Hi-tech clusters prove to be a hit even as Knowledge Oasis Muscat gets ready for its next Digital National seminar in June
Knowledge Oasis Muscat (KOM) is gearing up for its next Digital Nation Seminar, scheduled for June 10 at the Crowne Plaza Hotel. Sponsored by OER, Ericsson, Microsoft, Hewlett Packard, SAP Arabia, Nawras, Infoline, RealityCG, Omania e-Commerce, Times of Oman, and Al Watan, the first seminar in the newly launched series, Your Mobile: the Next Frontier, was held on March 4 and attracted over 180 delegates.
"I thought the first Digital Nation seminar was a huge success," said Susie Houh of Ericsson, "It attracted a large and diverse audience. I spoke to people from the oil business, media, telcos and venture capital, it was a great mix. In fact, I don't know of any similar ICT seminar programme running in the Gulf. This is certainly unique to Oman."
The second seminar in the Digital Nation series is entitled: How to Ramp up Internet Usage, and KOM's Director-General Mohammed Al Maskari is of the opinion that "the quarterly seminars will help raise awareness of ICT across the country. In partnership with our supporters we've drawn up an interesting agenda. For example, we're looking at how to increase Internet penetration and usage in the Sultanate; the power of digital media; how today's youth is using technology; and the future of mobile telecommunications. These are big picture issues and we want to talk about them."
Another reason behind the Digital Nation series is to highlight the government's thinking on technology and its intent on raising Oman's profile as a potential base for hi-tech firms. In brief, they're talking clusters and with over 60 firms resident in KOM, the Rusayl-based tech park has the beginnings of a critical mass.
Economies of scale
But what is a cluster? In simple terms, it's a group of industries and organisations that are more competitive when they co-operate. They can be linked by trading, sharing infrastructure, customers, technology or skills. They're led by businesses, but are supported by universities, research organisations and government. At the end of the day, the aim is to make businesses more profitable.
With its origins in the industrial era, the cluster mantra has its roots in the theories of classical economists, such as Alfred Marshall, and, more recently, it's been amplified through the writings of such top economic thinkers as Charles Sabel, Michael Priore and Michael Porter. As a result, countries, regions and cities across the world are all expending great effort to discover and expanding clusters that will turn their area into the next boomtown. Oman's no different.
"If we look at the US there's lots of high-tech production, but they aren't necessarily tech clusters," claims Al Maskari. What differentiates a tech cluster is its ability to move to a second phase of economic development where entrepreneurs mobilise local labour talent and finance start-ups. We're seeing this happen in KOM. Many of these firms are formed as spin-offs by employees of existing companies or out of educational institutions in the area. "California's Silicon Valley has been doing this for years," claimed Al Maskari.
Oman, however, doesn't have to be at the leading edge to be successful in high-tech. In recent years, the logistical needs of hi-tech service industries have led to tech growth in smaller cities in the US like Tulsa in Oklahoma, which has become a resource for existing tech clusters. Known as the Blue Collar Internet, local government encourages tech growth by developing transportation infrastructure such as roads and airports, higher education programmes and building fibre optic networks. "This is how we've approached developing KOM. We've constructed hi-tech, Class A office space, initiated a business incubator programme that has mentoring support from firms like Ernst & Young, KPMG, Trowers & Hamlins, Talal Abu Ghazaleh, and Ericsson. We've developed ties with academia, installed a fibre optic backbone throughout the Park and, with Ernst & Young, we're promoting entrepreneurship through our annual TKM-Ernst & Young Big Business Idea Competition."
Retaining Talent
But with the growth of hi-tech clusters outside the US, how do firms determine in what cluster to locate? "In our experience, we've found that our tenants are looking for an area that they believe will experience significant economic development 10-15 years into the future. Access to a talented, multi-lingual labour pool, higher education and real estate prices are also a concern."
A recent development which excites Al Maskari is the return from the overseas of experienced and highly educated Omani entrepreneurs. "We're seeing young Omanis with education and work experience investing in KOM and starting new firms. This is an important development," he points out.
The critical issue for KOM, according to Al Maskari, lies in finding and retaining talent. Back in the 1980s and 1990s, he recalls, it was relatively easy to lure top engineers, IT personnel and creatives to cities in the region, but now that has changed. "There are parts of the Gulf that are tough places to live," he explains. "The commutes are long and the cost of housing and office space has soared. It's getting a lot harder to get a good quality of life. What we're doing at KOM is offering those firms and individuals a different opportunity-a higher quality of life."
According to the KOM Director-General, economic-development professionals should heed one lesson in particular: "They're no longer going to be able to hold onto companies because firms in a particular line of business have always clustered in a specific country, region or city. Areas that want to hold onto their current economic supremacy will only do so by improving their quality of life, services and incentives. If you don't get these three things right, your efforts are likely to prove futile."
How can clusters benefit businesses and Oman's economy?
Companies can increase the expertise available to them if they locate amongst a cluster of other firms.
Companies can draw upon others with complementary skills to bid for large pieces of work which each of the individual firms would have been unable to complete.
Advantage can be taken of economies of scale by further specialising production within each firm, by joint purchasing of common raw materials to attract bulk discounts or by joint marketing.
Social and other informal links are important and can lead to the creation of new ideas and new businesses.
Reputations spread quickly within the cluster, enabling finance providers to judge who the good entrepreneurs are and for business people to find who provides good support services.
The cluster enables an infrastructure of professional, legal, financial, marketing, technical and other specialist services to develop.
© Oman Economic Review 2007
