Known for its political stability and forward-thinking legislation (particularly towards crypto), investing in Oman is an alluring prospect if you’re looking to venture into the Arabian Peninsula.
Today, Oman’s economy draws investors with promises of stability, a skilled workforce, and strategic access to the Gulf.
Oman’s strategic position is crucial to its role as a global investment destination. Located at the crossroads of the Arabian Sea and the Indian Ocean, it has quickly become a major player in logistics/trade.
Our full guide about investing in Oman is mostly geared toward foreigners, and covers several topics including, but not limited to:
- Buying real estate (inside and outside of Muscat)
- Trading stocks, bonds, and other financial instruments
- Bitcoin and other cryptocurrencies
- Private equity and Venture capital in Oman
- Should you even invest in Oman in the first place?
Cities to Invest in Oman
Despite its modest size, Oman offers a tapestry of diverse cities and towns, each with its own unique appeal:
Muscat is the capital and largest city and stands as Oman’s economic epicenter. It boasts a thriving finance district, shopping centers, luxury hotels, and a flourishing art scene.
Visitors can journey from Muscat’s bustling traditional souks to UNESCO World Heritage sites like the Bahla Fort.
Bahla Fort is only two hours away from Muscat downtown by car. It’s the first UNESCO World Heritage site in Oman. Today, the country has a total of five properties on the Heritage list.
Looking outside of Muscat, a rising city in Oman’s tourism sector is Salalah. Located in the south, it offers a more relaxed environment and unique historical perspective.
Especially, Salalah is known for lush greenery and a distinctive monsoon season, making it the perfect destination for tourism operators.
Positioned on the northern coast, Sohar is an industrial town with a strong focus on logistics. Sohar’s strategic location on the Gulf of Oman makes it a natural hub for trade.
As Oman’s biggest port and industrial complex, Sohar handles roughly 60 million tons of cargo annually.
The Duqm Special Economic Zone (SEZ) has also gotten significant attention recently, offering generous tax benefits and incentives to businesses. Duqm is quickly turning into a focal point for industrial investment.
How to Start a Company in Oman
The Omani government has taken many actions to attract foreign capital. You’ll generally find it easier to do business here compared with some of the competitors in the region.
One of the key advantages is that foreigners can own 100% of the shares in their Omani companies, provided they meet specific requirements. There are no limitations on the repatriation of capital and profits.
Additionally, entrepreneurs are eligible for several exemptions. The first OMR 30,000 is free from corporate income tax. For a maximum of 50 years, corporations registered in free zones are exempt from corporate tax and customs duties on imports.
Oman has trade agreements with several nations, including the Oman-USA Free Trade Agreement. It permits American investors to have the same legal rights as Omani citizens, including the ability to fully own a company there.
Oman has established free zones like the Duqm SEZ, which provide tax incentives and exemptions. Tax holidays, import duty waivers, capital requirement exemptions, and 100% foreign ownership are all permitted in these zones.
Oman’s tax structure is relatively favorable, with a majority of businesses enjoying a competitive corporate tax rate of just 15%.
Indeed, you’ll find that taxes are pretty low in Oman for individuals and businesses alike.
Trading Stocks in Oman
Oman boasts a well-regulated financial market that appeals to investors worldwide. The Muscat Securities Market (MSM) serves as the primary stock exchange in Oman, hosting numerous companies across various sectors.
One noteworthy feature for foreign investors is the ease of access to Oman’s financial markets. Since Oman has no restrictions on the flow of capital and repatriation of profits, foreigners can invest in the stock exchange.
Many brokerage firms offer remote account opening and trading services, eliminating the need for a physical presence in Oman.
Furthermore, foreign investors can own a significant stake in Omani companies listed on the MSM, subject to regulatory approval.
Still, there are restrictions on foreign investment, namely that foreigners may only hold up to 70% of the shares in any listed Omani company. In reality, that’s unlikely to ever be an issue for the average investor though.
Oman’s ports play an important role in growing the country’s logistics and commerce industry, shifting away its economy from heavily relying on oil and gas.
Oman’s Currency: The Rial (OMR)
With a fixed exchange rate to the US dollar, the Omani rial (OMR) is known for its relative stability compared to elsewhere in the Gulf region.
The official exchange rate is one OMR to 2.60 USD. It’s worth noting that Oman’s foreign exchange reserves, managed by the Central Bank of Oman, are rather substantial.
While not everyone loves the US dollar (or currencies which are pegged to it), it’s better than the alternatives.
The fact is: the greenback remains more stable than, for example, the Kuwati dinar or any of the other exotic currencies here in the Gulf region.
Industry in Oman
Oman’s economy is closely tied to the oil and gas sector with Petroleum Development Oman (PDO) being central to the nation.
Several other firms in the industry include Oman Oil Marketing Company, Masirah Oil Limited, Shell PLC. Yet none of these are as prominent as the country’s main state-owned oil company.
In recent years, Oman has gone through a large diversification effort, emphasizing sectors like hospitality and logistics. Pivoting toward to downstream industries is indeed crucial to Oman’s economic future.
Oman’s hospitality market now has a compound annual growth rate (CAGR) of 9.5% from 2015 to 2022 and is further expected to grow at a CAGR of 8.5% from 2022 to 2027.
Furthermore, Oman’s logistics and transportation industry was valued at $3.57 billion in 2022 and is projected to grow at a CAGR of 6.4%, reaching a value of $5.51 billion by 2029.
