Strategic Location
 
Oman is distinct for its strategic location, by virtue of which it controls the most ancient and important marine trade routes in the world, the route between the Arabian Gulf and the Indian Ocean.
Geographical location
 
Oman’s sea-coast stretches for 1700 kilometers and the Sultanate is considered the gateway to the Arabian Gulf. Its location also makes Oman, the meeting place of the Asian and African continents.
Marketing location
 
The GCC states offer a large consumer market catering to around 28 million people with a high purchasing power. Besides, Oman is closer to the Iran and Yemen markets which cater to around 82 million consumers. The Sultanate also lies between the markets of the Indian sub-continent and the East African coast. It is also strategically located near the landlocked Central Asian Republics.
Political Stability
 
Security and stability are two basic elements of development and Oman is characterized with both. Oman has very good relations with its neighbors as well as other countries of the world.
Economic Resources
 
    • Oil reserve: Oman’s oil reserves are estimated to be around 5.75 billion barrels and its daily oil   production is    around 954,800 barrels or 344 million barrels per annum.
 
    • Gas reserve: Oman’s gas reserves are estimated to be around 29.8 trillion cubic feet and Petroleum Development Oman (PDO) is processing part of it for the local demand
 
    • Mineral ores: Several natural minerals are available in Oman, which can be processed locally. These include, among other minerals, copper (around 25 million tons) and gold (around 1.5 million tons).
Conducive Economic Policies
 
    • Free economy and full competitiveness
      Oman’s economy is based on the free economy concept where competition, free markets and price mechanism concepts prevail. The market economy remains the main focus of Oman’s strategy since its modern renaissance and the state encourages and supports the private sector enterprises.
 
    • Freedom of Money Transfer
      There are no exchange controls in Oman. Capital and income may be repatriated abroad without any restriction.
Appropriate investment policies
 
The Sultanate had realized the need to introduce radical and effective reforms on the general investment climate to attract both local and foreign investments. New trade and investment laws were framed providing better degrees of vitality and flexibility to contain the international developments so as to serve the interests of the Omani economy regionally and internationally.

The Omani government supports the private sector to provide appropriate climate to launch the private sector enterprises and to stimulate trade and investment activities, through the following steps:
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    • Providing infrastructures (industrial estates, ports development, etc.)
    • Framing appropriate and flexible trade and investment legislation.
    • Establishing good regional and international economic relations and opening up to the international economy.
    • Creating active institutions to promote investment and to develop exports.
    • Laying down privatization programs to increase investment opportunities.
    • Laying down clear and specific strategies and priorities to various manufacturing sectors.
    • Incentives and loans regulations.
    • Provision of trade related information
    • Developing and updating the financial sector.
Excellent Infrastructure
 

Transport

Construction of infrastructure facilities began based on the objectives of the first Five-Year-Plan (1976-1980) which coincided with the oil boom period. This prompted the growth of non-oil sectors. Oman now has 8,477 kilometers of paved roads

There is a modern international airport that handles around 38,184 inbound and outbound flights and around 2.7 million passengers per annum.

Furthermore, Oman’s modern seaports (Mina Sultan Qaboos, Muscat and Salalah Port) and other utilities compliment the industrial sector as they act as the export points for the national products. The expansion of the Salaam port, which is close to major international container traffic route between Europe and the Far East, is aimed at making Oman an international re-export center. The Sohar port is also one of the important natural ports in Oman as its waters are deep and is not affected by sea conditions.
 

Telecommunications

The Sultanate is served by an efficient, state-of-the art telecommunications system that is continuously being upgraded with new technology. The entire transmission network is gradually being replaced with fiber optic cables, and is almost 100% digital. Satellite links allow sending and accessing data rapidly. A full range of Internet services is available, making global information and quick communication freely accessible to all.

Investment and Financial Institutions
 

In order to promote investment, the Omani Centre for Investment Promotion and Export Development (OCIPED) was set up which is now in full force. Foreign commercial representation offices are also being considered.

Muscat Securities Market (MSM) which was set up in 1989 with objective of creating opportunities for investing in securities. MSM deals in both corporate and Government securities, such as treasury bills and bonds.

