Business in Oman
Aired March 2005
The Sultanate of Oman, a recent entry into the World Trade Organization, is a dynamic, multicultural and multilingual business hub strategically located at the gateway to the Persian Gulf by the Strait of Hormuz. Oman offers investors direct access to fast-growing markets in the GCC and elsewhere in the Middle East as well as East Africa and the Indian sub-continent.
Oman’s rapidly developing economy is the product of the vision of one man--His Majesty Sultan Qaboos bin Said. Since coming to power in 1970, the Sultan has guided Oman from third-world status into a new role as a global business player.
Led by Sultan bin Said’s example, the people of Oman are open, friendly and hospitable to foreigners. 600,000 of the country’s 2.35 million residents are expatriates. They have chosen to live in Oman because of its high quality of life, free market economy, security and history of religious tolerance.
Oman offers a number of advantages for American investors and multinational corporations, including: political stability, security, proximity to Middle Eastern, Asian and African markets and an open market economy which allows free repatriation of profits. Additionally, Oman is on the fast-track to signing a Free Trade Agreement with the United States. A Trade and Investment Framework Agreement was signed on July 7, 2004 in Washington, D.C.
Covering nearly 213,000 square kilometers, Oman is a vast country with significant natural resources and geographic diversity. The rapid modernization of the country since 1970 has been remarkable. Rated the second most economically free country in the Middle East, Oman is a leader in the region for privatization and industrial projects.
Through its five-year development plans, the sixth of which ends in 2005, the government is actively promoting private-sector diversification into industries other than oil and gas. Privatization has created a number of opportunities in telecommunications, water desalination and electricity distribution. Additional investment opportunities abound in fisheries, tourism, and upstream and downstream oil and gas industries.
FINANCE
The Central Bank of Oman controls the country’s monetary policy and regulates its commercial banks and foreign branches. The Bank has controlled inflation very successfully by balancing the local currency, the Omani Rial, against the U.S. dollar at a fixed rate.
The financial sector’s growth is highlighted by Oman’s stock exchange, the Muscat Securities Market, one of the most dynamic markets in the world. The MSM offers fantastic investment opportunities in Oman’s burgeoning economy, and investors can rely on the country’s world-class financial services sector for local expertise.
The MSM is regulated by the Capital Markets Authority. Following a market crash in 1998, the CMA implemented strict guidelines to ensure total transparency for all listed companies. In addition to a strict regulatory environment, Oman offers full repatriation of capital and profits, no income tax and an open market policy welcoming to international investors.
Oman’s banks are an excellent source of short, medium and long-term credit for foreign investors. Additionally, there are no restrictions to applying for credit abroad, so foreign investors may also obtain credit from banks in Bahrain, the UAE or Kuwait. The Gulf Investment Corporation, established by the GCC, assists new companies with equity and/or loan funding. The government of Oman also provides long-term loans for certain projects, and general joint stock companies have the option of issuing shares or bonds on the Muscat Securities Market.
The insurance sector in Oman is developing rapidly. The leading insurance institutions are in the process of educating Omanis about the importance of general and life insurance because insurance did not exist before Sultan bin Said came to power in 1970. Car insurance is a particularly fast-growing segment of the industry, but there is also a very large reinsurance market. Massive privatization, industrial and commercial projects are providing significant opportunities for international reinsurers.
Commerce & Industry and Oil & Gas
International companies have been operating in Oman since 1970, when Sultan bin Said opened the country to foreign investment. To promote further local and international participation in the economy, the Omani government has invested heavily in creating the infrastructure necessary to support business growth, including world-class education, water, electricity, communications and transportation services. The capital city of Muscat is headquarters for most Omani businesses, though industrial areas in Sohar and Sur are major areas for growth as well.
A clean city with excellent roads, Muscat combines a unique blend of Arabic culture and charm with modern infrastructure.
The government has invested in the creation of a number of industrial areas around the country, all featuring state-of-the-art infrastructure. These make the ideal base for US enterprises, and opportunities abound for win-win partnerships with local firms. Among Oman’s advantages is its youthful population of 2.35 million, a growing consumer market.
