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In this page: FDI in Figures | What to consider if you invest in Oman | Procedures Relative to Foreign Investment | Investment Opportunities

 

FDI in Figures

Global foreign direct investment (FDI) flows showed a strong rebound in 2021, up 77% to an estimated USD 1.65 trillion, from 929 billion in 2020, surpassing their pre-COVID19 level. FDI flows in developing countries increased by 30% but almost three quarters of the total increase in global FDI (USD 500 billion) was recorder in developed economies, with developing economies showing a more modest recovery growth. FDI inflows to West Asia and the middle East increased by more than 49% in 2021 to 90 billion USD (UNCTAD, January 2022).

According to UNCTAD's 2021 World Investment Report, FDI inflows to Oman reached USD 4.1 billion in 2020, showing an increase from USD 3.4 billion in 2019, despite the global econmic crisis triggered by the Covid-19 pandemic. Oman's FDI stock has been largely restored since the 2010 crisis and remains robust, at USD 35.4 billion in 2020. Investment has quickened, in particular thanks to the development of the Duqm Special Economic Zone, which involves the construction of a port, an airport, a refinery and tourist facilities. According to figures by the National Centre for Statistics and Information (NCSI), the main investing countries are the UK, followed by the United Arab Emirates, Kuwait, Qatar, and Bahrain. The bulk of FDI were directed towards the oil & gas sector, with lower shares going to the financial services, manufacturing and real estate sectors.

The new Foreign Capital Investment Law adopted in 2020 and specifically the abolition of foreign ownership limits has been welcomed by the international community (WTO, 2021). It relaxed restrictions on foreign investment, streamlined the registration and licensing procedures for foreign investors and aligned foreign investors’ rights and incentives to those given to local investors. Special Economic zones have also attracted substantial foreign investment, though there is scope to further stimulate spillover effects from these economic zones to the local economy (IMF, 2022).

The Sultanate of Oman seeks to attract investors by offering tax incentives and customs duty exemptions. Oman has a stable political and macroeconomic situation. However, access to a limited number of sectors and government pressure on foreign companies to recruit domestic workers are major obstacles to foreign investments. In 2020, Oman issued the new Foreign Capital Investment Law, which removed the minimum 30% Omani ownership requirement for Oman-based companies in a bid to attract further foreign investment. In 2021, Oman introduced new incentives for foreign investors, including exemption from certain fees and operational requirements for investment projects in the country's less-developed regions. Oman ranks 68st in the last World Bank's 2020 Doing Business report, gaining ten places compared to the previous year.

 
 
Foreign Direct Investment 201920202021
FDI Inward Flow (million USD) 4,3772,8613,619
FDI Stock (million USD) 34,33437,19540,814
Number of Greenfield Investments* 612434
Value of Greenfield Investments (million USD) 3,6476,1014,695

Source: UNCTAD - Latest available data.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

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What to consider if you invest in Oman

Strong Points
Oman has a strategic location within the east-west nexus joining markets in Europe and Asia. Its ports are one of the most strategically placed in the world and provide fast sailing times to major markets in Asia. Good air connectivity and road infrastructure facilitate access to other GCC countries. Currency risk is low as the country's currency, rial, is pegged to the US Dollar and the Central Bank of Oman has high levels of foreign exchange. Oman does not impose any personal income tax and allows full repatriation of capital, net profit and royalties. The local labour force is highly skilled (most finish their studies in the UK or in the US).
Weak Points
Some challenges for foreign investors seeking to establish in Oman: The time it takes to set up a local business outside of free trade zones and to obtain operating licenses, local ownership requirements outside of free trade zones (setting up a 100% foreign-owned is nearly impossible), Omanisation policy (requirement to employ Omani nationals)
Government Measures to Motivate or Restrict FDI
The Foreign Investment Law (FCIL), promulgated by the Royal Decree No. 102/94 is the main legislation regulating foreign investment in Oman. The law provides for interest-free loans to the private sector in agriculture, fisheries, industry, mining and quarrying. Industrial firms enjoy low-interest loans from the Oman Development Bank. Custom duties are exempted on import of equipment and raw material. Corporate tax is exempted for the first five years of activity (can be extended for another period of five years). There are no limits on the repatriation of capital, net profit and royalties. Free trade zones in Duqm, Salalah, and Sohar provide enhanced tax-free holiday, duty-free treatment of all imports and exports and have lower Omanisation requirements. The Free Trade Agreement with the United States allows US citizens to bypass requirements regarding the process of setting up a business and to be treated as Omani (or GCC) nationals.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Non-Omanis (except for GCC and US citizens) cannot own more than 70% of shares of a company (The status of wholly foreign-owned company is rarely granted). Minimal share of the Omani citizen must be 30%. Foreign investors are further required to employ Omanis in addition to expatriates.
Acquisition of Holdings
The foreign share of in an Omani company cannot exceed 49% of the total capital (can be exceptionally raised to 65% or 100% by a decision of the Omani Minister of Commerce and Industry). Foreigners can only purchase shares in the Muscat Stock Exchange via an authorised broker. Real estate brokerage services, which were also limited to authorised Omani brokers, have been opened up to all Omani residents as of January 2018.
Obligation to Declare
Applications for foreign investment licence must be addressed to the Foreign Capital Investment Committee within the Ministry of Commerce and Industry. The Committee gives its opinions on the identification of the investment fields and the extent to which the project can be considered as one of the economic development projects while also giving priority to projects that use local products and raw materials, and attract internationally reputed industries. The Minister has the final say on the granting of licence.
Competent Organisation For the Declaration
Invest Easy (One Stop Shop)
Requests For Specific Authorisations
Public authorities reserve the right to inspect compliance of foreign investment projects with environment, health and other standards at any stage of operation.
70%-foreign ownership rule does not apply to investments in the electricity and water sector where 100% foreign ownership is allowed.
The Omani government can exceptionally extend foreign ownership rights of a company upon recommendation of the Minister of Commerce and Investment stating that the proposed investment activity is crucial and critical to the economic development of and to the national interests of Oman.

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Investment Opportunities

Investment Aid Agency
Ithraa -  Public Authority for Investment Promotion & Export Development
Tenders, Projects and Public Procurement
Electronic Tender Board, Tender Board of the Sultanate of Oman
Tenders Info, Tenders in Oman
Oman Projects, Tenders, projects, enquiries and business deals from the Sultanate of Oman
Other Useful Resources
Invest Easy Initiative
Oman Investment Corporation
Investor's Guide (Oman Chamber of Commerce and Industry)
 
 

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Latest Update: November 2022