Oman is taking steps towards making the country a more attractive destination for foreign investment. However, to improve the country’s overall investment climate substantially, the government will need to address its increasing financial problems, lessen its dependency on oil, and open up key sectors to private sector competition and foreign investment. These measures have a renewed sense of urgency in the wake of the dual crises of the oil price collapse and COVID-19 pandemic.

Oman touts its geographic advantages and interest in attracting foreign direct investment (FDI) in key sectors. It is located just outside the Arabian Gulf and Strait of Hormuz, with proximity to shipping lanes carrying a significant share of the world’s maritime commercial traffic and access to larger regional markets.  Oman’s most promising development projects and investment opportunities involve its ports and free zones, most notably in Duqm, where the government envisions a 2,000 square kilometer free trade zone and logistics hub at the crossroads of East Africa and South Asia.

Oman promulgated five new laws in 2019 to promote investment: the Public-Private Partnership Law; the Foreign Capital Investment Law (FCIL); the Privatization Law; the Bankruptcy Law; and the Commercial Companies Law. Oman’s long awaited FCIL holds particular promise for removing minimum share capital requirements and limits on the amount of foreign ownership of an Omani company. Under the U.S.-Oman Free Trade Agreement, U.S. businesses and investors already have the right to 100 percent ownership. Although the new laws provide a legal framework to promote investment, the government has not issued many of the underlying regulations with details for their implementation.

Sultan Haitham’s smooth accession following the passing of the late Sultan Qaboos in January 2020 showed Oman’s political stability, reassuring many investors. Sultan Haitham’s business background, combined with his initial decrees and televised speeches, also raised hopes that he could right Oman’s flagging economy. However, the collapse of oil prices in March due to the COVID-19 oil demand shock, the resulting oversupply, and OPEC+ disagreements highlighted Oman’s oil dependence and chronic fiscal vulnerabilities. Recent credit downgrades also reflect skepticism about the Omani government’s efforts to raise debt, control spending, diversify the economy, and foster private sector-led economic growth.

Even before the sharp economic downturn in 2020, Oman was a challenging place to do business. Smaller companies without in-country experience or a regional presence face considerable bureaucratic obstacles. The top complaints of businesses often relate to onerous requirements to hire and retain Omani national employees and heavy-handed application of “Omanization” quotas. Payment delays to companies are pervasive across various sectors and have done harm to Oman’s image within the business community.In sum, foreign investors will need to understand where Oman’s financial management plans are going in order to restore confidence in the local credit markets. Although the government has implemented across-the-board budget cuts, officials acknowledge that these will not be enough to cover growing fiscal gaps related to the COVID-19 crisis. The government needs to undertake more fundamental reforms to truly open up Oman to foreign investment.

Table 1: Key Metrics and Rankings 
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 56 of 180 http://www.transparency.org/
World Bank’s Doing Business Report 2019 68 of 190 http://www.doingbusiness.org/
Global Innovation Index 2019 80 of 126 https://www.globalinnovationindex.org/
U.S. FDI in partner country ($M USD, stock positions) 2018 USD 1,624 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2018 USD 15, 140 http://data.worldbank.org/indicator/

Policies Towards Foreign Direct Investment

Oman actively seeks foreign direct investment and is in the process of improving the regulatory framework to encourage such investments.  The new FCIL allows 100 percent foreign ownership in most sectors and removed the minimum capital requirement. The law effectively provides all foreign investors with an open market in Oman, privileges already extended to U.S. nationals due to the provisions in the U.S.-Oman Free Trade Agreement (FTA), although the FTA goes further in providing American companies with national treatment.

The Government of Oman’s (GoO) “In-Country Value” (ICV) policy seeks to incentivize companies, both Omani and foreign, to procure local goods and services and provide training to Omani national employees.  The GoO includes bidders’ demonstration of support for ICV as one factor in government tender awards.  While the GoO initially applied ICV primarily to oil and gas contracts, the principle is now embedded in government tenders in all sectors, including transportation and tourism.  New-to-market foreign companies, including U.S. firms, may find the bid requirements related to ICV prohibitive.

Limits on Foreign Control and Right to Private Ownership and Establishment

With the implementation of the United States-Oman FTA in 2009, U.S. firms may establish and fully own a business in Oman without a local partner.  Although U.S. investors are provided national treatment in most sectors, Oman has an exception in the FTA for legal services, limiting U.S. ownership in a legal services firm to no more than 70 percent.  The government has a “negative list” that restricts foreign investment to safeguard national security interests.  The list includes some services related to radio and television transmission as well as air and internal waterway transportation.

With the implementation of the United States-Oman FTA in 2009, U.S. firms may establish and fully own a business in Oman without a local partner.  Although U.S. investors are provided national treatment in most sectors, Oman has an exception in the FTA for legal services, limiting U.S. ownership in a legal services firm to no more than 70 percent.  The government has a “negative list” that restricts foreign investment to safeguard national security interests.  The list includes some services related to radio and television transmission as well as air and internal waterway transportation.

The new FCIL also contained a “negative list” of 37 additional sectors. The Ministry of Commerce and Industry (MOCI) is applying the new law on a reported case-by-case basis, and it remains uncertain whether a 100 percent foreign-owned company can now undertake an activity which is not on the negative list.

