Oman hasn’t been immune to the trickle-down effects of uncertain economic times across the GCC, with a scaled-back expat workforce leading to sudden departures and abandoned assets as those who have been made redundant struggle to find a way to pay off their loans. Y investigates the true cost of skipping out.
In its prime, the low-slung, blue-coloured Chevrolet Corvette would have torn past traffic with a muscle-car roar that could turn heads from several kilometres away. Still striking to look at, today, it lies parked up and covered in layers of dust under the hot sun in the outdoor parking lots of one of Muscat’s leading malls.
Now, its blue is fading fast and its engine will soon settle into a muck of unused oil and the tires will go flat – rendering the vehicle unusable and, in a few months, inoperable.
“I’d like a good explanation for this from the owner of the car,” says Ali al Hinai, the retail manager of the shopping mall where the car has been left, abandoned. His voice is firm and assertive, but he knows full well that neither will the owner of the car show up to the mall again, nor will the vehicle be removed.
In fact, the blue Chevy isn’t the only car that’s left deserted in the parking lot. Warning stickers from mall management placed on the windows of at least 20 other cars suggest that this is a widespread phenomenon – and that there’s an underlying reason.
It isn’t hard to dig up either. “Absconders and loan defaulters are the two main factors that lead to car abandonment,” adds Ali, who has been accustomed to such practices for nearly a decade now.
“When people can’t pay their loans on time, it leads to them either being arrested by the Royal Oman Police (ROP) or, to avoid such a situation, they skip town to their home country.”
His mall isn’t the only one affected either. A walk across any major retail shopping centre, the parking lot at the Muscat International Airport, or even the Seeb ROP station will reveal to you the extent of this trend.
There’s no discrimination of brands either – from cars that’ll set you back RO4,000 to ones that can cost as much as RO70,000 – they’re all there; parked up without any shelter and exposed to the elements until the authorities finally take the stand to pick the car up.
One source at the Muscat International Airport reveals to us that nearly 75 cars were removed only last month (June) by the Muscat Municipality from the short-term parking lot after their owners parked their cars and left town for months on end.
In an interview with Jason Kothaneth, a consumer loan officer with a leading private bank in the country, we learn that there’s more to this than what meets the eye. He says: “It’s very easy to spot a car that’s been abandoned in the parking lot of a mall or in the short-term parking of the airport. It’ll have a ‘No Parking’ sticker from the local authorities first before the Muscat Municipality issues another notice asking the user to remove the car.
“That’s all facts. What lies beneath that is what counts. For instance, loan defaulters are one of the main reasons this happens alongside other factors of much lesser extent such as deaths, imprisonment, and so on.
“But, if you were to concentrate on the former, you’ll realise that much of this is done by expats who once came to Oman with high-flying careers and to start a new life. GCC money is good – everyone knows that.
“Things only go out of hand when these people came intertwined with Oman’s bad times. Some people started having delays in their salaries while others lost their jobs in a day’s notice or didn’t receive a new visa from their employer.
“It’s unfair – I know,” he tells us. The pity in his tone is evident.
He’s right, too. As per the National Centre for Statistics and Information (NCSI), expat numbers in Oman have fallen from 2,054,811 in July 2017 to 1,961,614 in July 2019 – effectively dropping by over 93,000.
Currently, the Omani-to-expat ratio stands at 57.5 per cent to 42.5 per cent, and it’s had its repercussions on the country’s financial sector
As Jason tells, “This has led to fewer expats taking loans and opting to buy new cars. And those that can, still hold on to their money. This is breaking the financial cycle, which begins with taking loans and completing a transaction.
“Therefore, several players in the market are struggling,” he adds, before revealing how his loan targets have fallen substantially since 2016.
“Having said that, those that do, know that they’re taking a huge gamble by taking out huge loans. And when they do eventually lose their income source, they try to either sell the car off, or in some cases, wait for months and default the loan until they can secure another job and repay the debts.
“It’s a very tough time for expats in Oman. Hiring has been frozen by several companies in the country and many have also stopped paying their employees for months. I’ve heard of some very reputed companies withholding money for up to seven and eight months.
