Oman: The GCCs big investment opportunity | PRO Partner Group
Oman: The GCCs big investment opportunity
The Sultanate of Oman is on a mission to diversify its economy and reduce its reliance on oil-based revenues. Over the last few years, substantial investment in infrastructure, transportation and communications as well as a slew of legal reforms and foreign investment incentives have made market entry into the sultanate easier and more attractive than ever.
The country has a growing population and an increasing demand for social and economic infrastructure which brings with it a huge number of investment opportunities in a wide range of areas.
Through its Vision 2040 developmental plan, it has mapped out a strategy with which to diversify its economy and strengthen its economic and social development. Encouraging foreign investment is seen as the lynchpin of this development plan and 5 core industries have been identified as the best to spearhead the country’s economic growth:
• Transport and Logistics
• Agriculture and Fisheries
What opportunities are there for foreign investors in Oman?
The Omani government has created industrial estates, for example the Salalah Free Zone has specific infrastructure to support manufacturing businesses. Oman is also offering incentives such as soft loans, subsidised land and electricity and import duty exemptions to encourage investment in the country’s manufacturing industry and lessen its reliance on foreign imports. This presents a great opportunity for manufacturing companies to establish themselves in the country and leverage these benefits.
Tourism is the fastest growing industry in Oman. It’s estimated to be worth US$1 billion, and the country is expected to receive 3.4 million tourists in 2023.
As the government looks at ways to relax visa regulations and make entry into the country easier, licences have begun to be issued for a variety of business ventures. Hotels, resorts, casinos, travel agencies and other leisure and entertainment activities are just a few of the opportunities that exist.
Oman was the first country to permit foreign companies to generate electricity and own desalination plants, with the Al Manah Power Project being the first electricity generating company to be fully privatised in 1994. Since then, a number of power plants have begun operations under foreign ownership and ongoing privatisation of state assets is likely to present a huge number of investment opportunities in the energy and utilities sector.
Agriculture and Fishing
The fisheries sector is a large contributor to the Omani economy and with the country’s 3,165km of coastline being considered among the richest in the world, there is a great investment opportunity to make the most of the growing export market.
The agricultural sector is also relatively untapped and offers great opportunity for foreign investors to introduce agricultural mechanisation and new farming techniques to commercialise the obvious potential this industry has.
How is Oman supporting economic growth and encouraging foreign investment?
Foreign Capital Investment Law
The new Foreign Capital Investment Law (FCIL), which came into effect on 1 January 2020, has transformed the business landscape for foreign investors and put them on a much more even footing with respect to local Omani companies. The main highlight of the FCIL is the removal of the old requirement for Omani companies to have at least 30% Omani ownership. Now foreign investors can wholly own business investment projects in Oman.
The new law also grants certain incentives and privileges to foreign investors and ensures that certain rights are extended to them.
Privatisation is seen as a critical component of Oman’s developmental strategy. The country currently has approximately 70 state owned enterprises across a variety of sectors. However, these have shown reduced profits over the years which has prompted the government to now consider giving the private sector a larger role. With significant spending on developmental projects required, foreign investment is seen as one of the best ways to fund this and initiatives are being created to incentivise further FDI.
Double Taxation Avoidance Agreements (DTAAs)
Oman has agreed double taxation treaties with over 37 countries which ensures that any tax incurred in these countries is fully deductible from taxable income in Oman.
The New Commercial Companies Law
A new Commercial Companies Law entered into effect in Oman on 18 April 2019. Many of the changes made from the previous CCL are subtle but others have clearly been introduced to enhance corporate governance and provide greater transparency and flexibility for foreign investors.
Changes such as the allowance of full foreign ownership of LLCs, the addition of a greater variety of available corporate vehicles and increased flexibility with minimum and maximum shareholders in LLCs have all contributed to a more investment friendly and equitable business environment.
What strategic benefits does Oman offer foreign investors?
Free zones and special economic zones
A cornerstone of Oman’s FDI strategy are its free zones and special economic zones. There are currently three free zones (Salalah Free Zone, Sohar Free Zone and Al Mazunah Free Zone) and two special economic zones (The Duqm Special Economic Zone and Knowledge Oasis Muscat). These jurisdictions offer foreign investors several benefits such as the allowance of full foreign ownership, no minimum capital requirement for business setup and other significant tax incentives and customs duty exemptions.
The development of the Duqm Special Economic Zone in particular, with its airport access, seaport and prime geographical location with proximity to global shipping lanes, has attracted USD 11 billion of investment. The bulk of this FDI has been directed towards the oil and gas sector with the remaining share spread between the financial services, manufacturing and real estate sectors.
Covid Economic Stimulus Plan
The Covid-19 pandemic has had a drastic impact on all areas of development in the Sultanate. Issues such as reduced consumer spending, disruptions to global tourism and worldwide travel restrictions affected every area of the economy. However, the Omani government responded quickly with a series of measures to counter these negative effects and alleviate some of the difficulties that business owners and investors were facing. This involved the introduction of a Covid Economic Stimulus Plan which offered numerous incentives to support affected businesses and groups. These included reductions to taxes and fees, postponement of loan installments, waiving of penalties and various other supportive measures designed to promote economic recovery and encourage continued foreign investment in the Sultanate.
Oman is making major strides in creating a more attracting environment for foreign investment. Major legal reforms and other business and financial initiatives are increasing the country’s value proposition and creating opportunities for foreign investors to capitalise on the country’s rapid growth and diversification.
How can PRO Partner Group help?
Through years of local industry experience, we have built enduring relationships with key government bodies and have extensive knowledge of laws and company incorporation requirements in Oman.
We can assist you to set up your company in Oman and we can also provide you with PRO Services, visa support for staff and family members and assistance with licensing and regulatory matters. If you need assistance on this or any other related company set up, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, KSA, Bahrain or Qatar then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at firstname.lastname@example.org or complete the contact form below.