Business

AQABA — Representatives from the Aqaba Special Economic Zone (ASEZ) promoted the Jordanian port city as a touristic and investment destination during a tour this week in several US cities.  

The first marketing campaign in the US included visits to New York, Washington and Baltimore. 

Aqaba Special Economic Zone Authority (ASEZA) Chief Commissioner Kamel Mahadin, who chaired the delegation, described the campaign as an integrated drive by the public and private sectors to jointly coordinate promotional efforts and highlight successful investments in Aqaba.

The investment and media campaign seeks to promote stability and security, despite the regional turbulence, he said     

The delegates discussed education systems, training and specialised vocational programmes with representatives of major US universities in order to arrive to joint programmes to be implemented in cooperation with them in the various fields. 

They also met and held discussions with various media outlets, highlighting the positive business environment and the main advantages of the region, its objectives and achievements, in light of the latest regional political developments.  

Mahadin stressed the importance of the media sector as a partner, underscoring its role in stimulating and drawing investments and reflecting the true image of Jordan and the ASEZ.  

The Jordanian team also held talks with government officials and business leaders in the fields of energy, infrastructure, services, and tourism within the framework of furthering joint cooperation. 

The delegation was hosted by Citi Group.

PARIS — A consortium including French industrial groups Vinci and Alstom signed this week a two-billion-euro ($2.7 billion) contract with Qatar Railways to build a tram system for the city of Lusail. The contract won by Alstom and QDVC, which is 51 per cent owned by Qatari Diar and 49 per cent by Vinci's major projects unit, was signed on Monday at Paris' Elysee Palace during an official visit by Emir Tamim Ben Hamad Al Thani. Vinci said the contract includes the construction of 25 stations and the electric infrastructure surrounding the four-line network, which is expected to stretch 33 kilometres when finished. For its 750 million euros slice of the pie, Alstom said it will deliver 35 trains along with power supply equipment, signalling and trackworks. The tramway in Qatar's newest planned city with a population of 200,000 is expected to open in 2018 with further lines added two years later.

AMMAN — Supported by the UK Embassy’s Arab Partnership Fund, the Business Development Centre (BDC) launched this week the Sharaka Discussion Forum "Economic Development: Opportunities and Aspirations of Jordanian Youth and Entrepreneurs.” 

“The forum provides a discussion between the public and private sectors where opportunities and aspirations of youth and entrepreneurs in Jordan are discussed,” BDC said in a press statement. 

It added: “The initiative aims at opening a continuous dialogue and building relations between the public and private sectors to ignite and strengthen the partnership between both sides to face challenges and seize opportunities and thereby accelerate development in the Jordanian economy, based on the continuous cooperation between the two sectors.” 

According to the statement, the discussion forum was attended by Jordanian youth from different governorates as well as owners of small and medium enterprises, who are all beneficiaries of BDC’s programmes.

The BDC-managed Sharaka initiative, under the patronage of British Ambassador Peter Millet, was moderated and administered by Jawad Anani who highlighted three main pillars: SMEs (opportunities and financing), public and private sector partnership and the investment environment and the ways to improve it. 

“There were several interventions and inputs from attendees who are from various public and private sector entities revolving around the opportunities and services provided to SMEs from governmental organisations as well as chambers of industry and commerce in order to enhance competitiveness, increase exports and to better promote Jordan, while also maximising the use of those opportunities and services,” the BDC indicated in the statement.

“The initiative also focused on suggestions from entrepreneurs and youth and interventions from public sector representatives that aimed at highlighting the current available opportunities for youth and future solutions and perspectives of the private sector in order to serve two sectors to serve small and medium enterprises, entrepreneurship and investment projects, as well as their focus and perseverance to continue developing Jordanian governorate hoping to achieve full economic integration,” the statement said.

According to BDC, Sharaka has highlighted important issues affecting the interests of Jordanian entrepreneurs and youth. The initiative focused on the most important expectations and policies adopted by the government to stimulate economic development, which in turn will contribute to the convergence of opinions and views.

