if you have no ideas for solving it. But long before the 2008 global recession, Mulally had begun reshaping the culture of Ford. At the heart of the company’s culture is the One Ford plan, which is essentially its vision and mission. And at the heart of the One Ford plan is the phrase “One Team.” Mulally saw these more than just words. He expected colleagues to model certain behaviour. He expected his Team to be committed to the enterprise, to each other and to be focused on the job. Given the size and reach of Ford’s operations, employees are working for more than themselves. Powell once said, “The day soldiers stop bringing you their problems is the day you stopped leading them.” And Mulally says, “I can’t manage a secret.” Different words, same sentiment. Effective leaders foster a climate that invites and rewards openness and candour. What are we doing to create such a positive problem-solving climate in Oman’s public sector?
Co-producing Services with Citizens We’re living in the era of big data. Today, government holds more information than it has ever done. The challenge is tapping into this data and making it available to the public and local businesses who can refashion it into innovative apps and web content that solves pressing problems in the most expedient way at the lowest cost possible. Why not turn over pallets of raw information on demographics, transport, education, tourism, agriculture, industry, logistics, health and retail to the growing army of committed, tech-savvy youth who don’t necessarily want to work for government, but who would love coding its data. This desire to collaborate reflects a realization that government, service providers, nor citizens can often accomplish their purposes without joining forces. In a networked world, the speed of change, the pace of risk and the breadth of opportunity means no one institution, organization or individual can go it alone. Teaming up and co-producing services with citizens, industry and non-governmental organizations seems essential.
Upside Down Inside Out
The 21st Century Civil Servant The public sector is an excellent place to work, it delivers services that make a significant difference to people’s lives right across Oman. It employs talented people from diverse backgrounds who are committed to delivering outstanding public services. However, the underlying problem is that governments have not been built for the challenges they face today. They are often siloed and administrating, rather than integrated and innovating. And while the public sector is still strong, its size and legacy can often impede it from doing more of what we need it to do. Indeed, one of the biggest challenges facing Oman today is the public sector’s ability to meet rising citizen expectations. People expect public services to be as good as those offered by the private sector. Citizens want to pay bills online or by mobile at a time of their convenience, renew their driving licence and order birth and wedding certificates. They want to watch their favourite TV program when they have the time, not when the TV station chooses to broadcast it. The reason that rising citizen expectations is the greatest challenge is that the public sector is going to have to meet all of these new demands with less - or at best the same - level of resources. Our public service organizations are going through changes and this demands civil servants be equipped with a different set of skills to those traditionally deployed. In fact, civil servants have not always been kept up-to-date with the skills they need to operate in the most efficient and effective way possible. And in a fast moving and competitive world, they need to place customers at the heart of everything they do. Be more creative, innovative and prepared to take managed risks. Build partnerships with others and work effectively across the civil service, across sectors and with international partners. Be flexible and adapt to new priorities and challenges and recognize that we need to keep pace with an evolving and ever more competitive world. This is all new territory. In brief, how do we build internal capabilities and train civil servants to respond to the needs of today’s informed, tech-savvy and demanding young public? Indeed, civil servants that make a difference to society and people’s lives – are more important today than ever.
Spin-Outs Where a new opportunity is identified within the organization which leads to a spin off department or organization.
This is where innovation is driven by the c-suite. The first hidden barrier to innovation: Make sure the priorities are communicated throughout the organization.
Through formal research and development which leads to new processes which are then implemented within the organization.
Sources of Innovation Where does innovation come from? Within any organization innovation generally comes from five areas:
This is where innovation occurs within the organization either through the development by either incremental improvements, applications of new ideas and creativity by staff or through an internal culture which supports and drives innovation.
Where innovation is driven by employees, customers or front-line stakeholders through the organization. This may be a result of formal processes such as staff quality circles or feedback questionnaires.