Under the old law, foreign nationals seeking to own 100 percent shares in local companies had to seek MOCI’s approval, which required a detailed business plan highlighting the capital investment and the projected benefits to the Omani economy, including the number of local jobs to be created; the old law also required a minimum of two shareholders and two directors and minimum capital of one million Omani rials (approximately $2.6 million).

Over the past year, Oman has banned non-Omani ownership of real estate and land in various governorates and other areas the government deems necessary to restrict under Royal Decree 29/2018.  However, Oman has allowed the establishment of real estate investment funds (REIF) in order to encourage new inflows of capital into Oman’s property sector.  The new regulations permit foreign investors, as well as expatriates in Oman, to own units in REIFs.  In January, Oman’s first REIF (Aman) launched an initial private offering valued at $26 million for Omani and non-Omani investors.

Other Investment Policy Reviews

Oman has not undergone any third-party investment policy reviews in the past six years.  The last WTO Trade Policy Review was in April 2014  (Link to 2014 report: https://www.wto.org/english/tratop_e/tpr_e/tp395_e.htm .)

Business Facilitation

The GoO has tasked the Public Authority for Investment Promotion and Export Development (Ithraa) with attracting foreign investors and smoothing the path for business formation and private sector development.  Ithraa works closely with government organizations and businesses based in Oman and abroad to provide a comprehensive range of business support.  Ithraa also offers a comprehensive range of business investor advice geared exclusively to support foreign companies looking to invest in Oman, based on company-specific needs and key target sectors identified under the country’s diversification program. In November 2019, Ithraa launched a new “Invest in Oman” portal with some information about investment opportunities.

The GoO has tasked the Public Authority for Investment Promotion and Export Development (Ithraa) with attracting foreign investors and smoothing the path for business formation and private sector development.  Ithraa works closely with government organizations and businesses based in Oman and abroad to provide a comprehensive range of business support.  Ithraa also offers a comprehensive range of business investor advice geared exclusively to support foreign companies looking to invest in Oman, based on company-specific needs and key target sectors identified under the country’s diversification program. In November 2019, Ithraa launched a new “Invest in Oman” portal with some information about investment opportunities.

MOCI has an online business registration site, known as “Invest Easy” (business.gov.om ), and businesses can obtain a Commercial Registration certificate from MOCI in approximately three or four days.  However, commercial registration and licensing decisions often require the approval of multiple ministries, slowing down the process in many cases.  In 2019, MOCI set up the Investment Services Center (ISC) to integrate as many as 75 government agencies and private sector service providers into its “Invest Easy” portal in 2020 so it can serve as a single window for businesses in Oman. The various investment promotion entities and online portals appear to have overlapping and possibly redundant roles.

Outward Investment

The government neither promotes nor provides incentives for outward investment but does not restrict its citizens from investing abroad.

Although Oman does not have a bilateral investment treaty (BIT) with the United States, there is a chapter governing investment in the FTA.  Oman has 26 BITs with the following countries:  Algeria, Austria, Belarus, China, Croatia, Egypt, Finland, France, Germany, India, Iran, Italy, Republic of Korea, Lebanon, Morocco, Netherlands, Pakistan, Singapore, Sudan, Sweden, Switzerland, Tunisia, Turkey, United Kingdom, Uzbekistan, and Yemen.

Oman does not have a bilateral taxation treaty with the United States, but it has signed double taxation treaties with 34 countries.

The legal, regulatory, and accounting systems in Oman remain less than fully transparent and new policies are often ambiguous.  There are no regulatory processes managed by community organizations or private sector associations.  Ministries or regulatory agencies do not solicit comments on proposed regulations from the general public and do not conduct impact assessments of proposed regulations.  There is no requirement for periodic review of regulations.

Although reforms enacted in 2011 expanded the policy review function of the Majlis Oman, or Council of Oman (Oman’s parliamentary body), its powers remain limited.  Omani community organizations and private sector associations do not play a significant role in the regulatory environment.

The Ministry of Legal Affairs (MOLA) prepares and revises draft laws, drafts royal decrees, and negotiates international agreements and contracts in which the GoO is one of the involved parties.  MOLA also gives legal opinions and advice on matters from other ministries and government departments.  Its website contains copies of actual royal decrees and some ministerial decisions, mostly in Arabic, but some have English translations.  It also publishes Oman budget documents within a reasonable period of time.   Oman’s Capital Market Authority (CMA) is in the process of developing an updated legal framework for the capital markets sector. The new Commercial Companies Law (CCL) promulgated in 2019 seeks to create a more transparent and robust corporate governance system by imposing rules on shareholders and boards of directors. The government expects to release executive regulations for the CCL in July.

Oman’s budget is widely and easily accessible to the general public, including online on MOLA’s website and via the Official Gazette.  The government maintains off-budget accounts, including sovereign wealth funds.  Their portfolios are opaque, and transfers to and from these funds are only included in the debt-financing section of the budget as a debt financing mechanism.  Limited information on debt obligations is publicly available.