Industry and Trade Minister Hatem Halawani said: “The partnership exists between the public and private sectors and we are ready to improve and develop this partnership, and the government is currently working to launch certain laws & regulations specifically to facilitate the work of small and medium enterprises, expected to be launched within two weeks including a clear strategy to support SMEs in all aspects."

The minister also highlighted the new investment law, which will be shortly implemented in order to solve many of the challenges faced by young entrepreneurs, where the government is working to establish a single window for the licence and registration of projects.

Planning and International Cooperation Minister Ibrahim Saif said: “Before thinking about the need for developing small and medium enterprises, we must focus on identifying challenges and the various needs facing governorates, including infrastructure, human cadre and market size in those governorates.” 

He added: “So we must solve these challenges as a first essential step towards sustainable development.” The Ministry of Planning and International Cooperation identified some of the main shortcomings at the provincial level and have included some of these projects within the executive plan 2014 – 2016. 

A decision has been made to set up vocational and professional cities creating the necessary infrastructure and providing funding for business owners and young Jordanian entrepreneurs from different governorates, as well as finding the basis from which to start and expand the project thus creating more job opportunities in governorates.

Iyad Al Qadah, director of sales and income tax, said: “The department is working hard to study the work exemption of up to 50 per cent of investment projects in the southern governorates in order to increase investment opportunities in the various governorates of the Kingdom."

Millett said: “Economic growth in any country comes from the expansion of private sector businesses and an increase in national exports to that country, so the public sector needs to open direct channels of communication with the private sector and facilitate actions that will increase exports.”

He added: “This is what actually happens in Britain, where there are channels of daily contact between the government and private sectors, and there are specialised units in embassies to help entrepreneurs and exporters in facilitating their export procedures to various countries in the world.”

“Similarly we care to support such initiatives and activities that open a constructive dialogue between the sectors and serve young Jordanian entrepreneurs," the ambassador continued.

Nayef Stetieh, BDC chief executive officer, said: "We have launched the Sharaka initiative through direct contact with Jordanian entrepreneurs and youth from different governorates through our entrepreneurial programmes offered to a vast number of groups of people. 

“We recently opened an urgent, necessary and constructive dialogue between the private and public sectors in order to identify essential services available for Jordanian entrepreneurs, and to break the barrier between youth and the government as well as to inform the government of the current situation and needs, whether these needs are market needs or fundamental infrastructure which Jordanian entrepreneurs pursue and aspire thus converging different views,” he added.

The statement concluded that there will be further meetings and forums to be held by the BDC dealing with strengthening the private and public sector partnership as one of the most important outcomes from this initiative. 

A special focus will be on renewable energy in Jordan and its strategies followed by the educational sector and its outputs.

TEL AVIV — Israeli lawmakers are pressing Prime Minister Benjamin Netanyahu to lift what they call unjustified secrecy over opaque — and rising — funding for settlements on West Bank land Palestinians want for a state.

Unpublished official data reviewed by Reuters suggests state spending on settlers rose by a third after Netanyahu took office in 2009 and critics complain that the cost of settlements has long remained hidden in thickets of budgetary convolution.

Condemned by US and European allies as illegal obstacles to peace with the Palestinians, settlements face a new wave of hostility within Israel — from taxpayers who suspect the state of handing on their money by the back door to a vocal minority.

“I’m a member of the finance committee and I’m telling you, I’m being conned,” said Elazar Stern, who sits in parliament for chief peace negotiator Tzipi Livni’s liberal Hatnuah party.

“Funds are hidden. Clauses are lumped together so that you vote on an item that is justified and then they slip it in,” he added.

Netanyahu dropped his objection to a Palestinian state after becoming prime minister in 2009 but has defended an expansion of Israeli building in the West Bank and rejects the Palestinian view that it shows he is not serious about a two-state solution.

While the rise in funding underlines Netanyahu’s commitment to keeping some occupied land in any deal with the Palestinians, their cost has become a target of middle-class discontent on the economy that drove street protests in 2011 and last year sent new lawmakers to parliament to challenge the right-wing premier.