Several private and public sector organizations have been established to facilitate and guide foreign investors. All companies engaging in economic activities in Oman must register with the Oman Chamber of Commerce and Industry, which acts as the essential liaison between the private and public sectors. Additionally, the Ministry of Commerce and Industry serves as the one-stop government shop for foreign investors looking to partner or set up operations in Oman. The Oman Center for Investment Promotion and Export Development is another valuable source of information for foreign investors. It operates under the auspices of the Ministry of Commerce and Industry
Export-oriented enterprises are particularly encouraged and Oman offers everything exporters need, from well equipped seaports in Muscat, Salalah, Sohar and Sur to modern infrastructure, low energy costs, availability of skilled labour and government support, which includes subsidies for large industrial projects. Multimillion dollar plants are now being built in the fertilizer, polypropylene and aluminium industries, and there are also significant opportunities in upstream and downstream activities in the oil and gas sector for firms providing technological expertise.
The oil and gas sector now accounts for 80 percent of Oman’s exports, but the country’s mining industry also has potential. Oman has deposits of chromite, gold and marble and untapped natural resources include coal, copper, gypsum, manganese, quartzite and silica sand.
The Omani people have been instrumental in bringing about Oman’s economic success. Since 1970, the entrepreneurial spirit of the Omanis, the financial support of His Majesty’s government, and an infusion of foreign technology and business management skills have combined to propel Oman to its current prosperity. To ensure the country’s future, the government is encouraging investment in training programs, for which demand is currently outpacing supply.
TOURISM
Oman has the potential to become one of the top tourist destinations in the world. Genuine Arabian culture, stunning landscapes, absolute security, the overwhelming friendliness of the Omani people, and a capital renowned as the safest and cleanest urban center in the region make Oman a “can’t miss” destination for any traveller.
Oman offers a unique experience for all types of travellers. It has a number of luxurious five-star beachfront hotels as well as exceptional shopping opportunities, whether in Muscat’s designer boutiques or colourful soukhs famous for silver jewelry, Arabian antiques and classic khanjars, the traditional knife worn on a sash around an Omani man’s waist.
Oman is an absolute paradise for any traveller with as sense of adventure. Blessed with the most diverse geography in the Middle East, Oman has pristine beaches, dramatic sand dunes and lush, green mountains. Visitors can try scuba diving, hiking, mountain climbing, spelunking, off-road wadi (or riverbed) exploration, and desert safaris by camel or 4x4.
Dhofar, located 1,000 km south of Muscat, is famous as the only green region in the entire Arabian peninsula. Every summer, monsoon rains move west from India and transform the Dhofar area into a land of misty lushness, and the Khareef festival, held in August every year, attracts hundreds of thousands of tourists from around the world. Dhofar is home to the famous frankincense tree, which is rumored to have healing powers in addition to being a perfume ingredient. Dhofar is also renowned as a holy destination. Prophets from the Christian, Jewish and Moslem religions have lived and preached in Salalah. One highlight is the tomb of Job perched atop a green hilltop near Salalah, Dhofar’s capital.
Oman is renowned for eco-tourism. The beaches of Ras al Khaid, 300 km south of Salalah, are famous for the sea turtles that lay thousands of eggs there every year. In the south part of Oman between Dhofar and Muscat, one can find the rare Arabian oryx. Oman is the world’s only remaining sanctuary for this wonderful animal.
Oman’s tourism sector currently contributes 1.1% to the country’s GDP, but the government expects this to climb to well above 3% by 2020. With 1,700 km of unspoiled coastline, opportunities for tourism development projects are extensive, and the government is willing to provide subsidies for tourism infrastructure initiatives.
Under His Majesty Sultan Qaboos bin Said’s guidance, Oman has gained a reputation as one of the world’s most pleasant places to live, work and prosper. Safe and stable with an open market economy, Oman is a secure environment for all business transactions, and the Ministry of Commerce and Industry is ready to serve investors from the United States.