International Regulatory Considerations

As a member of the GCC, Oman largely follows its regional regulatory system.  In 2013, GCC Member States issued regulations on the GCC Regional Conformity Assessment Scheme and GCC “G” Mark in an effort to “unify conformity marking and facilitate the control process of the common market for the GCC members, and to clarify requirements of manufacturers.”  U.S. and GCC officials continue to discuss concerns about consistency of interpretation and implementation of these regulations across all six GCC Member States, as well as the relationship between national conformity assessment requirements and the GCC regulations.

As a member of the GCC, Oman largely follows its regional regulatory system.  In 2013, GCC Member States issued regulations on the GCC Regional Conformity Assessment Scheme and GCC “G” Mark in an effort to “unify conformity marking and facilitate the control process of the common market for the GCC members, and to clarify requirements of manufacturers.”  U.S. and GCC officials continue to discuss concerns about consistency of interpretation and implementation of these regulations across all six GCC Member States, as well as the relationship between national conformity assessment requirements and the GCC regulations.   As Oman is a member of the WTO, it is committed to update the WTO Committee on any Technical Barriers to Trade (TBT).  Oman’s Trade Facilitation Agreement (TFA) with the WTO entered into force on February 22, 2017.

Legal System and Judicial Independence

Oman’s legal system is code-based, but incorporates elements from a variety of legal traditions, most notably modern English and French law, as well as Islamic law in the Ibadhi interpretation.

Oman has a written commercial law and specialized commercial courts. Oman’s Commercial Court is responsible for resolving business disputes.  The Commercial Court has jurisdiction over most tax and labor cases, and can issue orders of enforcement of decisions.  The Commercial Court can accept cases against governmental bodies, but can only issue, and not enforce, rulings against the government.  The Commercial Court replaced the Authority for Settlement of Commercial Disputes.

Oman’s judicial system is independent and reliable, though the procedures can be long and many steps are required to initiate a case.  Oman’s multi-level court system has an appeals process. The Supreme Court is the court of last resort for appeals of regulations and enforcement actions.

Laws and Regulations on Foreign Direct Investment

The new FCIL removed the minimum share capital requirement, which was RO 150,000 (about $390,000) under the old law. The FCIL also eliminated the 70 percent limit on foreign ownership of an Omani company. While the GoO has not issued any ministerial decisions or executive regulations to clarify the new FCIL, MOCI released an unofficial “negative list” of 37 commercial activities that are prohibited to foreign investors.

“Invest Easy” (http://business.gov.om/ ) is an online portal that enables business owners and investors to get the business procedures done easily in a short time.  According to the website, the main purpose of “Invest Easy” is to provide citizens, entrepreneurs, and prospective businesses and investors with the services and information they need quickly and efficiently.

Competition and Anti-Trust Laws

Oman does not screen investments for competition considerations, and Oman does not have an active competition commission.  The Competition and Anti-Monopoly Law (Royal Decree No. 67/2014), promulgated in December 2014, aims to combat monopolistic practices by prohibiting anti-competitive agreements and price manipulation.  It includes a reporting requirement for any activity, such as mergers and acquisitions, which results in a dominant market position for one firm.  A 2018 royal decree established a Competition Protection and Monopoly Prevention Center.

Expropriation and Compensation

Oman’s interest in increased foreign investment and technology transfer make expropriation or nationalization unlikely.  In the event that a property is nationalized, Article 11 of the Basic Law of the State stipulates that the Government of Oman must provide prompt and fair compensation.  There are no recent examples of expropriation or nationalization.

Dispute Settlement

ICSID Convention and New York Convention

Oman is a party to the International Convention for the Settlement of Investment Disputes between States and Nationals of other States (ICSID) and the United Nations New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

In June 2018, Oman sued U.S. mining company owner Adel Hamadi Al Tamini in Massachusetts federal court for a $5.6 million arbitration award issued against him by ICSID.  In 2011, Al Tamini filed a claim against the Government of Oman alleging that it improperly ended limestone mining leases that violated his rights under the FTA.  The Tamini case was the first ICSID case filed against Oman and the first case filed under the bilateral FTA.  An ICSID tribunal dismissed the claim and rendered an award for Oman, which the government is now seeking to enforce.

Investor-State Dispute Settlement

Oman has a modern arbitration law that is largely based on the United Nations Commission on International Trade Law (UNCITRAL) model. Pursuant to its arbitration law, an arbitration agreement must be in writing, and it can be in one or more instruments.  The parties are free to choose any law relating to the arbitration agreement and, in the absence of an explicit law, the courts are given the power to make the determination.  Additionally, there are specific dispute resolution mechanisms through the FTA that can assist Omani and U.S. companies in resolving disputes outside of the Omani legal system.

International Commercial Arbitration and Foreign Courts

Many corporate entities in Oman are increasingly turning to arbitration to resolve their disputes, since arbitration is considered a more efficient and reliable mechanism than court processes. An arbitral award is usually rendered in Oman within 12 months after the aggrieved party states in writing that a dispute has arisen.  In contrast, court processes can often be much lengthier, particularly where technically complex issues are involved.  Cases normally go through three tiers of justice (Primary, Appeal, and Supreme), lengthening the process.

The Omani Arbitration Law (Royal Decree 47/97 as amended) defines the term “arbitration” as a dispute resolution mechanism agreed to by parties of their own volition.  Usually, the parties will state in their initial contract that any dispute will be resolved by arbitration pursuant to, for instance, the Omani Arbitration Law.  The Law mandates that an arbitration agreement should be in writing.  It is also permissible for parties to agree in writing, once a dispute has arisen, to resolve it by arbitration.  In such cases, however, the agreement has to specify the underlying issues that the parties have agreed to resolve by arbitration.

