By Khalil bin Abdullah al Khonji, Former Chairman of Oman Chamber of Commerce and Industry

I return to this issue with a deep sense of regret. Nearly a quarter of a century has passed since one of the most important decisions aimed at localising commercial activities and opening the doors of self-employment to Omanis was taken: the Omanisation of food retail and grocery shops.

The initiative emerged from the First National Employment Symposium, held in 2001 at Saih Al Tayibat in Saham under the patronage of the late Sultan Qaboos bin Said.

At the time, food retail, particularly neighbourhood grocery shops, was largely operated by expatriate workers. The importance of the sector was clear. It is directly connected to people’s daily lives, enjoys relatively stable demand and can provide a sustainable source of income for thousands of Omanis. It was also worth remembering that food retail had historically been operated by Omanis until 1975.

A comprehensive national project

Localising grocery shops was not simply an administrative measure. It was conceived as a national project, preceded by field studies covering different wilayats of Oman and followed by a phased programme to transfer grocery businesses into Omani hands.

According to a statement by the Ministry of Commerce and Industry at the symposium, there were nearly 30,000 commercial registrations related to food retail. A comprehensive market survey subsequently found that around 10,000 represented active businesses.

An implementation programme was then introduced, initially covering grocery shops in four wilayats – Nizwa, Nakhal, Rustaq and Quriyat – before being expanded over several years to other parts of the country.

The programme was accompanied by support initiatives to train shop owners and employees in areas such as accounting, merchandising and marketing. Measures were also taken to combat hidden trade and prevent expatriate workers from returning to operate businesses covered by Omanisation.

The objective was clear: businesses intended for Omanis should not become merely nominal enterprises registered in citizens’ names while being effectively operated by others.

These efforts resulted in around 6,000 grocery shops being operated by Omanis across the sultanate. It was a significant achievement and demonstrated that localisation of the sector was possible when supported by political will, organisation, financing and proper follow-up. Importantly, the initiative did not lead to shortages of food supplies or delays in delivering goods to consumers.

The beginning of the decline

The momentum, however, was not sustained. Over the years, the project gradually began to lose ground.

One important turning point was the decision to allow shops classified as supermarkets, with a floor area of at least 200 sqm, to employ expatriate workers. What may initially have appeared to be a limited exception designed to meet the needs of larger stores created, in practice, a gap in the localisation framework.

It became possible to circumvent restrictions on grocery shops by expanding the premises or changing the commercial classification to a supermarket.

The Omani grocery owners consequently found themselves competing with a larger establishment that could employ expatriate labour at different costs and under different operating arrangements.

Stores operating under labels such as supermarkets, hypermarkets, “Everything for One Rial” and “100-baisa shops” also became increasingly common, despite the fact that their core activities were not fundamentally different from those of the neighbourhood grocery shops that were supposed to be operated by Omanis.

The regulatory approach subsequently shifted gradually from localising the business activity as a whole to Omanising specific professions within it.

This was evident in Ministerial Decision No 8/2021, which restricted certain occupations in shopping centres and supermarkets to Omanis, including customer service, accounting, management and merchandising. Work permits for expatriates in those occupations were not to be renewed once they expired, while other positions within the establishments remained open to expatriate workers.

This weakened one of the central pillars of the original project. Its success had been based on enabling Omanis to own and manage the business itself, rather than simply reserving a limited number of job titles within an establishment whose overall operation and management could remain in non-Omani hands.

Over time, exemptions expanded, oversight weakened and incentives declined. At the same time, some forms of hidden trade returned, while operating costs increased and competition facing Omani shop owners intensified.

The turning point

The year 2022 was not the beginning of the decline, but it marked a major turning point. The return of expatriate workers to the management of food shops in residential neighbourhoods became increasingly visible, while general stores were increasingly transformed into grocery outlets operated by expatriates.

This raised legitimate questions among citizens and observers: Had the decision to Omanise food retail changed? How had a limited exception become an opening that weakened a national project built through considerable effort? And who was responsible for allowing the project to gradually lose its impact and original objectives?

The questions resurfaced in 2024 following the issuance of Ministerial Decision No 300/2024 and the debate it generated on social media.

The Ministry of Labour explained at the time that the decision sought to cancel a number of decisions prohibiting the practice of certain commercial activities and businesses, arguing that regulation of such activities falls within the jurisdiction of the Ministry of Commerce, Industry and Investment Promotion.

The ministry also confirmed that Ministerial Decision No 235/2022, regulating certain professions – including professions related to food retail – remained in force and that these occupations were restricted to Omanis.

