The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
The State Department’s Investment Climate Statement on Oman.
Executive Summary
Oman’s location at the crossroads of the Arabian Peninsula, East Africa, and South Asia and in proximity to larger regional markets is an attractive feature for potential foreign investors. Some of 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. With a “friends of all, enemies of none” foreign policy, Oman does not face the external security challenges of some of its neighbors. Oman’s domestic political situation is stable.
The United States and Oman share a strong bilateral relationship based on a joint commitment to the security, stability, and prosperity of the region. In 2009, the two countries signed the U.S.-Oman Free Trade Agreement (FTA), which removed most customs duties, allowed citizens to set up businesses without a local sponsor, and gave businesses and investors the right to 100 percent ownership of companies in Oman. The United States is Oman’s biggest non-oil export destination, ahead of the United Arab Emirates and Saudi Arabia, registering $2.73 billion in 2022, a 47-percent increase from 2021. The United States was also the second largest foreign direct investor in Oman in Q3 2022 ($6.5 billion) after the United Kingdom ($23.6 billion).
In February 2023, Oman hosted the first U.S.-Oman Strategic Dialogue, which focused on education and cultural exchange, trade and investment, and renewable energy. On the sidelines of this event, the Export-Import Bank of the United States (EXIM) and the Omani government signed a memorandum of understanding to use $500 million in EXIM financing to establish projects in wireless communication equipment; 5G network, biotechnology, renewable energy, agriculture, water and wastewater treatment, mining and manufacturing sectors, among others.
Oman is making strides to diversify its economy, including an energy transition; for now, it remains dependent on oil and gas revenues. High oil prices and fiscal consolidation improved Oman’s fiscal and external balances considerably in 2022. Effects on the local economy from the war in Ukraine have been limited, but citizens have raised concerns on social media about inflationary pressures and the lack of jobs. Under its Vision 2040 development plan, Oman is keen to diversify its income sources and develop the logistics, manufacturing, technology, gas, food, and tourism sectors, among others.
Oman’s continued success in attracting investment and growing its economy will depend in part on revising labor policies, which some U.S. companies tell us can be challenging to navigate. Smaller companies with limited or no local or regional experience report bureaucratic difficulties, including sometimes lengthy approvals processes to establish operations. The government recognizes these challenges and is working to address them as part of efforts to improve the investment climate and achieve its economic development goals under Vision 2040.
Under Sultan Haitham bin Tarik Al Said’s leadership, Oman is developing incentives for foreign investors, including tax and fee incentives, permissions to invest in several new industries, lower government fees, expanded land use, and increased access to capital for qualifying companies. Special incentives also exist for investors in industrial areas and economic zones, such as the city and port of Duqm – Oman’s premier infrastructure project, with an 800-square-mile free trade zone and logistics hub. In February 2023, Oman’s Council of Ministers reduced commercial registration fees for foreign investors and exempted companies from insurance bond requirements while submitting bids for government tenders.
Oman’s success in attracting investment will also depend on its ability to open additional sectors to private-sector competition and foreign investment, minimize bureaucratic hurdles, make its tender system more transparent, and increase access to credit, including for entrepreneurs.