The Omani government recognizes binding international arbitration of investment disputes with foreign investors, though the government has increasingly challenged rulings in favor of foreign companies in payment collection cases.  The government has been slow in the payment of some arbitration awards to foreign companies.  Oman’s legal framework provides for the enforcement of international arbitration awards and most foreign companies elect for dispute resolution by arbitration.  Arbitration is generally cheaper, quicker, and easier than settling commercial disputes in the normal court system, where judges often lack expertise on technical commercial issues.

Bankruptcy Regulations

Oman introduced a new Bankruptcy Law in 2019 under a royal decree. The main provisions of the new law involve the concepts of restructuring and preventive compositions. Other provisions of the new law prescribing expert input and instituting strict timelines into bankruptcy proceedings will be beneficial to both businesses and investors in avoiding liquidation. The Bankruptcy Law will apply to foreign agencies and branches of foreign companies established in Oman, but exclude entities licensed by the Central Bank of Oman and insurance companies. The new law will come into force in July 2020 and implementing regulations will provide greater clarity. According to the World Bank, it takes on average three years to complete foreclosure proceedings in Oman, and the cost of resolving bankruptcy as a percentage of the estate (3.5 percent) is lower in Oman than elsewhere the region.  In 2019, the World Bank ranked Oman 97th in the world for resolving insolvency, up three slots from the previous year. Oman ranks higher than many other countries in the region for resolving insolvency.

According to the World Bank, it takes on average three years to complete foreclosure proceedings in Oman, and the cost of resolving bankruptcy as a percentage of the estate (3.5 percent) is lower in Oman than elsewhere the region.  In 2019, the World Bank ranked Oman 97th in the world for resolving insolvency, up three slots from the previous year. Oman ranks higher than many other countries in the region for resolving insolvency.

Investment Incentives

Oman’s offers several incentives to attract foreign investors such as competitive lease rates for certain types of companies established in recognized industrial estates, free zones, and specific locations, but only on a case-by-case basis.  Oman established an independent tax authority under a royal decree issued in April. Oman has no personal income or capital gains tax.

However, some of Oman’s investment incentives have diminished in recent years.  Most industrial and commercial consumers now pay cost-reflective tariffs for utilities. Oman’s overhaul of its corporate tax law in 2017 eliminated many tax exemptions for foreign investors. Oman taxes corporate earnings at 15 percent.

Foreign Trade Zones/Free Ports/Trade Facilitation

The government has established free trade zones to complement its port development projects in Duqm, Salalah, and Sohar.  These areas include strategically located ports and are well connected with modern infrastructure and facilities.  An incentive package for investors includes a tax holiday, duty-free treatment of all imports and exports, and tax-free repatriation of profits.  Additional benefits include streamlined business registration, processing of labor and immigration permits, assistance with utility connections, and lower “Omanization” employment quota requirements.  Foreign-owned firms have the same investment opportunities as Omani entities.

Performance and Data Localization Requirements

Since 1988, the GoO has had a labor market policy of Omanization, which includes employment quotas for Omani nationals.  These quota targets vary depending on the sector; they can be as low as 10 percent in the Special Economic Zone at Duqm (SEZAD) and as high as 90 percent, for example, in the banking sector.  Most government ministries have achieved Omanization rates at or near 100 percent.

Omanization targets are prevalent throughout the private sector but the government enforces them inconsistently.  In practice, each company in Oman submits an Omanization plan to the Ministry of Manpower (MoM), which has the authority to reduce the requirements for some businesses and to adjust required Omanization percentages accordingly.  In response to the economic fallout from the COVID-19 pandemic, the MoM adopted stronger measures to force companies to increase their employment of Omanis and also to ensure that Omanis are not terminated from their jobs.

Employers seeking to hire expatriate workers must seek a visa allotment from the MoM and Royal Oman Police (ROP).  The MoM and ROP scrutinize specific visas allocations, and they often use opaque criteria.  Foreign investors complain of the difficulty in hiring expatriates to the point that it frustrates or deters companies from investing in Oman.  The ROP still requires expatriate workers to leave and remain outside the country for two years between changing employers (unless the initial employer agrees otherwise).  Persons may seek exemptions to this rule from the ROP on a case-by-case basis.

In January 2018, the MoM issued a decree that imposed a six-month ban on visas for expatriates in 87 job categories across 10 private sector industries.  The MoM has extended the dates for this ban several times and has added additional job categories to the visa ban.  The decree does not apply to business owners registered with the Public Authority for Small and Medium Enterprise Development (Riyada) or to the owners insured by the Public Authority for Social Insurance.

Currently, Oman does not have any requirements for companies to turn over source code or to provide access to surveillance.  However, the Telecommunications Regulatory Authority (TRA) requires service providers to house servers in Oman if they are to provide services in Oman.  The TRA is the lead agency on establishing data quotas in Oman.