Capital Market Authority (CMA), a Government authority, acts as a regulator and is responsible for organizing and overseeing the issue and trading of securities in Oman. Muscat Depository and Securities Registration Company, is the sole provider of services relating to registration and transfer of ownership of securities and safekeeping of
Privatization Policy
 

After having established most of the essential development requirement and provided the favorable climate for investment, the Omani Government saw that the private sector should be encouraged to participate effectively in the development. It, therefore, adopted a number of policies and measures to promote the private sector. One of such policies was the privatization policy that got commenced in the early eighties. The Government uses the following methods for privatizing its assets:
 
    • Direct sale of government shares and assets.
    • Offering the capital increase for production capacity expansion projects for direct public subscription.
    • Granting concessions to set up projects against investment on BOOT (build, own, operate and transfer) basis.
 
Oman’s privatization process is based on several policies as set out in the fifth five-year plan, which includes the following:
 
    • Privatization forms a part of the government’s program aimed achieving sustained development and to raise the growth ratios and to distribute the fruits of development to all regions and all sections of the public.
    • Priority in privatization shall be given to service sectors that operate on a commercial basis such as sewage, electricity, water, communications, speedways, etc. However, while privatizing these services, the financial and administrative capability of the private sector to run such activities should be taken into consideration.
    • More than one company shall be set up, as far as possible, to provide the required service, in order to have competition among them and whereby the Government can evaluate and compare the performance and efficiency of each of them.
    • Foreign participation in the privatization projects shall be encouraged in order to benefit from the foreign capital and technical and managerial expertise. However, this shall be pursuant to the provisions of the Foreign Capital Investment Law.
Agreements on Investment Promotion and Protection
 
In order to boost investment cooperation between Oman and other countries of the world, the Sultanate had signed more than 35 agreements on promotion and protection of joint investments, with 25 countries such as Jordan, Yemen, USA, Tunisia, etc. Oman has also signed agreements on avoiding double taxations with France, India UK, Pakistan, Italy, Egypt, Lebanon, Algeria, Tunisia, Mauritius, Russia, China and Yemen till the end of August 2002.
With its accession to WTO, Oman now get the benefits of the developing countries and it can now resort to the WTO rules and regulations to settle commercial disputes with other countries.
In line with its policy of promoting investments, Oman had issued the Copyright Law in 1996. Earlier the Sultanate had promulgated the Law of Trade Marks and Information and Patenting. Oman also has joined the World Intellectual Property Organization (WIPO).
Terms and conditions for import of commodities to Oman
 

The following terms and conditions shall be met by importers:

    • The importer should be an establishment owned by Omani citizens, only or a company established in accordance with the prevailing laws of the Sultanate of Oman.
    • If the company has non-Omani partners, the share of Omani citizens in its capital should not be less than 51%.
    • The place of business or head office of the company/establishment should be in Oman.
    • The company/establishment should be registered with the Commercial Registry at the Ministry of Commerce and Industry and a member of Oman Chamber of Commerce and Industry
      Importation should be one of the activities of the company/establishment.
    • The imported commodity should be one of the goods allowed to be imported by the company/establishment as per the importation form issued by the Ministry of Commerce and Industry.
    • The importer should provide spare parts and maintenance in case of commodities that require them.
    • The country of origin of all commodities imported into Oman should be written on them. If they were foodstuff, all details should be written in Arabic (such as the contents, country of origin, date of production and expiry, volume or weight).
    • The imported commodities should not be among those prohibited because of not conforming to the standard specifications applied in Oman, or those totally barred from importing, or those require prior approval from competent authorities, such as arms and ammunition, alcoholic beverages, currencies, narcotics, etc.)
    • The imported goods should be accompanied by documents proving their origin, type and nature.
Services:
 

Oman is committed to allow the entry of Foreign Service providers in the following sectors:

    • Communication
    • Banking and finance
    • Insurance
    • Marine transport
    • Professional services (e.g. legal and accounting)
    • Business services (e.g. computer, management consultancy, advertising)
    • Construction
    • Education, health and environment
    • Audi-visual
    • Distribution

Oman has fixed an upper ceiling for foreign participation starting from 49% to 70%, with effect from January 2001, to be implemented by the Ministry of Commerce and Industry.