The drive for transparency, which has support from some of those newly elected critics whom Netanyahu has had to bring into coalition, saw the supreme court last week order the finance ministry to offer changes in rules for oversight of the budget.

The pro-settler chair of the parliamentary finance committee defended the existing process. But a senior government official told Reuters there was some obfuscation — not to misuse tax revenues but to frustrate foreign critics of the settlements:

“We are discreet about the figures,” he conceded, “Since there are those who exaggerate and use them against Israel.”

There is little prospect of any government giving up major settlement blocs; many who grumble at the cost, or see hardline settlers as dangerous religious zealots, still support the idea of Israelis living in the big, suburban settlements that act as buffers between occupied Jerusalem and the Arab cities of the West Bank.

So the dispute may not change the familiar calculus that saw US-brokered talks with the Palestinians break down again in April amid recriminations over the expansion of big settlements.

But the row over money has highlighted divisions in Israeli public opinion on the issue and has put settler leaders on the defensive, fearing that especially some more controversial and remote hilltop outposts could be choked of funds.

Netanyahu’s own Finance Minister Yair Lapid, a TV anchorman  whose new party broke into parliament last year on a platform of cutting government waste, has led criticism of such spending. But support for the settlers among opposition parties has so far outweighed such critics within the fractious coalition Cabinet.

Spending rising

Agreeing on the total fiscal cost of the settlements, which are home to more than half-a-million people or some 6 per cent of Israelis, is all but impossible, not least since views differ on how they contribute to the costs and benefits of the military occupation of lands seized in the 1967 war against Arab armies.

But a portion of state spending on the settlers is added up by the government’s Central Bureau of Statistics (CBS). It includes the cost of building homes and other facilities, special hardship subsidies and providing energy, communications, roads and other infrastructure not needed by the military.

This data is compiled for the United States under the terms of a 2003 agreement by which Washington helps Israel with loan guarantees but reserves the right to reduce its pledges by the amount that Israel spends on settlements. In total, $1.1 billion was deducted in 2003 and 2005 from $9 billion of guarantees.

The report is not published but Reuters was able to review the CBS data for the past decade or so. It showed spending on a downward trend from 2003 and rising since 2009, when Netanyahu was elected. 

From 1.015 billion shekels in 2004, it had declined to 760.7 million in 2009 but rose to 1.05 billion ($305 million) in 2012, the last full year for which figures were available.

The first three quarters of 2013 showed a steady trend.

Netanyahu’s office declined comment on the statistics.

Asked about the rise in settlement spending, US State Department spokesman Edgar Vazquez declined comment on the data but noted: “We view settlements as illegitimate. We have consistently said that settlement activity is unhelpful and counterproductive to achieving a two-state outcome.”

The figures are small in terms of total state spending of 366 billion shekels in 2012, itself 13.5 per cent up on 2009.

They do not include the likes of health, education and welfare spending on the 350,000 West Bank settlers included in the statistics. The CBS data include 19,000 Israelis in the Golan Heights annexed from Syria and, until 2005, 9,000 settlers in the Gaza Strip. They exclude 200,000 Israelis living on land annexed and incorporated into Jerusalem municipality.

Some 2.7 million Palestinians live in the West Bank.

‘Hidden’ transfers

Using another measure, municipal financial reports show that in 2012 the central government contributed 3,630 shekels per head of population per year to support settler towns, two-thirds more than the national average of 2,181 shekels per person.

“When people find out that there are those who get much, much more because they live in the territories and because a few politicians want to attract people there in order to paralyse the peace process, then they get upset,” said Stav Shaffir, who was elected to parliament last year for the Labour opposition.

“This upsets everyone, not just left-wingers. We all pay taxes,” added Shaffir. She challenged the rules for reviewing the budget in the supreme court and won a judgement last week giving the finance ministry and parliament’s finance committee three months to agree to changes that have yet to be worked out.

Shaffir, a member of the finance committee and a leader of street demonstrations over living costs that swept Israel in 2011, said her own parliamentary committee had been approving spending without having all the details of where it was going.

