Future-ready economy

Similar to other GCC countries, Oman’s economy is still heavily dependent on oil revenues, but that is set to change in the not-too-distant future. For some time now, the government has recognized the need to diversify the economy in the face of new economic realities and establish an accommodating investment environment, successfully introducing several measures and initiatives to attract foreign capital and expertise into non-oil and export-oriented sectors such as manufacturing, agriculture, logistics, energy, and tourism.
Located in the southeastern coast of the Arabian Peninsula, the Sultanate is at the center of trade routes connecting Europe, Asia, Africa, and Americas. Accordingly, the government has taken advantage of this strategic geographical location by building outstanding infrastructure, including state-of-the-art airports and ports, industrial estates and technology parks, and free trade zones. A case in point is that of the Port of Salalah, one of the world’s biggest deepwater ports. It offers shipping times that are 30-40% shorter than other competing locations, such as 15 days to New York, 12 to the UK, and eight to Singapore.
The government has backed its infrastructure investment with business- and investor-friendly laws. The latest of such laws is the Foreign Capital Investment Law, which went into effect in January 2020. Promulgated by Royal Decree 50/2019, the law encourages FDI by providing several incentives to investors including 100% foreign ownership, reduced capital requirements, competitive lease rates in specific locations, allocation of real estate property for long-term lease, and tax incentives and customs duty exemptions. The law also provides foreign investors with the same rights and benefits as Omani business owners. Foreign investors are particularly attracted by the fact that Oman taxes corporate earnings at 15% and has no personal income or capital gains tax. The government is also willing to offer additional incentives on a case-by-case basis and for certain types of companies established in recognized industrial estates and free trade zones.
Then, there is the government’s nationwide digitalization drive, a central pillar of the Oman Vision 2040 and the national diversification strategy. One of the leading digital initiatives taken by the Ministry of Commerce and Industry (MoCI) to streamline the process of setting up a business in Oman is Invest Easy, an online portal that enables businesspeople and investors to get the business procedures done easily in a short time. Its main purpose is to provide citizens, entrepreneurs, and prospective investors with the services and information they need efficiently.
MoCI’s Invest Easy portal is complemented by the Public Authority for Investment Promotion and Export Development’s (Ithraa) Invest in Oman portal. Talking to TBY, Ithraa’s CEO Azzan Al Busaidi described the portal as “a platform dedicated to driving and facilitating investment into the Sultanate, connecting local project owners, investors, and entrepreneurs with the international business community. It is a one-stop shop for browsing, engaging and investing in Oman’s most exciting and innovative businesses.”
The outcomes of steps and initiatives taken by the government of Oman in recent years have been impressive to say the least. According to the National Centre for Statistics and Information, FDI into Oman soared to USD30.2 billion (OMR11.65 billion) in 2Q2019, up 13.3% from USD26.7 billion (OMR10.29 billion) in 2Q2018. The UK brought in USD14.67 billion of FDI into the Sultanate, followed by the UAE with USD2.96 billion, the US with USD2.32 billion, Kuwait with USD2.16 billion, and China with USD1.26 billion. Other countries that have invested heavily in Oman are Bahrain, India, the Netherlands, and Switzerland. Moreover, Oman ranks 68th in the 2020 Doing Business report by the World Bank, up 10 places YoY.

Oman’s ninth Five-Year Development Plan focuses on increasing FDI in the mining, fisheries, manufacturing, tourism, and transport and logistics sectors in order to decrease the direct contribution of oil to GDP from 44% to 26%. And going by the most recent numbers, it is safe to say Oman is doing exceptionally well at preparing itself for a post-oil future.