Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
Numerous transport, logistics, and retail companies serve Oman’s domestic market. Most goods destined for the Omani market enter through the Port of Sohar, Oman’s main import/export hub, which is located two hours northwest of Muscat by road. A well-developed road infrastructure links almost all points in the country. In addition, goods may enter Oman overland after arriving at seaports in the UAE. Omani customs authorities exempt American goods from the five-percent GCC customs duty under the terms of the FTA, although the GCC duty has been charged on occasion on American goods entering Oman overland from the UAE at the Wajaja border post, in contravention of the FTA.
The Port of Salalah, located some 1,000 kilometers southwest of Muscat in southern Oman, has established itself as a leading container transshipment center on the Indian Ocean Rim. It also handles import/export shipments. Maersk is the principal customer of the port and a majority shareholder in the Port of Salalah Company. The Port of Salalah is the only port between Europe and Singapore that can accommodate S-class container vessels. Salalah boasts 14-day turnaround times to the United States. The government has offered several incentives to attract business to the adjacent free trade zone, including reduced or deferred corporate taxes; extended period for re-exports; financing; favorable rental charges; reduced local-content requirements; and lower customs duties and Omanization requirements.
The Port of Sohar is located just outside the Strait of Hormuz and is proximate to the busy shipping lanes of the Arabian Gulf. By entering the Gulf through Sohar, companies avoid the high insurance premiums normally levied on vessels that ply the Upper Arabian Gulf. Sohar Port is a deep-draft port with remote-controlled container gantries capable of loading and unloading some of the world’s largest container ships, with general cargo, liquid bulk, container, service-dedicated terminals, and a modern management and vessel notification system. It is home to a diversity of companies offering a full spectrum of maritime support. The port largely serves four industries: metals, logistics, petrochemicals, and food. Sohar Industrial Port Company, a 50-50 joint venture between the Port of Rotterdam and the Sultanate of Oman, manages Sohar Port and its adjacent Freezone. The Sohar Freezone offers investment incentives which include a 10-year corporate tax holiday; no minimum capital requirements; a relaxation on the quotas of Omanis a company must employ; and a one-stop shop for business registration and permits.
The government is constructing a large commercial port at Duqm, with a dry dock, deep-water draughts, hotels, and a special economic zone. The port connects to a 2000-square-kilometer special economic zone, divided into eight main areas: the port, a dry dock, an oil refinery, a regional airport, an industrial complex, a residential and commercial area, a tourism area, and a logistics services area. The Special Economic Zone Authority for Duqm, under the Public Authority for Special Economic Zones and Free Zones, offers its own one-stop shop for investors, facilitating business registration, work visas, reduced Omanization requirements, and permits directly.
Oman has airports in Muscat, Salalah, Duqm, Khasab, and Sohar apart from desert airports serving petroleum facilities.
Using an Agent to Sell U.S. Products and Services
Foreign companies wishing to distribute their products in Oman often prefer using a local agent. While not required, agents are particularly useful for sales to the Omani government due to their contacts, language ability, and cultural knowledge. In practical terms, it is still difficult for foreign firms to sell to the government without an Omani agent scouting for and bidding on tender opportunities. As in other Gulf countries, regular, personal contact is the key to success in trade relationships.
The manufacturer or supplier may not unilaterally terminate an agency agreement except where an unjustifiable breach of agreement by the agent exists. Agents must register agreements at the Oman Chamber of Commerce and Industry (OCCI). Agents must register in writing (in Arabic) with the Registrar of Agents and Commercial Agencies at MOCIIP, renewable every three years. Agencies may be non-exclusive, and more than one agent may be engaged to promote the same product or service.
The Embassy’s Commercial Section can provide due diligence on most Omani companies and/or potential agents for a small fee via our “International Company Profile” service. The Embassy recommends personal visits to potential agents and obtaining legal counsel before drawing up an agency agreement. The Embassy recommends formal legal counsel for specific questions on labor, investment, tax laws, and licensing procedures, and for the resolution of commercial disputes.
The Embassy’s website has a list of local attorneys, including those specializing in commercial law.
Establishing an Office
Due to the provisions of the FTA, Omani authorities do not require a U.S. company to incorporate or make any form of local investment when supplying its services on a cross-border basis. In other words, Oman does not require a U.S. company wishing to provide its service to have any formal presence in the country. This is a benefit to all U.S. service providers, especially small and medium enterprises, which may not have the resources to maintain a presence outside the United States, nor conduct enough business to justify a physical presence. However, many U.S. businesspeople prefer to have a local presence to facilitate transactions or appoint a local agent to fulfil Oman’s In Country Value requirements.
MOCIIP’s Invest Easy Portal is a one-stop-shop that provides e-services to help set up and manage companies in Oman. Its page has instructional videos on how to use the online portal. The State Department’s Investment Climate Statement on Oman includes information on the investment and business environment pertinent to establishing and operating an office and to hiring employees.