While this clarification was important, it did not answer the central question: if professions related to food retail remain Omanised, how have expatriate workers returned to manage large numbers of grocery shops?

Is reserving a job title for Omanis in official records sufficient if the actual management of the business remains in the hands of a non-Omani?

The separation between regulation of commercial activities and regulation of the labour market appears to have created a grey area between the relevant authorities. Omanisation may remain legally applicable to specific professions, while the actual localisation of the business activity has weakened on the ground.

What happened to the Omani businesses?

The public has a right to know what happened to the thousands of businesses established under the Sanad programme, and why so many Omanis left the sector.

Was the problem weak economic viability, unequal competition, high rents and operating costs, reduced financing and support, the return of hidden trade in new forms, or the absence of a single authority responsible for monitoring and protecting the project?

Until 2021, there had been no complaints of shortages of food supplies in residential neighbourhoods. On the contrary, there was considerable community support for Omanis working in retail, particularly food retail.

There should also be a proper assessment of compliance with Omanisation decisions and of who actually manages these businesses, bears their risks and benefits from their profits.

A commercial registration in an Omani citizen’s name does not necessarily make a business a genuinely national enterprise if it is financed, managed or exploited for the benefit of another party.

The impact of this decline goes beyond the loss of direct employment opportunities. It also involves the transfer of a vital, everyday sector, with significant cash flow and growth potential, into non-Omani management at a time when many citizens are seeking stable opportunities in employment and business.

Reviving the project does not mean returning to the past

Reviving the localisation of food retail does not mean simply restoring the old system. It means developing it to reflect today’s economic conditions, technology and consumer behaviour.

Omani entrepreneurs need businesses capable of competing and surviving, not small shops left to compete alone against major retail chains and an uneven competitive environment.

This requires the relevant authorities – including the Ministry of Economy, Ministry of Labour, Ministry of Commerce, Industry and Investment Promotion, Authority for Small and Medium Enterprises Development, municipalities, Development Bank, private financing institutions and local banks – to work together on a new national programme based on several pillars:

• Conducting a comprehensive and independent assessment of the previous experience and identifying the factors behind its successes and failures.

• Reorganising licences for grocery shops and supermarkets in residential areas in a way that gives genuine priority to Omani entrepreneurs and prevents the use of floor space or commercial classifications to circumvent localisation requirements.

• Providing accessible financing and appropriate grace periods, while reducing fees and rents during the early years of operation.

• Establishing collective purchasing mechanisms that allow Omani-owned shops to obtain goods at competitive prices.

• Supporting the transformation of Omani grocery shops into modern retail outlets using accounting systems, electronic payments and home delivery.

• Giving businesses that fully comply with localisation requirements advantages in terms of locations, licences and government facilities.

• Strengthening oversight of hidden trade and verifying who actually manages each business, rather than relying solely on the name appearing on the commercial registration.

• Encouraging the creation of cooperative chains or national brands that bring Omani grocery owners together under a common umbrella.

• Assigning a single authority to lead the project and monitor its results, with regular publication of indicators on localisation and business sustainability.

• Establishing a professional association for food retailers to represent and defend the interests of traders.

A project worth reviving

The previous experience demonstrated that Omanis are capable of owning and managing this sector, as well as other vital sectors such as water supply, oil & gas, logistics, banking and manufacturing, when they are provided with the right environment, fair support and protection from irregular competition as any country would do for their citizens.

It also demonstrated that decisions alone are not enough. Successful localisation requires continuous follow-up, economic incentives, coordination among government bodies and clear accountability when progress is reversed.

The question today is no longer simply: How did the food-retail localisation project decline?

The more important question is: Who will take responsibility for reviving, developing and protecting it from failing again?

It is time to reopen this issue transparently, identify the reasons behind the decline of a project that once supported thousands of Omani citizens, and build a stronger and more sustainable model that restores their ability to compete and provides genuine incentives to enter, remain in and expand within the sector.

Localising food retail is not simply about replacing an expatriate worker with an Omani worker. It is about enabling Omanis to own and manage businesses and benefit from their returns, strengthening the role of small and medium enterprises, protecting an important part of the national economic cycle and contributing to sustainable food security.

A modern, carefully designed revival of the project could provide meaningful business ownership and employment opportunities, combat hidden trade and strengthen the presence of Omani entrepreneurs in a sector that touches people’s lives every day.

The question remains: Why was a national food-retail project designed to be owned and managed by Omanis allowed to fail?