New law to spur investments, job creation Regulating investment process
The Foreign Capital Investment Law is leading to creation of new investment avenues in Oman, a number of consultants and investors have said.
The new law lifts restriction on the minimum capital limit for foreign investment in a project. Earlier, the minimum capital limit was RO150,000 for ownership in a project.
They said that the implementation of the new law will lead to creation of direct or indirect job opportunities for Omanis. It will also curb hidden trade and regulate the labour market. The country’s infrastructure is ready to attract different types of investments. The penalties under the law are part of the regulatory process.
Dr Ahmad bin Abdul Karim al Houthi, a member of the Board of Directors of the Oman Chamber of Commerce and Industry (OCCI), said, “The law is an important requirement to attract more investments. It was also needed to regulate the investment process inside the country. It has a set of rules to regulate the commercial and economic processes inside the sultanate. The Foreign Capital Investment Law is one of the laws to attract foreign investors. Other laws to do the same are Public and Private Partnership, Privatisation, Investment and Bankruptcy. Also, there is a commercial arbitration centre. All these factors will help investors in making decisions regarding investments.”
Dr Houthi said that the advantages and incentives of the investment must be clear in the annexe to be issued later. “The sultanate is now passing through a very important stage. This has to be studied properly and the possibilities of increasing the incentives offered to investors should be looked into.”
He said that the Foreign Capital Investment Law will lead to the creation of new entities and opportunities for new investors. “It will also regulate the hidden trade, which will ultimately lead to an investor managing his or her investment. This will also regulate the labour market in creating job opportunities for Omanis.”
Dr Houthi said that the sultanate has an infrastructure which is none to any country in the region or even better than them. “Therefore, the law will help make the sultanate one of the most preferred countries for investments. For foreign capital limits, investors should realise that the system will continue its monitoring process to ensure real money is invested. There should be knowledge, experience and technology to help investors from abroad. This aspect of the foreign investment must be taken care of.”
He said that the penalties under the Foreign Capital Investment Law per se are huge. “They are not to intimidate the investor, but to regulate the work. I do not think that the legislation will resort to imposition of penalties, except in certain circumstances.
The law will regulate the investment flow and enable foreign investors to work freely in Oman which is a basic requirement.”
Oman: Rich in natural resources
Commenting on the new law, Dr Youssef bin Hamad al Balushi, chief executive officer of the Smart Portal of Investment, said, “There is no doubt that investment in general and foreign investment in particular is very important for any development process. Many countries compete to attract foreign investments.”
Regarding the sultanate, Dr Balushi said there is an urgent need to accelerate the pace of attracting domestic and foreign investments. “This is required due to the current growth stage. We have required infrastructure in place. There is now a legislation to ensure transition and reap the fruits of huge investments. It will also maximise the benefits. The sultanate is among the nations which have lots of natural resources. The priorities of development have changed from the beginning of the Renaissance until now. The sultanate is ready to adapt to the changes within a short period.”
The law is an important requirement to attract more investments
Dr Ahmad bin Abdul Karim al Houthi
Dr Balushi said that the Omani economy is at a crossroad. “The thing it requires is well-studied policies and interventions which should be simultaneous and consistent. In fact, the sultanate, with its wide community participation, completed the formulation of the Oman 2040 Vision. The vision talks about international cooperation, attracting investment, expanding the production base, boosting export and supporting entrepreneurship. In fact, the launch of the Oman Vision 2040 gave an opportunity to move to a new phase and pattern of growth.”
He said that the domestic and foreign direct investment is being promoted due to several reasons. “The foreign investment is the most important engine for the next stage of change. It strengthens Oman’s integration with the world, leads to transfer of technology and knowledge, opens markets to achieve diversification and financial sustainability and creates job opportunities through innovative initiatives.”
The CEO of the Smart Investment Portal said that the recent legislative developments in the Foreign Capital Investment Law were undoubtedly important. “Without them it was difficult to attract foreign investments. Still, it is not enough because there is huge competition between countries not only in the region but in the entire world. Countries are competing in providing incentives to attract foreign investments. This is because of the benefits it holds like inflow of capital, technology and opening markets. The most important thing is to generate jobs.
“Everyone should realise that the amendment of the legislation alone will not lead to major changes in attracting investments, unless it is compatible with structural policies and programmes.”
Minimum capital requirement no more
Dr Adel al Miqdadi, a former associate professor at the Law Faculty of Sultan Qaboos University and a lawyer and legal adviser at the office of Dr Ahmed Said al Jahwary Law Firm and Legal Consultations, said, “The Foreign Capital Investment Law (No 50/2019) is considered one of the important laws as it replaced the previous law (No 102/1994). This law has many advantages which were not in the previous law.”
He said that the new law allows a foreign investor to own the project alone or in association with a foreign investor or in association with an Omani. “The law does not restrict the foreign investor to have minimum capital limit in a project. Earlier, the limit was RO150,000 for their ownership in a project. The new law has several other advantages and incentives. It exempts foreign investment from tax and customs duties and has many procedures to make the investment process smooth.
“If the investor takes advantage of the benefits under the new law, he will be able to obtain tax exemption and exemption from customs fees when importing items. It can have long-term benefits of investments. They also have the right to repatriate the investment project’s capital, profits and funds to his country after liquidation of the project.”
Photograph for illustrative purpose only