Real Property

Oman does not recognize or enforce securitized interests in property, both moveable and real. Mortgages and liens exist in the country.  Foreign nationals are generally not able to own real estate in Oman, other than residential property located in a few designated Integrated Tourism Complexes.  Individuals record their interest in property with the Land Registry at the Ministry of Housing.  The legal system, in general, facilitates the acquisition and disposition of property rights.

There are lands reserved for tribal use and ownership, but there are no clear definitions or regulations governing these lands.  These tribes legally own the land, as opposed to the government owning the land, and therefore control access and any commercial activities.

According to the World Bank, it takes 18 days on average to register property, and the cost of the registration process as a percentage of the property value (five percent) is lower in Oman than elsewhere the region.  In 2018, the World Bank ranked Oman 52nd in the world for registering property, and Oman ranked higher than many other countries in the region.

Intellectual Property Rights

Oman has a relatively robust legal and regulatory framework for Intellectual Property Rights (IPR) protection. Oman was not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

U.S. stakeholders have experienced difficulty getting appropriate agencies, including the Public Authority for Consumer Protection, the Public Prosecution, MOCI, and the ROP, to take IPR enforcement action.  Adding to the lack of efficiency in IPR enforcement is the continued confusion about which government agencies are responsible for investigating different types of IPR violations.

Public Authority for Consumer Protection officials have confirmed that they do not accept responsibility for complaints arising from brand-owners; they only take action on consumers’ complaints.  MOLA also confirmed that the Law of Copyrights and Neighboring Rights (Royal Decree No. 65/2008) stipulates that the MOCI shall be responsible for IPR enforcement at the retail level, including inspections and seizures.

Oman revised its intellectual property and copyright laws to comply with its obligations under the 2009 U.S.-Oman FTA.  As a result, Oman offers increased IPR protection for copyrights, trademarks, trade secrets, geographical indications, and patents.  FTA-related revisions to IPR protection in Oman built upon the existing IPR regime, already strengthened by the passage of WTO-consistent intellectual property laws on copyrights, trademarks, industrial secrets, geographical indications, and integrated circuits.  The FTA’s chapter on IPR can be found at: https://om.usembassy.gov/business/u-s-oman-free-trade-agreement/texts-free-trade-agreement/

Oman is a member of the World Intellectual Property Organization (WIPO) and is registered as a signatory to the Madrid, Paris, and Berne conventions on trademarks and intellectual property protection.  Oman has also signed the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty.  Oman is also a signatory to the International Convention for the Protection of New Varieties of Plants.

Trademark laws in Oman are Trade Related Aspects of Intellectual Property Rights (TRIPs) compliant.  MOCI registers trademarks and notes them in the Official Gazette.  Local law firms can assist companies with the registration of trademarks.  Oman’s copyright protection law extends protection to foreign copyrighted literary, technical, or scientific works; works of the graphic and plastic arts; and sound and video recordings.  In order to receive protection for a foreign-copyrighted work, the rights holder must register the work with the Omani government by depositing a copy of it with the government and paying a fee.  Trademarks are valid for 10 years while patents are generally protected for 20 years.  Literary works, software and audiovisual content receive protection for 50 years.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at: https://www.wipo.int/directory/en/details.jsp?country_code=OM .

Resources for Rights Holders:

Ministry of Commerce and Industry – Department of IPR Enforcement
Director of Intellectual Property
Ahmed Al-Saidi
Tel: +968- 9942-1551
Fax: +968-2481-7412
E-mail:  saidy3916@yahoo.com
Web: http://www.moci.gov.om/ 

Oman Chamber of Commerce & Industry
Dr. Al Fadhil bin Abbas al-Hinai, CEO
Tel: +968-2479- 9146
Fax: +96-2479-1713
E-mail: adheem@chamberoman.om
Web: www.chamberoman.om 

U.S. Patent & Trademark Office
Regional IP Attaché
Pete C. Mehravari
Intellectual Property Attaché for the Middle East & North Africa
U.S. Embassy Kuwait City, Kuwait
U.S. Department of Commerce Foreign Commercial Service, U.S. Patent & Trademark Office
Tel: +965 2259 1455
E-mail: Peter.mehravari@trade.gov
Web: https://www.uspto.gov/learning-and-resources/ip-policy/intellectual-property-rights-ipr-attach-program/intellectual  

United States Trade Representative
IPR Director for the GCC
Sung Chang
Tel: +1 (202) 395-9564
E-mail: Sung.E.Chang@ustr.eop.gov
Web: http://www.ustr.gov 

U.S. Department of Commerce – International Trade Administration
IPR Lawyer
Kevin Reichelt
Tel: +1-202-482-0879
E-Mail: Kevin.reichelt@trade.gov
Web: http://www.trade.gov/cs/‎ 

Capital Markets and Portfolio Investment

There are no restrictions in Oman on the flow of capital and the repatriation of profits.  Foreigners may invest in the Muscat Securities Market (MSM) so long as they do so through an authorized broker.  Access to Oman’s limited commercial credit and project financing resources is open to Omani firms with foreign participation.  At this time, there is not sufficient liquidity in the market to allow for the entry and exit of sizeable amounts of capital.  According to the 2017 annual report on exchange arrangements and exchange restrictions of the IMF, Article VIII practices are reflected in Oman’s exchange system.