“The way to hide it is to transfer a lot of funds... quietly through the finance committee, where for the most part the lawmakers are not familiar with what is on the table,” she added, echoing comments by pro-government fellow member Stern.

Moshe Gafni, a former chairman of the committee from a religious party now in opposition, said settlers received money “through all kind of clauses that you can’t really follow”.

But his successor, Nissan Slomiansky from the pro-settler Jewish Home bloc that is part of Netanyahu’s coalition, flatly denied the process was anything but fully transparent and denied the settlements were being granted undue privileges.

“What do you get in Judea and Samaria?” he said, using the Biblical name for the West Bank. “Just like any other place, any other town, that the government decided to establish.”

One reason for extra funding is that 90 of 120 settlements qualify for special benefits to compensate for being located close to hostile neighbours — but these are also granted to towns inside Israel, for example near the Gaza Strip or Lebanon.

Gafni, however, noted that he had found other ways to secure state funds for settler communities when he chaired the committee.

“I would go to the defence ministry and say, ‘help them, it is a matter of security, help them with paving a road’. Things like that,” Gafni indicated. “You can agree or disagree on whether they should live there, but they do. There are children there.”

“I never got into the specifics, I would just transfer money to them,” Gafni said. “The mechanism works that way and they have been getting money for decades. They get special money.”

Critics have also found another target, in an arm of the World Zionist Organisation (WZO), the historic body that helped create the Jewish state. Now overseen by the prime minister’s office, the WZO’s settlement division acts as development agency in Israel but also — amid growing controversy — in the West Bank.

The CBS data showed its spending on settlements grew tenfold from 2008 to 2012, albeit to a modest 84.1 million shekels.

Among its projects has been financing the relocation in 2012 of dozens of settlers when an Israeli court ordered the army to clear Migron, one of about 100 unauthorised hilltop outposts classed as illegal even under Israeli law. The settlement division helped families rebuild nearby, still in the West Bank.

Pro-settler parliamentarians have rallied to block efforts in recent months to make the settlement division’s budget public — a success that only confirmed some critics’ suspicions.

“Money meant to boost construction is given under the table with no transparency or oversight,” said Hatnuah leader Livni, who was beaten to the premiership by Netanyahu in 2009 but since last year has sat in his coalition Cabinet as justice minister.

“You only have to look at the united political front that has rallied to prevent transparency in the Settlement Division,” she added.

Economy, security

Lapid complains that settlements are damaging the economy all round: “They hurt growth, gross domestic product and economic ties with the world,” he said in a speech this month.

Citing two small, religious settlements that have seen violent clashes with Palestinians, he added: “There is money buried somewhere between Yitzhar and Itamar, which could have given us smaller school classes, better healthcare, narrower gaps between rich and poor... and a stronger army.”

The settlers’ main body, the Yesha Council, hit back, accusing Lapid of sowing national division and referring to his career as a broadcaster: “The claim that billions are hidden there is cheap and more becoming of populist media rather than a finance minister who understands the economy,” it said.

While for many settlers the main draw is cheap housing, many also cite deep religious and historic ties to the land and argue that the enclaves serve to strengthen Israel’s security.

Netanyahu, who rejects the argument that his expansion of settlements has undermined peace negotiations, says that to give up all the occupied territory would return Israel to borders left by a ceasefire in 1948 that he says would be indefensible.

While far from over, the argument now being framed in terms of economics has revived fundamental differences over the role of settlements that may affect future state spending on them.

Finance committee chair Slomiansky, who himself co-founded a settlement, cited deaths among residents in Palestinian violence and said settlers did a service for fellow Israelis: “People are willing to live in Judea and Samaria with great self-sacrifice.”

But Livni, the coalition’s negotiator with the Palestinians, said the opposite was true: “The settlements are not providers of security, they are consumers of it,” she said. “Roads are paved with billions of our tax money under the premise of security — but in reality they serve a handful of homes.”

AMMAN — The Central Bank of Jordan (CBJ) decided to reduce the interest rates on key monetary policy tools by 50 basis points as of Wednesday.

