Foreign Direct Investment
Global foreign direct investment (FDI) flows showed a strong rebound in 2021, up 77% to an estimated USD 1.65 trillion, from 929 billion in 2020, surpassing their pre-COVID19 level. FDI flows in developing countries increased by 30% but almost three quarters of the total increase in global FDI (USD 500 billion) was recorder in developed economies, with developing economies showing a more modest recovery growth. FDI inflows to West Asia and the middle East increased by more than 49% in 2021 to 90 billion USD (UNCTAD, January 2022).
According to UNCTAD's 2021 World Investment Report, FDI inflows to Oman reached USD 4.1 billion in 2020, showing an increase from USD 3.4 billion in 2019, despite the global econmic crisis triggered by the Covid-19 pandemic. Oman's FDI stock has been largely restored since the 2010 crisis and remains robust, at USD 35.4 billion in 2020. Investment has quickened, in particular thanks to the development of the Duqm Special Economic Zone, which involves the construction of a port, an airport, a refinery and tourist facilities. According to figures by the National Centre for Statistics and Information (NCSI), the main investing countries are the UK, followed by the United Arab Emirates, Kuwait, Qatar, and Bahrain. The bulk of FDI were directed towards the oil & gas sector, with lower shares going to the financial services, manufacturing and real estate sectors.
The new Foreign Capital Investment Law adopted in 2020 and specifically the abolition of foreign ownership limits has been welcomed by the international community (WTO, 2021). It relaxed restrictions on foreign investment, streamlined the registration and licensing procedures for foreign investors and aligned foreign investors’ rights and incentives to those given to local investors. Special Economic zones have also attracted substantial foreign investment, though there is scope to further stimulate spillover effects from these economic zones to the local economy (IMF, 2022).
The Sultanate of Oman seeks to attract investors by offering tax incentives and customs duty exemptions. Oman has a stable political and macroeconomic situation. However, access to a limited number of sectors and government pressure on foreign companies to recruit domestic workers are major obstacles to foreign investments. In 2020, Oman issued the new Foreign Capital Investment Law, which removed the minimum 30% Omani ownership requirement for Oman-based companies in a bid to attract further foreign investment. In 2021, Oman introduced new incentives for foreign investors, including exemption from certain fees and operational requirements for investment projects in the country's less-developed regions. Oman ranks 68st in the last World Bank's 2020 Doing Business report, gaining ten places compared to the previous year.
| Foreign Direct Investment | 2018 | 2019 | 2020 |
| FDI Inward Flow (million USD) | 5,940 | 3,420 | 4,093 |
| FDI Stock (million USD) | 28,207 | 31,332 | 35,425 |
| Number of Greenfield Investments* | 57 | 61 | 24 |
| Value of Greenfield Investments (million USD) | 19,683 | 3,647 | 6,131 |
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
| Country Comparison For the Protection of Investors | Oman | Middle East & North Africa | United States | Germany |
| Index of Transaction Transparency* | 8.0 | 6.4 | 7.0 | 5.0 |
| Index of Manager’s Responsibility** | 5.0 | 4.8 | 9.0 | 5.0 |
| Index of Shareholders’ Power*** | 3.0 | 4.7 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