Regarding the sensitive sectors, foreign participation in them has been extended to the lowest level even after the year 2000 in some sectors such as films and cartoon films distribution (49%), owning and operating cinemas (51%) restaurants (49%) air transport selling and marketing (51%), on-line reservation (51%) storage and warehousing (51%) and packaging and contract cleaning (51%). Oman has also agreed to allow either to open branches or full ownership, or both for the service providers in the following sectors:

    • Service related computers (full foreign ownership from 2003)
    • Communications service (full foreign ownership from 2005)
    • Banking service (full foreign ownership from 2003). Foreign banks can open their branches.
    • Other financial services: Securities (full foreign ownership from the date of WTO joining)

Oman has also fixed the maximum number of foreign staff in foreign companies wishing to have a business presence in Oman, at 20%. The entry of these natural persons is allowed for 2 years renewable for a maximum of 4 years.

As regards the taxes, the companies in which the foreign ownership is 70% have to pay the same rates as levied from the wholly owned Omani companies starting January 2001.

Investment Incentives

As part of its efforts to attract foreign investment and activate the private sector, Oman offers several financial incentives and support for foreign investors such as the following:

  • The government grants soft loans investment projects with an investment of up to RO 250,000/- through Oman Development Bank.
  • Oman has a strong and stable local currency, Rial, which is equivalent to US$ 2.58, and it is fully convertible.
  • Oman’s laws allow free transfer of capital funds and profits and entry of foreign workers.
  • Plant, machinery and spare parts imported for industrial investment purposes are exempted from custom duties. Raw and semi-processed material imported for the manufacturing purposes and which not available locally are also exempted from paying custom duties.
  • Wholly Omani owned shipping companies or foreign companies operating in Oman through an approved local agent are exempted from tax
  • Oman’s investment laws guarantee exemption from income tax on companies for a 5-year period renewable. Foreign investors treated equally with their local counterparts as far as income tax on companies is concerned. The income tax rates vary according to the legal form of the company, the percentage of Omani participation and the level of taxable income as follows:
    • Businesses wholly owned by Omani nationals, businesses with foreign ownership up to 70% and public joint stock companies (SAOG) are liable to tax at 12% of the taxable profits in excess of RO 30,000.
    • Businesses (other than SAOG companies) where foreign ownership exceeds 70% and branches of foreign companies are liable to tax at the following rates:
 
 
Taxable Profit (in RO) Tax rate (%)
Up to 5,000 Nil
From 5,001 to 18,000 5
From 18,001 to 35,000 10
From 35,001 to 55,000 15
From 55,001 to 75,000 20
From 75,001 to 100,000 25
Over 100,000 30
 
  • In order to promote exports, the Export Guarantee and Financing Unit was set up by a decision of the Development Council in 1989 and it started functioning in 1991. This unit aims at promoting and developing non-oil exports, by:
    • Providing insurance cover for returns of Omani exports from commercial and political risks.
    • Sharing a portion of the interest on loans granted by commercial banks to the exporters for a period not exceeding 180 days after completing the shipping formalities.
    • Providing subsidized interest for loans taken against export of national products with an added value of not less than 40%, in the case of exports to GCC countries and 25% in the case of exports to other countries.
  • Planned and serviced plots are provided by the government, to set up industrial units. Ready made factories of various sizes, which can be leased for a period of 25 years renewable. Services provided at the industrial estates include roads, water, gas, communication means, liquid waste processing, solid waste collection and disposal, etc. The government levies only a nominal rent on the premises at the industrial estates as shown below:
    Annual rent for land plots = 250 baisas/sq. meter
    Annual rent for building = 2-4 Rials /sq. meter (1)
  • The Ministry of Commerce and Industry in agreement with various concerned entities is subsidizing the electricity, water and fuel consumed for manufacturing purposes by industries as shown below:
Electricity 24 baisas for kw/h during summer months
12 baisas for kw/h during winter months
Water 3 baisas per gallon
Natural Gas 20.4 baisas per cubic meter.