Under the CBJ decision, the deposit window interest rate will drop by 50 basis points  to 2.75 per cent  and the one week (or more) repurchase agreement rate will drop by 50 basis points to 3 per cent, annually.

However, the rediscount rate and the overnight repurchase agreement rate will remain unchanged at 4.25 per cent and 4 per cent, respectively.

The CBJ attributed its decision to the continued improvement in the most basic variations of the national economy, besides expectations of an inflation rate remaining at a suitable level and the increasing attractiveness of savings tools in Jordanian dinar. 

Also, the improvement in the current account of the balance of payments was another factor which reflected on foreign reserves reaching record and comfortable levels. 

The CBJ expressed hope that its decision to reduce interest rates will stimulate the investment environment and provide sufficient credit at lower costs to various economic activities in order to reflect positively  on economic growth and employment in the country. 

The CBJ said it will continue to follow up on economic and financial indicators at domestic and global levels and take appropriate measures, accordingly, in a manner that strengthens financial and monetary stability and boosts an investment favourable environment.

AMMAN — The Jordan Petroleum Refinery Company (JPRC) on Monday selected Ernst and Young Company (EY) as its financial adviser to present the best alternatives and options for the fourth expansion project. EY will also present a financial model to finance the project of increasing JPRC’s production and improving its quality within the grace period given to JPRC from the government which ends in May 2019. EY competed with two other companies and won the financial adviser tender after the technical and financial terms were met. JPRC Chief Executive Officer Abdel Karim Alawin said the expansion project is important to the Kingdom in general, and particularly to JPRC, to cover the local needs of oil products and changing the production units of the refinery entirely. Alawin added the expansion project to cover the Kingdom’s oil needs by 2025 could cost around $2 billion, noting that it may decrease to $900-$1,000 million should the project be limited to enhancing the products and improving quality.

BRUSSELS — The European Union (EU) beat out the United States to become the world's top exporter of agricultural and food products last year, a European Commission report on the global farming market said Monday.

Fuelled by record sales to China and other emerging markets, in 2013 the 28 countries of the EU sold 120 billion euros ($163 billion) in agri-food products, up 5.8 per cent and with cereals alone accounting for over two thirds of the jump.

A market of 500 million people, the EU remained the world's biggest importer of farming and food products, though the level was mostly unchanged from 2012 at 101.5 billion euros. 

A quarter of Chinese imports came from the United States, but the EU saw its share rise to 9.1 per cent in 2013, mainly on sales of malt extract for beer brewing, and pork.

Hit by drought, the United States lost the top exporter perch with sales of soya bean and cotton especially affected. Lower prices in China also hurt US exports putting neighbour Canada back as top destination.

Agricultural products in the EU make up 9 per cent of total bloc exports, ranking fourth after machinery, chemicals and pharmaceuticals. 

The EU became a net exporter of agricultural goods in 2010, and has seen its trade surplus in the sector grow steadily ever since.

ROME — From a bribery racket in Venice to accusations of contract rigging in Milan and mafia infiltration of the judiciary, Italy is engulfed by a wave of corruption scandals which have raised the spectre of depravities past. 

Reports of widespread graft in northern Italy in particular have drawn comparisons with Italy's "Clean Hands" investigations of the 1990s, which saw top politicians jailed and swept away the country's postwar party system.

Two decades on, Italy still comes third-to-last in Transparency International's European rankings — ahead of just Bulgaria and Greece — and corruption costs the taxpayer some 60 billion euros ($80 billion) per year.

The economic crisis which sank Italy into its worst postwar recession "makes these fresh scandals even more intolerable in the eyes of the citizens", Michelangelo Anderlini, Transparency's deputy head in Italy, told AFP.

Prime Minister Matteo Renzi, who came to power in February, has pledged to make inroads into corruption, seen as a significant stumbling block in attracting foreign investors to the eurozone's third largest economy.

The International Monetary Fund (IMF) urged him to make good on his promises as soon as possible, advising in particular the reversal of legal reforms brought in by former premier Silvio Berlusconi which decriminalised false accounting.