“This is why the people who now find themselves unemployed or cashless must leave their car behind and leave the country.
“Sadly, that’s the last thing on their mind but what else can they do?”, he asks.
Y’s research into the matter shows us that in 2017 – in the peak of the financial crisis in Oman – some 2,622 expats failed to repay their loans.
The loan value from the fiscal period 2015 to 2017 amounted to RO21mn; and each expat, on average, had taken RO4,515 as consumer loans from the bank.
A consumer loan corresponds to a car, housing, holiday, or any personal loan that’s offered to a customer by a bank. Loans in Oman, unlike in several other Asian countries, are held against one’s job and salary as opposed to a physical asset; meaning, the loan can only be cleared by paying off the debt.
But, Omanis have raked up their fair share of debts too. While stats aren’t easily available, we learn from Jason that several skip town to countries such as Egypt to avoid arrest after defaulting on loan payments.
Some Omanis have been known to be defaulting their loans for over two years.
“Banks in Oman are quite lenient when compared with those in most Asian countries. But yes, defaulting on payments will lead to arrest as repayments to the lenders (banks and other financial institutions) are issued back as cheques and bounced cheques can lead to a criminal case,” Jason clarifies.
“An arrest won’t be made immediately but it’s likely to happen when you travel or cancel your visa and plan on leaving the country,” he adds.
And even though Jason’s words align with the Central Bank and the Oman law, we get in touch with Inderdeep (name changed to protect identity) who had defaulted eight payments on his SUV.
In an interview with Y, he tells us: “I bought my car back in 2015 and my loan was valid until 2020. The loan value was upwards of RO12,000 and I was paying nearly RO220 per month.
But, things took a turn when the businessman lost contracts with several clients.
“I defaulted eight payments and had no money to pay the bank. My intention was never to do that, but a time came when I was forced to leave the country or face an inevitable arrest someday.
“I couldn’t even eat or drink. I was scared that a ring on the bell would be of the ROP waiting to identify and take me to jail. I was physically prepared but mentally scarred.
Eventually, in February of 2019, he left Oman for his home back in India, leaving behind his wife who is working in Muscat. The authorities, startlingly, didn’t stop Inderdeep prior to his travel.
“I created a life in Oman, but it was all falling into pieces. I couldn’t deal with that. So, I borrowed every penny I could from my friends and family, and even some clients who were on cordial terms with me, and I made my way back to Oman.
“I prayed that they wouldn’t catch me at the airport. All I had to pay off was RO4,800 and I just needed to get past security at the Muscat International Airport.”
He could do that in May of this year, and he has since cleared off his loan with the bank
While car loans are on one side of the spectrum, house rents make up the other side – this has now led to loan defaulting becoming Oman’s most prominent criminal activity, taking into consideration how a majority of expats sign year-long rental agreements with their landlords.
This means expats – and even Omanis – who cannot afford to have money in the bank often find themselves at the cusp of being homeless.
Mariam al Balushi, 54, a businesswoman in the real estate industry with six apartment complexes within Ruwi and Wadi Kabir tells us how the financial crisis has led to several abandoning their homes and leaving the country.
She states: “Just take a look at my apartment in Wadi Kabir. We have ‘For Rent’ signboards placed on all four sides just so that people can see the vacancies. Several of these rooms are either unoccupied or have rental agreements that haven’t been honoured – and the tenant has left the country.
“Just last month, we had one expat leave the country with his family; leaving behind much of his belongings and even his car – which I learned recently is on loan.
Mariam says that there are currently 14 tenants who have fallen behind on their rental payments due to non-payment of salaries by their companies.
“I know what the reality is out there. We’re all humans and I understand that everyone wants to protect their families – and if that man had come to me and asked to withhold his cheques for months, I would have done that for him.
“Sometimes, we all need to be flexible so that someone else can continue to live a normal life. Money isn’t everything and maybe it’s the misconception that Omanis have become hostile to expats during this financial crisis that has led them to believe that.
