Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Oman’s strategic location at the crossroads of regional markets, combined with its modern, efficient infrastructure and an educated, largely bilingual workforce, make it an attractive location for U.S. trade and investment. Approximately one hundred U.S. firms have operations or do business in Oman. The Omani economy has made a strong recovery following a slump due to COVID-19 and low oil prices. Oman’s economic fundamentals are good. The government is using revenues from high oil prices to pay down external debt and invest in development projects. Oman is making strides to diversify its economy, including an energy transition; for now, it remains dependent on oil and gas revenues.
Oman’s success in 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 requirements to hire a certain percentage of Omanis for their workforce and problems letting go of non-performing or redundant employees. 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 Oman’s Vision 2040 development plan.
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.
Oman seeks to diversify its economy through projects in manufacturing, logistics, tourism, mining, and fishing. The government is also overseeing the development of several food-related projects to strengthen long-term food security. Oman Investment Authority (OIA, Oman’s sovereign wealth fund) is involved in the privatization and sale of state-owned assets. Oman successfully created a public-private partnership (PPP) in its utilities sector, and it seeks U.S. investment and expertise to develop more PPP projects. In January 2022, Oman signed a Sovereign Investment Partnership with the United Kingdom to facilitate joint investments in both countries. In December 2021, Saudi and Omani firms signed 13 MoUs worth $30 billion for joint projects in various sectors, including a petrochemical complex in Duqm.
Oman’s continued success in attracting investment will depend on its ability to open additional sectors to private-sector competition and foreign investment, minimize bureaucratic hurdles, address labor policy concerns, make its tender system more transparent, and increase access to credit, including for entrepreneurs.
Oman has enacted several recent laws that facilitate investment. In September 2021, Oman allowed expatriate residents with work visas to own residential units and offered long-term residency visas to attract investors. Five- and 10-year renewable residence visas are available to foreign investors in tourism, real estate, education, health, information technology, and other key sectors. These moves followed five significant laws promulgated in 2019 to promote investment: the PPP Law; Foreign Capital Investment (FCIL) Law; Privatization Law; Bankruptcy Law; and Commercial Companies Law. The FCIL removed minimum share capital requirements and limits on the amount of foreign ownership of an Omani company. To facilitate the FCIL, Oman created the Investment Services Center to streamline procedures for foreign investors.
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 FTA also reduces the minimum share capital requirements for a U.S.-owned business, expedites the movement of goods and provision of services, safeguards intellectual property rights, and provides dispute resolution procedures. Both sides have benefited from increased trade. Sultan Haitham has told U.S. leaders he wants stronger U.S.-Oman economic ties based on the FTA.
In 2021, the United States exported $1.4 billion in goods to Oman. Principal U.S. merchandise exports to Oman were machinery, vehicles, aircraft, plastics, chemicals, drilling and oilfield equipment, and pharmaceuticals. In 2021, the United States imported $1.86 billion in goods from Oman. Principal merchandise imports were industrial supplies, petroleum products, jewelry, plastics, fertilizers, iron, and steel and aluminum products. The United States was the second largest foreign direct investor in Oman in 2021 ($5.2 billion) after the United Kingdom ($21.6 billion).