Renzi — nicknamed the "Demolition Man" for vowing to shake up the system and oust the old guard — announced last week he was boosting the powers wielded by his top anti-corruption czar, magistrate Raffaele Cantone.

Cantone, famed for investigations against the powerful organised crime group Camorra, has called for a "real political and cultural change", describing corruption as "like the mafia. When no-one talks about it, it is prospering".

"To really achieve clean hands, we have to get hands out of pockets," he said.

'Bribesville is back' 

The Council of Europe's anti-corruption group (GRECO) said on Friday that Italy was taking important steps, but described as "quite disappointing and hard to understand" why such slow progress had been made in casting the net wider to cover more corruption offences.

The mayor of Venice, Giorgio Orsoni, was forced to resign last week amid a sweeping probe into a multi-billion-euro flood barrier project, after police said they had traced some 20 million euros ($27 million) in kickbacks.

Prosecutors are also investigating allegations of wide-scale contract rigging for the 2015 world fair Expo in Milan, and last month they arrested seven businessmen and politicians suspected attempting to influence public tenders.

Two of those under investigation did time behind bars in the early 1990s for corruption, a revelation which sparked headlines in Italy warning that "Bribesville is back".

President Giorgio Napolitano waded into the fray Thursday, urging the financial police to do more — less than two weeks after their own second in command came under investigation in a tax rigging probe.

And the justice system also came under scrutiny after a mafia boss-turned-informant accused judges in Naples of having accepted bribes to acquit him of murders he has confessed to carrying out — sparking a police probe.

Even Pope Francis has referred to the scandals hitting the headlines, denouncing "the corrupt politician, the corrupt businessman, the corrupt priest", saying it was "the poor who pay for the parties of the corrupt. The bill goes to them".

Bruno Manfellotto, editor of the weekly L'Espresso magazine, said the difference between "Clean Hands" and today's rackets is that the latter "involve not just politicians and the odd rotten apple from the public sector, but ministers, undersecretaries, magistrates, the financial police... and secret services".

"Such a vast network of friends, and friends of friends" seems to be aimed at creating a system "to warn them of approaching trouble, mislead investigations, and shut overly-curious eyes," he added.

The IMF stressed that Renzi must rapidly enact labour reforms and clean up corruption to boost weak growth in the eurozone's third-biggest economy.

Despite a pickup in private consumption and exports, "the recovery remains fragile and unemployment unacceptably high, highlighting the need for bold and quick policy actions," the IMF said in a report after a visit to Italy.

Italy's economy shrank by 0.1 per cent in the first quarter of 2014 after officially pulling out of its worst post-war recession at the end of last year. 

Official data, including a rise in industrial production, showed growth should pick up again in the second quarter.

Renzi — who became premier in February — has pledged repeatedly to modernise Italy, clean up its political system and tackle record unemployment, though few have seen the light of day.

"Delivery of real change is now crucial for strengthening confidence and support for reforms," the IMF emphasised.

The IMF also highlighted "fiscal rebalancing to allow lower tax rates and increased productive spending", as key to turning around Rome's fortunes.

The international body said reforming government policy on labour and competition, providing more support to small and medium enterprises and cleaning up the judicial system would all help to boost growth.

On workers rights, the IMF said Italy's temporary roles, which have been criticised for stripping workers of their rights, should be replaced by contracts that increase job protection for workers.

Reforms from 2012 to clean up corruption have helped but "could be further improved, notably by criminalising the false accounting offense and changing the limitation period provisions", it added.

The body also praised Italian banks for making progress in precognising losses, reforming governance and raising private capital, but warned on the slow pace of write-offs.

WASHINGTON — Argentina on Sunday took its battle against paying hedge fund investors in its defaulted bonds to the US media, placing adverts in major newspapers demanding US courts help foster "fair and balanced" negotiations.

The full-page ad — which appeared in The New York Times, The Washington Post and the weekend edition of The Wall Street Journal — lashes out at the "voracity" of the so-called "vulture funds".