“I can’t fault them either. Every day, we have media companies writing against expats; how visas for expats have been banned and so much confusing news on the no-objection certificate (NOC) rule. How will they feel safe in Oman?” she asks us.
“Either way, now not only do I need to pay someone to clear out his belongings, I also need to alert the municipality to clear the car from the complex,” she adds, before requesting the government to take stricter action against companies not paying their employees’ salaries than clamping down on those that have taken loans or signed annual rental agreements.
Speaking to Y on Oman’s banking law is Ahmad al Shukaili, an independent financial analyst and investment banker, who asserts that both the bank (lenders) and the government will do everything in their hands to protect the borrowers.
He says: “Even though defaulting on loans and having your cheques bounced is a criminal activity, there are quite a few procedures before you’ll be arrested.
“You won’t just be picked up from home and arrested. Firstly, you’ll need to have flouted three loan payments. These usually happen when the borrower has either come under financial strain or has expired (passed away).
“When you have defaulted on three payments, there are three bounced cheques on your name. You’ll immediately be blacklisted by the Central Bank, so you cannot simply open another bank account.
“A warning will also be issued to you. This must be heeded immediately and you must prove in court that you are incapable to pay off the debt due to whatever reason it may be – and it doesn’t matter if you’re an expat or an Omani.”
One source, however, working with the ROP tells us a different story. He says: “Defaulting on three payments will essentially land you in jail. Right now, we have several people who are in custody for defaulting on payments.
“Most of them are expats but a few Omanis are in as well. These people must pay off the principle amount of the debt at the very least – and it all depends on how they negotiate that with the bank.
“The conditions of many of these people are truly heartbreaking. Many have families who are stuck in Oman trying to source the money. But, times are just too difficult.”
All of this has created a deep financial strain for the country. While banks take a deep hit in such cases where the borrower has absconded from the country and is defaulting on payments, it’s now the Muscat Municipality’s duty to clear these cars from public spots.
Salim al Jassasi, an operations executive from the municipality, says: “The Oman law mandates that owners have no rights to touch another person’s property, even if it’s parked in their personal space.
“In such cases, [the owning body of the public or private space] must first alert the ROP of such a case. They will try to contact the owner of the car or the home goods.
“If the ROP fails to sort the issue between the owners, you can contact the municipality. We will then come there, analyse the situation, and stick a warning sticker as per Article 3 of the administrative decision. In case of a car, this sticker will be placed on its window.”
The official goes on to say that abandoning vehicles for long periods contradicts the provisions of administrative decision no. 171/2018.
“Following that, if the car is still unmoved for 14 days, we will then tow and seize the vehicles. We will also not take any responsibility for damage to the vehicle during transportation to the place of reservation, and during reservation time.
“During this period, a fine will be imposed too. It can be anywhere between RO200 and RO1,000 depending on the type of vehicle. Moreover, another RO5 will be imposed on the owner for each day that the vehicle has been impounded from the site.
The vehicle will then be placed in the impound lot for 90 days, following which – to cut government losses – the municipality in conjunction with the ROP will then publicly auction the vehicle away.
Though, it’s to be kept in mind that the new owner may have to bear the fines and any additional mechanical expenses the car has incurred over the course of its life.
Salim then goes on to say that the municipality has towed away nearly 4,000 cars in the last three years.
He then adds: “These are tough times in the Sultanate. And a lot of people leaving their cars behind and the country are definitely taking a huge gamble by doing so – whatever the reason for their actions may be.
“It’s easy for us all to give sympathy and sweep these problems under the carpet. Reality, however, is different. These tough times must be handled with care. Stay away from huge and overbearing loans if you’re a resident – you could lose your job.
“Also, try to opt for homes with reasonable rents so that you can bear the expenses for a few months if a problem arises.
“That’s my advice to you all: stay wise and make wise decisions. It pays off to think like a wolf.”
Meanwhile, the abandoned blue Corvette continues to gather dust. It’s fate too will be decided in the days to come. But, its future remains bleak for the foreseeable present.