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Potential 100% Ownership for Business Investors in Oman


With a population that grew by 8% between 2014 and 2015, demand for financial, tourism, hospitality and manufacturing services are rapidly developing as Oman’s government moves towards its Vision for Oman’s Economy (Oman 2020), including the national programme for enhancing economic diversification. Attracting foreign investment is a major part of Oman's drive to achieve such a goal.

Foreign direct investment has been increasing in recent years, with more than OMR 7.4 billion coming into the Sultanate in 2016, an increase of almost USD 1 billion over 2015. With the impending arrival of the new Foreign Capital Investment Law, both public and private parties anticipate that figure to grow significantly, giving Oman the economic boost needed to continue the gains of the past few decades.

In line with the currently prevailing Foreign Capital Investment Law (Royal Decree No. 102/94 issuing the Foreign Capital Investment Law, as amended, the FCIL), foreign companies seeking to do business in Oman are required to form a locally registered company with local equity participation of at least 51%. A foreign capital investment license is granted by the local Ministry of Commerce and Industry (the MoCI) to foreign entities upon satisfying capital and other requirements.

Although the FCIL restricts foreign ownership in Omani companies to 49%, pursuant to Oman’s accession to WTO in 2002, foreign shareholding up to 70% in all sectors is permitted without need for approval from the cabinet or the Council of Ministers. 100% of shares- 51% reserved by the law to an Oman individual/entity, equals to 49% left to a foreigner. WTO accession – the law has not been amended yet, however in practice the MoCI follows the international agreement and allows up to 70% foreign ownership.] In addition, foreign ownership of 100% is permitted for projects deemed by the Council of Ministers to contribute to the development of the national economy. This 30% local shareholding requirement has acted as a deterrent for experts and investors alongside wide-ranging commercial, operational and legal factors.

The proposed new Foreign Capital Investment Law is still in draft form and has not yet been ratified or passed. It will only become effective after all due legal and governmental processes are completed. Correspondingly, Oman’s MoCI has pushed for the rapid ratification of this legal development, having already completed the third draft in collaboration with the World Bank. The MoCI Undersecretary announced in September 2017 that the agency had finalised the law and had sent it to the Ministry of Legal Affairs for review. It is envisioned for the investment law to be ratified in the near future.

The new Foreign Capital Investment Law initiative may allow foreign companies or individuals to increase their ownership within local companies to 100 per cent.

Advances of the proposed new law could involve a removal of current major restrictions upon investors – namely requirements of having a local partner and a minimum capital of OMR 150 000 (approx. USD 389 000) to set up a business in the Sultanate. The removal of these requirements is aims at opening the market to make it more attractive for businesses and individuals to invest. Nonetheless, a restrictive list will be produced to safeguard specified areas which the Government deems beneficial to protect national interests.

The new law will introduce tax incentives and exemptions. Furthermore, it will provide for dispute resolution and arbitration mechanisms in accordance with recognised international institutions. These provisions will enable Oman to be more closely aligned with international practices and standards which are instrumental in promoting higher levels of foreign investment within the country.
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