"Paying the vulture funds is a path leading to default," says the ad from the government of Argentine President Cristina Kirchner. "The will of Argentina is clear: We expect a judicial decision that promotes fair and balanced negotiating conditions to resolve this protracted and difficult dispute."

Last week, the US Supreme Court rejected Argentina's appeals against paying at least $1.3 billion to hedge fund investors who refused to take part in a restructuring deal for debt on which Buenos Aires defaulted in 2001.

In effect, it let stand an August 2013 ruling from US appeals court judge Thomas Griesa — one of the targets of Argentina's fury.

The supreme court thus opened the way for NML Capital and others to seek immediate payment on 100 per cent of the face value of the bonds they hold, even though most of the country's creditors took a huge writedown of their bonds to help the government rebuild its finances.

"The vulture funds that secured a ruling in their favour are not original lenders to Argentina," the ad says. "They purchased bonds in default at obscenely low prices for the sole purpose of engaging in litigation against Argentina and making an enormous profit."

Buenos Aires argues that it will in fact need to pay an estimated $15 billion "in the immediate future" — or more than 50 per cent of its foreign reserves.

"This ruling seeks to put Argentina in a delicate position, but also any country that may have to undertake a restructuring of its debts in the future," the ad says.

On Friday, Griesa ordered Argentina to pay hedge fund bond holders in the United States, not Argentina — effectively scuppering a government proposal for a debt exchange inside the country.

Buenos Aires has said it wants Griesa to set conditions for a negotiated settlement that would respect US and Argentine laws. But the judge has questioned Argentina's willingness to pay up.

MUSCAT/DUBAI — Oman has scrapped price controls for all but 23 basic products, prompting rare public criticism of government policy, after companies demanded freer markets. Economists said the move was unlikely to have a major impact on inflation.

Under rules dating back to 2011, retailers and traders needed to ask the Public Authority for Consumer Protection for approval to raise the prices of all goods.

Under new rules announced last week, permission will still need to be sought to increase prices of essential items such as rice, tea and fish, state news agency ONA said. Other goods will no longer need approval, though the authority will continue monitoring all prices for any suspicious rises to prevent monopolistic behaviour.

"The council of ministers agreed that the Food Security Committee... will revise the list of basic goods annually," ONA said. "The prices of the remainder [of] goods and services, which are not included in the list, are governed by the supply and demand principle."

In an unusual public furor over government policy in the sultunate ruled by Sultan Qaboos Bin Said, hash tags objecting to the reform drew tens of thousands of tweets. One showed a picture of a man pierced by a screw with the word "consumer" written on his trousers.

"We admit that we made a mistake by not preparing the public for this decision," Commerce Minister Ali Bin Masoud Al Sunaidy told journalists.

Oman, a small oil exporter but not a member of the Organisation of Petroleum Exporting Countries, faced sporadic street protests in 2011 that demanded jobs and an end to corruption. It responded by boosting welfare spending and creating tens of thousands of public sector jobs.

Despite the public dismay, economists said the reform was unlikely to boost inflation much, partly because companies knew the threat of government action against "monopolistic" behaviour remained.

"I do not expect a significant impact on the cost of living," said Fabio Scacciavillani, chief economist at Oman Investment Fund, a state fund.

"The worst you can have is a one-off adjustment in a handful of items and that will be filtered out. The key prices remain under the administrative watch," he added.

Oman's inflation climbed to a four-month high of 1.5 per cent on an annual basis in April from 0.7 per cent in the previous month, but it remains at half of the average rate of 3 per cent in the last five years.

There was no indication in the announcement of the reform that state subsidies for fuel and food, which have begun to strain government finances in recent years, would be cut.

In May, Oman's minister for financial affairs said the government was looking closely at cutting subsidies, with petrol an obvious target as the country looks at ways to soften rising pressure on public finances.

The International Monetary Fund has said Oman's state budget may slide into a deficit of 3 per cent of gross domestic product in 2015, widening to 11.4 per cent in 2019 as weaker oil prices erode export receipts.