Several U.S. franchises and major brands are well established in Oman, particularly in the fast-food restaurant sector. U.S. car rental franchises are also popular. Oman’s relatively high per-capita income, young population, high rate of unaccompanied expatriates, and absence of alternate entertainment venues encourage out-of-home dining and entertainment options. Omani businesses continue to express interest in U.S. franchise opportunities, especially for family-oriented, recreational, and educational outlets.
To franchise in Oman, the franchisor and the local franchisee must sign a formal contract, which must be approved by OCCI and registered with the Registrar of Agents and Commercial Agencies at MOCIIP and the local municipality. Under Omani law, franchise relationships fall under the authority of the Commercial Agencies Law. Parties can also make franchise agreements under a non-Omani legal system if these agreements include an arbitration clause.
Registration is extremely important for a franchisee because courts will not recognize an unregistered franchise in the event of any dispute concerning the franchise relationship. Similarly, despite the fact Oman is a party to the New York Convention of 1958 on the Enforcement of Foreign Arbitral Awards (the “New York Convention”), if the franchise is not registered, Omani courts may not enforce a foreign arbitral award in relation to the agreement.
For the franchisor, law firms recommend that agreements contain provisions permitting the franchisor to terminate the agreement if the franchisee performs inadequately. A blog entry from a local law firm has further information pertaining to franchises and franchisees in Oman.
Oman has three daily English-language newspapers in which companies can advertise – the Oman Daily Observer, the Muscat Daily, and the Times of Oman – each with a business section that reaches a predominantly expatriate readership. Arabian Stories is a digital media outlet in Oman. The Arabic dailies – Oman Daily, Al-Watan, Al-Shabiba, and Al-Roya – reach a broader Omani audience and are published seven days a week. Most dailies have a website for company advertisements. Advertising is also possible on Omani television and radio and on highway signs. Many businesses also distribute flyers in residential neighborhoods, with permission from the municipal authorities.
The main regulation that governs advertising within Muscat is Local Ordinance 25 of 1993 (“Ordinance”). The Muscat Municipality controls and inspects all advertisements in Oman, including cases of non-compliance with the Ordinance.
Limitations exist on freedom of the press and freedom of expression, including advertising content. The government prohibits advertising it deems to be detrimental to state security or public order, or offensive to societal values or customs.
The Ordinance covers a broad range of advertising formats (e.g., shop display ads, billboards, banners, print ads, and packaging) and regulates many aspects related to such advertising, including sites and installation, permits and licensing, and restrictions and prohibitions on content.
The Ordinance essentially prescribes a two-step process for carrying out such advertising:
- Obtain a permit/license from the Municipality for the site where the advertising infrastructure (e.g., the billboard frame) will be installed; and
- Obtain permission/approval from the Municipality for the advertising content (e.g., the poster advertisement) that will be displayed.
Article 8 of the Ordinance sets out certain restrictions on advertising content, which include the following:
- The main language of the advertisement shall be literary Arabic;
- The English language may be used provided that it is next to the Arabic language;
- The translation from Arabic to English shall be correct linguistically;
- The content of the advertisement shall not be against the public order or morals or security and shall not be against customs and religious beliefs;
- The size of the advertisement shall be suitable enough to write the name and kind of activity and be completely suitable with the façade of the shop and the general view;
- The advertisement shall not be an obstacle to pedestrians or traffic and the advertisement shall not cause the destruction of any connection, services, or plantations; impede rescue services or ventilation; or cause damage to others;
- It shall not contrast with the organizational aspect of the town or area, or spoil the public view; and
- An advertisement requires a license (a written approval) from the landowner.
Article 7 of the Ordinance further prohibits advertising in certain types of locations (e.g., in and around mosques, Omani government properties, and public parks).
- The period of the permit for advertisement fixed boards is two years renewable for one or more equal periods. Companies wishing to advertise should seek renewal at least one month before the expiry date of the permit.
- Violations of the Ordinance are subject to fines and the Municipality has the right to remove any advertisement which is not in compliance with the Ordinance.
The Omani government welcomes foreign capital and expertise, particularly in the tourism, health care, higher education, fisheries, infrastructure, and manufacturing sectors. Oman seeks foreign investment for the technical expertise it brings and the training it provides to Omanis. Under the FTA, U.S. investors qualify for national treatment in Oman, but increasingly, U.S. companies raise concerns that they are being excluded from most government tenders, which authorities now limit to local Omani companies.
Major global organizations such as DHL, FedEx, UPS, ARAMEX, and others operate in Oman and offer express delivery services. Transit times vary, but average shipping times from the United States to Oman is 3-10 days, not including the customs clearance process. Oman prohibits all items that are offensive to the Muslim culture or sensitive to the Middle East security situation. These include pork products, religious publications/figures, imitation firearms/paraphernalia, and military uniforms.
The International Company Profile is one of Embassy Muscat’s Commercial Services, which for a nominal fee, provides a comprehensive background check on Omani companies and reports on its owners, sales, and business activities and suitability as a business partner for U.S. companies. Trade and bank references (when available) are used in forming an opinion and making recommendations.