Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
Cumbersome government regulations present challenges for foreign firms to do business. Bureaucratic obstacles include obtaining Ministry of Labor clearances for visas and permits for foreign workers. The Ministry does not grant work visas to expatriate women in most business sectors. U.S. firms have reported lengthy business registration requirements for specialized consultancies. The divide between the government and the private sector is not well defined in Oman, leading some firms to complain of unfair competition. Covid-19 restrictions brought significant disruptions to commercial activity and a decline in private consumption. Of particular concern for many international firms in Oman is the Omanization process, wherein the government sets quotas for Omani national employment on a sectoral basis. Many companies, both Omani and international, have noted that some of the quotas are difficult to satisfy and applied inconsistently. The Ministry of Labor and other authorities strongly encourage companies to meet their Omanization quotas, turn over management jobs to Omanis, and create training programs for new hires, which can be costly. Although the FTA provides for limited exceptions for specialized upper management, U.S. companies are responsible for complying with most Omanization requirements. Obtaining labor clearances for new foreign workers, and in recent times termination of Omani employees, also present challenges for foreign companies.
Other issues of concern to U.S. companies and investors:
- The threat that fiscal constraints pose to the realization of government-funded projects. The government announced budget cuts for 2020 and froze all new investment projects for the year. Government budgets and new projects continue to be constrained in 2021;
- Payment delays for construction and infrastructure projects;
- Pressure on companies related to the hiring and firing of Omani employees and local manufacturing and sourcing requirements;
- Omani customs officials occasionally charging duties on American goods transshipped by road via Dubai despite the duty exemption advantage of the FTA;
- Slow company registration processes, especially for consulting firms;
- Scarcity of natural gas feedstocks for new projects;
- Price sensitivity in contract negotiations;
- Expansion of Oman’s tax regime and increases in government service fees;
- The fact that the FTA does not enable U.S. investors to own land; and
- Limited business opportunities outside of the oil and gas industry.