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	Oman		Info-Prod Country Guide
CHARACTERISTICS   INDICATORS   THE ECONOMY   INVESTMENT ISSUES   PROJECTS   PROSPECTS

Investment Issues General The government's emphasis on income diversification has opened the country to foreign participation in the economy, particularly in the form of joint ventures. Oman is actively seeking private foreign investors, putting specific emphasis in the industrial field. Those investors who allow technology transfer and provide employment and training for Omanis are particularly welcome. Oman's labor law and the Oman tax law also affect a foreigner's ability to do business in Oman. Since there is no complete body of regulations codifying these laws and many government decisions are made on an ad hoc basis, investors should consider engaging local counsel. Recent changes in the tax law have, for the first time, required Omani companies to pay taxes on profits. The taxes levied on foreign companies and joint ventures were recently changed, and companies with foreign ownership of less than 90 percent are subject to the same tax as Omani firms. Foreign investment in Oman is allowed only through joint stock companies or joint ventures. In both forms, majority Omani ownership is generally required, although joint venture industrial projects may be up to 65 percent foreign and up to 100 percent in special cases. Privatization Royal Decree 42/96, which became effective on June 15, 1996, authorized the creation of a Privatization Committee charged with the task of establishing a privatization program, particularly with respect to service and utility sector businesses. The Foreign Capital Investment Law applies to the participation of foreign investors in the privatization of such entities. The Decree acknowledges that the government has set a course of slow and careful privatization in order to encourage economic growth. Priority is to be given to the service and utility industries, and special considerations must be made with regards to environmental protection in implementing privatization plans. The Decree encourages investment from abroad. Foreign investment, however, must be licensed according to the Foreign Capital Investment Law. The first schemes to be offered will include electricity, water, road and telecommunications projects. Coopers & Lybrand of the UK have conducted a study for the government on privatization. Oman also intends to initiate the selling of existing state assets, including holdings in a number of banks, the General Telecommunication Organization (GTO), Gulf Air and possibly the Oman Mining Co. As GTO is the second highest government revenue earner, it will not be easy for the government to let it go. Stock Exchange The Muscat Securities Market was established in 1989 pursuant to the Law of Muscat Securities Market and Amendments (Royal Decree 53/88) and Ministerial Decision 112/88. The Exchange was modeled after exchanges in Taiwan, Malaysia and New York. The framework of the statute and regulation is rather comprehensive and sets out provisions regarding members, brokers, dealers, administrative organization, market finance, disclosure, control, disciplinary actions and the like. The Muscat Securities Market is active and sophisticated. It has acquired a good reputation in terms of management and administration. A well-known fund-raising exercise associated with the National Bank of Oman was conducted through the Muscat Securities Market, and local companies have raised funds through that market. Modifications to the Law adopted in 1994 allow foreign investors to invest in approved investment funds, up to 49 percent of the shares, and such investment funds are treated as 100 percent Omani entities and can freely invest elsewhere in the economy as such. The capitalization markets, or volume of investments, listed on the Muscat Securities Market totals US$ 4.16 billion, of which overseas contributions account for 10.55 percent, or US$ 444.86 million. This is the result of Oman's continued economic reforms and strong performance of trading institutions world-wide for 1996. The year 1989 saw US$ 24.7 million in turnover; 1990 saw US$ 122.2 million; 1994 reached US$ 327.6 million; and 1995 ended with US$ 283 million. At the end of 1995, fifty-two of the eighty-four listings on the market were open to non-Omanis. More foreign investment is sought and expected for 1997 and onward. Presently, there are eighty-nine companies listed on the exchange. December 1996 saw the listing of Shell Marketing Group with paid up capital of RO 50 million, 40 percent of which is to be raised through public conscription. Oman's Information Technology (IT) plan, initiated at the beginning of 1996, includes the gradual introduction of electronic trading to the stock market (to take approximately two years) and involves new hardware to assist in the clearance, settlement, depositing and finance. Oman does not need the electronic upgrading for many years, even under the most positive growth assumptions. Thus, the move towards high technology is seen as a sign of the country's commitment to sustained growth in the future. Previous Chapter Contents Menu Next Chapter

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