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Unwrapping Packaging In today’s congested business world, packaging has become a critical factor; it can often make or break a product. If the packaging is right, people will buy a product without even trying it because most associate superior packaging with quality. It’s generally accepted that 70 - 80% of a consumer’s purchasing decision is made at the point of sale. In supermarkets, for example, research shows shoppers spend an average of less than 10 seconds in any single product category, so decisions are made quickly and often based on what a product looks like. The look and feel of the product, design, colour, labelling, price and the name of the product itself are all things that trigger us to stop and look at items on shelves. Most of these triggers either are, or can be influenced by packaging. Indeed, potential consumers will touch, rate and even smell a product simply based on its packaging. With so much at stake, having a product packaged creatively will increase the likelihood of it being bought and re-bought if it lives up to its name. However, attention to packaging is a crucial step that’s often neglected in business. Ask yourself this question, would you buy a plain looking item or something excitingly packaged that makes people drool? Everyone knows that packaging attracts attention, provokes and communicates volumes about the product it contains and the brand. Think about a box of chocolates, would you buy one with ‘Cheap Chocs’ printed on the box if you were taking it as a gift - even if the contents were just as good as those at twice the price? So packaging is important but many Omani companies make the same mistake – they only ever think about packaging when they launch a new product. If packaging is so important as to influence 70 - 80% of a consumer’s purchasing decision then it must be continually reviewed and tested. Packaging is an important marketing strategy and one that Oman-based manufacturers shouldn’t neglect. Most consumers judge a product by its packaging before buying. So it’s logical to say attractive packaging is crucial in order to get the first time buyer to choose your product. Without good packaging, who would buy it in order to try it? Your first step to enter the market is crushed if the packaging is ugly.
If your target audience wants to feel they’re saving money then making your product look cheaper using plain packaging and a ‘No Frills’ message would be right - the reality is that the packaging ‘origination costs’ will bear little or no impact on the product price but it makes the product feel cheaper.
With only 10 seconds, consumers will generally go with what they’re familiar with. However, in the absence of relevance the consumer will always fall back on price. If a consumer has seen your product in advertising they feel that they already know what it can do for them, they will be more likely to buy your product. If you’re going to get the biggest bang for your marketing Rial then everything from the company’s ads, branding and packaging must carry the same and consistent message.
Most Omani consumers like to try new things and the only way to buy something that’s worth their investment is through the depiction of the design or image of the packaging. Be creative in your packaging to help better impress potential consumers. In fact, creative packaging help breaks the consumer’s fear of a bad purchase. It also opens the door for products to be tried at least once from first time users. Packaging is a crucial element that can’t be neglected.
If consumers only spend 10 seconds then they get a lot of information about a product by just looking at the pictures on the packaging than from reading the text. Colour can also convey a message about your product and shortcut communication with consumers. Though be aware, colour has different meanings in different cultures so it needs to be researched. Where text is used, make it easy to read and use language that connects with your target audience.
Eco-friendly Oman’s product designers are the great enablers of sustainable behaviour. By understanding people’s needs they can design products that help people lead a more sustainable existence. Indeed, when starting a project, product designers and manufacturers should think first about the product’s life cycle rather than creating a product that will end up in landfill after a short life. The recent upcycling movement is a great example of how creative thinking can prolong a product’s life cycle.
Ithraa News NOVEMBER TWENTYSIXTEEN ISSUE FOUR
And Finally... Ithraa Launches New Website We launched a new website (www.ithraa.om) in October. The website provides a range of information targeted at local businesses and potential inward investors.
According to Azza Al Kindi, Ithraa’s Head of Systems & Program Development, the new website is designed to promote Oman as a location to do business, drawing on its strategic position, world-class infrastructure and connectivity, talent and range of high-profile development projects. Al Kindi explained: “We’re constantly looking at new ways to further improve our relationship with local businesses and attract new investment into the sultanate. The new website builds on and compliments the important work colleagues and stakeholders are doing across Oman and internationally to increase non-oil exports, attract inward investment and create jobs.” Ithraa’s Head of Systems & Program Development added: “We would like to encourage all businesses, whether in Oman or further afield, to have a look at the site, find out about the range of business support and e-services available to them, and support us in promoting Oman as a great place to live, work and invest in.”
Commenting on the site’s design, Azza said: “We were delighted to work with Muscat-based Linetechs who helped us upgrade our website making it more professional, responsive and user friendly to both our domestic and international clients. They also suggested useful and relevant ideas and options.” Mr. Abdullah Al Nassri, CEO, Linetechs remarked: “Ithraa’s new website has a responsive user interface that works on desktop computers and laptops, as well as tablets and smartphones. We’ve also integrated social media throughout, allowing users to share interesting business content.” The new website can be viewed at www.ithraa.om For further information about the website, exporting or locating in Oman, businesses can also e-mail: email@example.com
Talk to Us Tel: +968 24 62 33 00 Fax: +968 24 62 33 35 www.ithraa.om Ithraa, PO Box 25, Wadi Kabir 117, Sultanate of Oman.
The Public Authority for Investment Promotion & Export Development