Oman re­works its in­ward in­vest­ment strat­egy

The Pak Banker - - OPINION - Jasim Ali

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.

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