The Commercial Companies Law requires the listing of joint stock companies with capital in excess of $5.2 million.  The law also requires companies to existence for two years before their owners can float them for public trading.  Publicly traded firms in Oman are still a relatively rare phenomenon; the majority of businesses are private family enterprises.

Money and Banking System

The banking system is sound and well-capitalized with low levels of non-performing loans and generally high profits.  Oman’s banking sector includes eight local banks, nine foreign banks, two Islamic banks, and two specialized banks.  Bank Muscat, the largest domestic bank operating in Oman, has $28.1 billion in assets.  The Central Bank of Oman (CBO) is responsible for maintaining the internal and external value of the national currency.  It is also the single integrated regulator of Oman’s financial services industry.  The CBO issues regulations and guidance to all banks operating within Oman’s borders.  Foreign businesspeople must have a residence visa or an Omani commercial registration to open a local bank account.  There are no restrictions for foreign banks to establish operations in the country as long as they comply with CBO instructions.

Foreign Exchange and Remittances

Foreign Exchange

Oman does not have restrictions or reporting requirements on private capital movements into or out of the country.  The Omani rial (RO) is pegged at a rate of RO 0.3849 to $1, and there is no difficulty in obtaining exchange.  In general, all other currencies are first converted to dollars, then to the desired currency; national currency rates fluctuate, therefore, as the dollar fluctuates.  The government has consistently stated publicly that it is committed to maintaining the current peg.  The government has stated publicly that it will not join a proposed GCC common currency.  There is no delay in remitting investment returns or limitation on the inflow or outflow of funds for remittances of profits, debt service, capital, capital gains returns on intellectual property, or imported inputs.

Remittance Policies

Oman does not restrict the remittance abroad of equity or debt capital, interest, dividends, branch profits, royalties, management and service fees, and personal savings, but it does apply withholding tax to many of these transfers at a rate of 10 percent.  Because Oman’s currency is pegged to the dollar, the GoO is unable to engage in currency manipulation tactics.  Investors can remit through legal parallel markets utilizing convertible, negotiable instruments.  There are no surrender requirements for profits earned overseas.

The GCC, of which Oman is a member, is a member of the Financial Action Task Force (FATF) and its regional body.  In February 2019, Oman hosted a workshop on combating money laundering and terrorism in cooperation with FATF.  The level of compliance of Oman’s anti-money laundering and counter-terrorist financing regime with the FATF Recommendations is comparatively high for the region, and the legal framework is sound.  However, the government has not yet fully addressed a number of gaps, including completing the certification procedures for anti-money laundering/countering the financing of terrorism (AML/CFT), issuing AML/CFT regulations to the sectors identified in Oman’s CFT law, and designating wire transfer amounts for customer due diligence procedures.  Statistics regarding suspicious transaction reports, investigations, and convictions are not widely available.

Sovereign Wealth Funds

The State General Reserve Fund (SGRF) is Oman’s principal Sovereign Wealth Fund.  The SGRF joined the International Forum of Sovereign Wealth Funds in 2015 as a full member and follows the Santiago Principles.  Omani law does not require sovereign wealth funds to publish an annual report or submit their books for an independent audit.  Many of the smaller wealth funds and pension funds actively invest in local projects.

The SGRF focuses on two main investment categories: Public Markets Assets (tradable) that include global equity, fixed income bonds and short-term assets, and Private Markets Assets (non-tradable) which includes private investments in real estate, logistics, services, commercial, and industrial projects.

State-Owned Enterprises (SOE) are active in many sectors in Oman, including oil and gas extraction, oil and gas services, oil refining, liquefied natural gas processing and export, manufacturing, telecommunications, aviation, infrastructure development, and finance.  The government does not have a standard definition of an SOE, but tends to limit its working definition to companies wholly owned by the government and more frequently refers to companies with partial government ownership as joint ventures.  The government does not have a complete, published list of companies in which it owns a stake.

In theory, the government permits private enterprises to compete with public enterprises under the same terms and conditions with access to markets, and other business operations, such as licenses and supplies, except in sectors deemed sensitive by the Omani government such as mining, telecom and information technology. SOEs purchase raw materials, goods, and services from private domestic and foreign enterprises.  Public enterprises, however, have comparatively better access to credit.  Board membership of SOEs is composed of various government officials, with a cabinet-level senior official usually serving as chairperson.

SOEs receive operating budgets, but, like budgets for ministries and other government entities, the budgets are flexible and not subject to hard constraints.  The information that the GoO published about its 2020 budget did not include allocations to and earnings from most SOEs.

Privatization Program

The GoO has indicated that it hopes to reduce its budget deficits by privatizing or partially privatizing some government-owned companies.  Although the plan for privatization is not publicly available, the GoO has already begun to reorganize its some of its holdings for public offerings.

In March, State Grid Corporation of China (SGCC) acquired a 49 per cent stake in Nama Holding, a government-owned holding company for five electricity transmission and distribution companies. The government’s divestment of a portion of its ownership in telecommunications firm Omantel is one example of a past partial privatization.  In this case, the government offered Omantel stock on the Muscat Securities Market, but only to Omani investors.

The government allows foreign investors to participate fully in some privatization programs, even in drafting public-private partnership frameworks.  In July 2019, Oman established the Public Authority for Privatization and Partnership (PAPP), which is reportedly examining 38 public-private partnership projects for implementation. Forthcoming executive regulations for the new Privatization law reportedly will clarify the role of PAPP in public-private partnerships.

