Oman reworks its inward investment strategy
Omani authorities seem determined to entice interest from investors in the Gulf and elsewhere, ostensibly for the benefits of all sides. Investors for portfolio and direct investments are being welcomed on the premise of the streamlined business environment Oman offers, its prudent regulations as well as emerging business projects.
For one, the Muscat Securities Market (MSM) is becoming steadily popular with investors not withstanding its substandard performance in 2014. The index for the MSM30 fell by nearly 7.2 per cent last year partly reflecting fears associated with the drop of oil prices midway through the year.
To be sure, last year started off on a positive note on the back of governmental determination to increase investments, only to be adversely affected by possible consequences of the oil price decline on budgetary estimates. The petroleum sector contributes two-thirds of treasury revenues, which in turn finance governmental expenditures. Budgetary spending for fiscal year 2015 is projected at $36.6 billion.
Notably, regional and international interest at the bourse is on the rise. Non-Omani ownership of publicly-listed firms stood at 30.4 per cent by end-June, up from 29.4 per cent in the corresponding period in 2014. Clearly, the development reflects growing confidence concerning the performance of the Omani economy. There is interest from GCC residents and expatriates to own properties at Omgine, a scheme combining the two words of Imagine Oman. Omagine is projected to attract some $2.3 billion worth of investments, certainly sizeable for an economy boasting a gross domestic product (GDP) of $80 billion.
The Omagine scheme calls for developing seven pearl-shaped buildings in addition to hotels, a mall, a marine area and offices. Understandably, the sultanate relies on its scenery, clear air, hospitality and warm weather to attract potential investors from the region and beyond. It is likely that GCC investors would not be discouraged from investing into Oman by a recent development concerning land ownership. They are entitled to acquire pieces of lands in the sultanate for the eventual aim of turning them into properties.
Likewise, trading of lands is allowed after four years of owner- ship rather than at once, apparently to protect interests of nationals by avoiding price hikes and which could lead to adverse effects on the purchasing power of nationals. The new development is not a ruling per se but rather the announcement of the government's determination to implement it within the four-year time span. Failure to do so would empower the authorities to buy back the land, and reimbursing owners only the original prices paid for acquiring them in the first place.
This seems to be a stand-alone case, not reflecting the overall investment mood in the sultanate. Not long ago, officials streamlined rules concerning foreign ownership, allowing foreign equity participation in joint ventures at 70 per cent, up from 49 per cent. Full foreign ownership is granted for certain projects within the framework of attracting investments to help meet economic goals. A primary objective for officials relates to creating jobs that meet the expectations of locals. Sadly, unemployment in Oman is the worst within the GCC, as per figures from the World Economic Forum. Its report puts the overall jobless rate in Oman at 8.1 per cent against a mere 0.6 per cent in Qatar. The jobless rate rises to above 20 per cent among the youth in the sultanate, certainly a cause of concern.