Oman has recently issued a new Foreign Capital Investment Law, which will aim to attract foreign investment by offering key incentives and expanding investment sectors to foreign investors. The new law is part of a string of recent reforms by the government that looks to create a more robust regulatory environment for investment and encourage the private sector to play a more important role in Oman’s development and boost the economy. This article outlines some of the take-away points of the new Foreign Capital Investment law.
The new Foreign Capital Investment Law ("New FCIL") was published in the Official Gazette on 1 July 2019 (Sultani Decree No. 50/2019).
While we expect further clarity in the coming months, here are the key developments that have been confirmed for now :
- The New FCIL will not come into force until 1 January 2020.
- The Minister of Commerce & Industry will issue executive regulations under the New FCIL and it is these regulations which are likely to include significant changes from the old FCIL.
- Reports in newspapers have referred to the minimum capital for companies with non-Omani owners being dispensed with or reduced and the introduction of sectors where no Omani ownership will be required – however we must wait and see what the executive regulations will include. They should be published by 30 July 2020.
- The Minister shall also issue a list of activities in which foreign investment is prohibited.
- The New FCIL shall not affect existing legislation concerning GCC investments, the Special Economic Zone at Duqm, the Public Establishment for Industrial Estates or free zones.
- The New FCIL refers to Investment Projects and the need for an economic viability study to be approved by the Ministry of Commerce & Industry. It is unclear whether all foreign investments will be required to provide such studies for approval or only “projects”.
- Upon the recommendation of the Minister of Commerce & Industry, the Cabinet may grant a single approval (covering construction and manpower as well as all other approvals) to establish, operate and manage strategic development projects involving public facilities, infrastructure, energy (including renewables), roads, transport & ports. The executive regulations shall set out the rules and procedures for such approvals as well as for the granting of land for Investment Projects and exemptions from customs duties. These Projects shall also be exempt from income tax.
- The New FCIL includes a provision which provides that the Oman Courts will have jurisdiction to hear disputes between an “Investment Project” and third parties and that they will hear such disputes on an expedited basis. There is then a reference to arbitration being permitted. The meaning and likely effect of this is unclear and hopefully will be clarified by the executive regulations.