Responsible business conduct is generally referred to as corporate social responsibility (CSR) in Oman, where the term carries a different connotation than in other parts of the world.  In Oman, CSR programs are organized, “extra-curricular” programs hosted and supported by a business entity to engender goodwill in the community and to provide a social benefit.  Examples include:  competitions in elementary and secondary schools for academic performance and artistic skill; sponsorship of charitable, academic, and social events; entrepreneurship incubators; and women’s or tribal empowerment events.

The press covers consumer rights violations, mostly the sale of expired food or counterfeit medicine or car parts.  There is a general culture of accountability, and a sense that companies who violate these tenets of corporate social responsibility will suffer in business and market share.

There are no independent consumer organizations promoting CSR. However, many business associations, including the Oman American Business Center (the local AmCham affiliate), pursue CSR initiatives as a part of their annual activities.  Companies generally follow CSR guidelines set forth by the Organization for Economic Cooperation and Development (OECD). In March, Oman’s Council of Ministers directed state-owned companies to allocate a portion of their CSR budgets to support training programs/employment of Omani citizens. Additionally, each government ministry has a department dedicated to facilitating CSR compliance and initiatives.  The government has not waived regulations promoting CSR to attract foreign investment.

U.S. businesses do not identify corruption as one of the top concerns of operating in Oman.

The Sultanate has the following legislation in place to address corruption in the public and private sectors:

1) The Law for the Protection of Public Funds and Avoidance of Conflicts of Interest (the “Anti-Corruption Law” promulgated by Royal Decree 112/2011).  The Law predominantly concerns employees working within the public sector.  It is also applicable to private sector companies if the government holds at least 40 percent shares in the company or in situations where the private sector company has punishable dealings with government bodies and officials.

2) The Omani Penal Code (promulgated by Royal Decree 7/2018).  In January 2018, the GoO issued a new penal code that completely replaced Oman’s 1974 penal code.  Minimum sentencing guidelines for public officials guilty of embezzlement increased from three months to three years.  The definition of “public officials” expanded to include officers of parastatal corporations in which the GoO has at least a 40 percent controlling interest.  The new penal code may make Oman seem more investment-friendly, by virtue of modern references to corporations as legal entities, as an example.  However, its language on money laundering is still ambiguous and descriptions of licit and illicit banking are unclear, potentially contributing to confusion about investment regulations.

A lack of domestic whistleblower protection legislation in Oman has resulted in the private sector taking the lead in enacting internal anti-bribery and whistleblowing programs.  Omani and international companies doing business in Oman that plan on implementing anti-corruption measures will likely find it difficult to do so without also putting in place an effective whistleblower protection program and a culture of zero tolerance.

Ministers are not allowed to hold offices in public shareholding companies or serve as the chairperson of a closely held company.  However, many influential figures in government maintain private business interests and some are also involved in public-private partnerships.  These activities either create or have the potential to create conflicts of interest.  In 2011, the Tender Law (Royal Decree No. 36/2008) was updated to preclude Tender Board officials from adjudicating projects involving interested relatives to “the second degree of kinship.”

It is not yet clear if Sultan Haitham will prioritize rooting out corruption. The late Sultan dismissed several ministers and senior government officials for corruption during his reign. In response to public protests in 2011, a royal decree expanded the powers of the State Financial and Administrative Audit Institution (SFAAI).

Oman has stiff laws, regulations, and enforcement against corruption, and authorities have pursued several high profile cases.  In March 2019, local press and social media focused intensely on an embezzlement scandal and the subsequent arrest of employees at the Ministry of Education. The Courts have signaled that corruption will not be tolerated.

In an extra attempt to prevent and eradicate corruption in the Sultanate of Oman, Oman joined the United Nations Convention Against Corruption (the “UNCAC”) in 2013.  Oman is not a party to the OECD Convention on Combating Bribery.

Resources to Report Corruption

State Audit Institution
Phone number: +968 8000 0008

There are no “watchdog” organizations operating in Oman that monitor corruption.

Oman is stable, and politically-motivated violence is rare.  Incidents of violence were associated with Arab Spring-related demonstrations in 2011, including several demonstrations that resulted in blocked pedestrian and vehicle access to the Port of Sohar. Omani law provides for limited freedom of assembly, and the government allows some peaceful demonstrations to occur.  The transition to power of Sultan Haitham on January 11, 2020 was peaceful, smooth, and well orchestrated.

Oman’s labor market is a significant factor for foreign business and investors to consider. Sultan Haitham made clear in his first royal decrees and nationally televised speeches that addressing unemployment among Omani nationals would be a top priority.

Unemployment figures in Oman vary, but the most severely impacted demographic is young men.  There are no available statistics about employment in the informal economy, but this sector is mostly limited to agriculture and fishing in rural areas.

Omani national private sector employees often work in administrative or managerial roles carved out for them through Omanization.  Most drivers and secretaries are required to be Omanis across all sectors.  Generally speaking, there is a surplus of workers in desirable fields, such as information technology and engineering.  There is a shortage of workers in labor-intensive sectors, particularly construction, due to Omanization laws curbing the number of foreign workers who can be brought in to fulfill these roles.  Foreign workers play a significant role in the Omani economy. Indians and Bangladeshis alone constitute more than half of the workforce.

Omani citizens enjoy a high degree of protection, making labor dispute resolution very difficult and lengthy.  Both the MoM and the courts have broad powers to reinstate Omani national employees or mandate a severance package that provides pay for several months or, in some cases, several years.  Foreign workers may also appeal termination to the MoM but have less legal protection.

While unions are allowed to operate in the private sector, they are not very influential and do not engage in collective bargaining.  Most unions only exist to ensure that employers provide government-mandated benefits to employees, such as required annual raises.  Workers generally direct appeals for wage increases, by sector or throughout the economy, towards the government.  During the Arab Spring protests in 2011, the government passed a law increasing worker benefits.

There were no significant organized private sector strikes in the past year. Several small-scale protests about the lack of jobs, inadequate unemployment benefits, and recruitment policies have occurred outside MoM headquarters in Muscat and Salalah over the last few years.  The Omani government takes public concern about unemployment very seriously.

Oman is a member of the International Labor Organization (ILO).  Oman has ratified four of the eight core ILO standards, including those on forced labor, abolition of forced labor, minimum working age, and the worst forms of child labor.  Oman has not ratified conventions related to freedom of association, collective bargaining, equal remuneration, or the conventions related to the elimination of discrimination with respect to employment and occupation.

The international community has criticized Oman for insufficient efforts to detect, deter, and prosecute labor violations, including Trafficking in Persons (TIP).  An Omani official who spearheads Oman’s efforts to institute reforms to combat TIP stated in February that Oman had decided “to migrate fully” from a sponsorship (kafala) system to a contract based employment system and that the No Objection Certificate (NOC) will no longer be required for employees to seek new employment. The Council of Ministers has reportedly instructed relevant ministries to initiate implementation.

The government did not enact any new labor-related laws in 2019, though the Supreme Committee on COVID-19 issued a series of guidelines in April to bolster Omani nationals’ employment and to authorize the termination of expat laborers in response to the economic slowdown.  The government has not moved forward with a long-anticipated comprehensive labor law.  Government officials have not shared publicly the contents of any proposed draft.

Oman is eligible for Export-Import Bank of the United States (EXIM) financing, and Development Finance Corporation (DFC) insurance coverage.  In April, Oman approved a $300 million (DFC) loan and $150 million in political risk insurance for an oil exploration and production project for PetroTel Oman, LLC, the wholly-owned subsidiary of Plano, TX-based PetroTel Energy.

Unusual for a Gulf country, Oman provides export credit insurance against commercial and political risk, through the Oman Development Bank.  In addition, the independent Export Credit Guarantee Agency of Oman, a closed stock company, extends credit insurance, guarantees and financial support to Omani exporters, though its limit is $1 million per transaction.

The U.S. Embassy in Muscat purchases local currency at the fixed rate of RO 1 to $2.6.

In 2018, total FDI inflow into Oman was $4.1 billion, an increase from $2.9 billion in 2017, according to the UN World Investment Report 2019. Oman’s National Centre for Statistics and Information (NCSI) is currently the only host country source of 2018 data on FDI.  Total cumulative FDI at the end of the second quarter of 2018, was RO 9.7 billion (over $25.22 billion) compared to RO 8.3 billion (about $21.58 billion) from the second quarter of last year, a growth rate of almost 17 percent.  The United Kingdom remains by far the biggest investor in FDI, followed by the UAE, the United States, Kuwait, and China (see Table 3).

Major foreign investors that have entered the Omani market within the last five years include SV Pittie Textiles (India), Moon Iron & Steel Company (India), Sebacic Oman (India), BP (UK), Sembcorp (Singapore), Daewoo (Korea), LG (Korea), Veolia (France), Huawei (China), SinoHydro (China), and Vale (Brazil).

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy 
Host Country Statistical source* USG or international statistical source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2018 $82,200 2017 $73,700 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2017 $1,624 2018 2,131 BEA data available at
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2018 NA BEA data available at
Total inbound stock of FDI as % host GDP N/A N/A 2018 34.3 UNCTAD data available at

* Source for Host Country Data: National Centre for Statistical Analysis, 2018 Q2. 

Table 3: Sources and Destination of FDI 
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment* Outward Direct Investment**
Total Inward 30,313 100% Total Outward 16,764 100%
United Kingdom 14,703 47% UAE 1,099 N/A%
UAE 2,981 10% Saudi Arabia 288 N/A%
USA 2,333 8% India 205 N/A%
Kuwait 2,162 7% United Kingdom 77 N/A%
China 1,265 4% Kuwait 77 N/A%
“0” reflects amounts rounded to +/- USD 500,000. *Source for Host Country Data: National Centre for Statistical Analysis, 2019 Q2 (Inward). **2017 Q4 (Outward).  Data on Oman from the IMF’s Coordinated Direct Investment Survey is not available.

Table 4: Sources of Portfolio Investment
Data not available.

Economic & Commercial Officer
U.S. Embassy, P.O. Box 202, Postal Code 115, MSQ, Muscat, Sultanate of Oman
+968-2464-3623, muscatcommercial@state.gov

2020 Investment Climate Statements: Oman
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