Key developments like the Port of Duqm and Salalah Free Zone have enhanced Oman’s role in shipping. Nowadays, these ports are essential for the entire Middle East and North Africa regions.
There’s a lot of work left to be done though. Oil still plays an outsized role in the economy, and if oil prices crash, Oman as a whole will almost surely go along with it.
Will Oman ever manage to truly diversify its economy outside the oil and gas sector? Only time will tell.
Cryptocurrency in Oman
Today, cryptocurrency in Oman remains legal but unregulated. However, Oman has been gradually exploring the potential of cryptocurrency and blockchain technology.
While the country hasn’t yet established a regulatory framework on bitcoin or other forms of crypto, the government taken a strong interest in it. They’ve directly funded blockchain tech on several occasions, in fact.
The Omani government announced in 2023 that it’ll invest nearly $800 million more in cryptocurrency mining operations. Additionally, Muscat approved a $370 million farm run by Exahertz International.
On top of this, a $300 million agreement was made recently with the Phoenix Group of Abu Dhabi to build a 150-megawatt cryptocurrency mining farm with Green Data City, Oman’s first licensed crypto mining company.
If you’re interested in crypto, take special note of Oman’s notable business-friendliness towards bitcoin and other digital assets.
The government has specifically boosted the crypto industry with billions of dollars while other countries in the region have banned it.
As the sector developers, crypto investors should closely monitor Oman’s evolving stance on digital assets.
Al Mouj Muscat, Oman’s first Integrated Tourism Complexes (ITC) project. The project boasts itself as a luxurious mixed-use waterfront development, its facilities include a golf course and a marina.
Buying Real Estate in Oman
Oman’s real estate market has witnessed steady growth. In particular, the government actively encourages foreign investment in free zones and industrial areas by offering zero property taxes.
Foreigners can buy property freehold in Oman in specially designated Integrated Tourism Complexes (ITCs) and certain commercial buildings that have been authorized by the Ministry of Housing.
Several of the most notable ITC developments include Muscat Hills, Saraya Bandar Jissah, and Shangri-La’s Barr Al Jissah Resort.
Foreigners can’t indefinitely hold unused land in Oman though, and are generally given four years to start construction. Developed land is okay here but you can’t sit on it for an extended period of time and “landbank”.
The Ministry of Housing and Urban Planning may extend this period if needed. However, they’ve been known to put the land up for auction if a foreign buyer doesn’t use it within the allotted four years.
Foreign nationals aren’t allowed to purchase property in certain restricted areas, which include areas near military installations, archaeological sites, and historic buildings.
Currently, some of the most popular locations to invest in Oman include Muscat, Salalah, and Sohar with prices per sqm ranging from OMR 300 on the cheapest end to OMR 1000 at the most expensive.
And of course, you’ll find the capital city of Muscat is much pricier than anywhere else in the country.
The Diplomatic Area in Muscat, in particular, is a prime neighborhood. Housing near the Oman Avenues Mall and Muscat Grand Mall is similarly in-demand.
Venture Capital in Oman
Oman’s private equity industry is on the ascent, targeting key sectors such as tech and healthcare. It’s still not huge, but there’s plenty of support.
Projects like the Oman Technology Fund provides support and funding to startups. Back in the first half of 2020, Oman’s startups were able to secure investments totaling OMR 30.8 million (or about $80 million) in total.
Granted, the VC sector has slowed down notably since then. But the country is overall home to a vibrant scene for innovators and entrepreneurs. We think it’ll rise again as global risk-appetite returns to normal levels eventually.
Phaze Ventures, Oman’s first private VC firm, is particularly worth mentioning. With a heavy focus on automation, nanotech, and the Internet of Things, they’ve been vital to the sector’s development.
Muscat’s lively night scene by the coast is one of the most attractive spots for tourists and locals alike.
Phaze Ventures had earlier this year announced a collaboration with OQ, an energy service provider in Oman. The business funds tech incubation both domestically and abroad.
The partnership builds upon strategic alliances and partnerships with Petroleum Development Oman (PDO) and other visionary Omani public and private institutions.
Venture capital is a crucial source of funding for Oman’s startup ecosystem. The country has made significant strides in building a VC ecosystem driven by government programs and private sector participation.
Is Investing in Oman a Good Idea?
Compared to some of its neighbors, Oman’s record of fiscal responsibility and a currency pegged to the US dollar provides a greater degree of economic stability.
That said, its economy still depends highly on the oil sector. While that isn’t by any means unique for a Gulf nation, it’s nonetheless a problem that must be fixed in the long-term as Oman develops.
Further diversification into non-oil sectors such as finance, tech, and tourism would help Oman out a great deal. It’s happening, but at a slow pace.
On the brighter side, Oman has solid infrastructure and a thriving private equity market. The government is especially friendly to crypto, which sets it apart from most countries in the world… let alone the Gulf.
The relative availability of property investment options, including designated zones for foreign ownership and no property tax, provides further investment opportunities.
Additionally, Oman’s strategic location within the Arabian Peninsula positions it as a gateway to global markets.
Oman’s combo of political stability, investment-friendly policies, and a growing economy makes it a compelling choice for investors seeking opportunities in the Arabian Peninsula.
Do keep in mind though: you’re doing business in a small, oil-reliant country of barely four million inhabitants. Your options are naturally limited because of this.
You should perhaps consider looking further towards Southeast, or even East Asia, if you want a greater variety of options. Within the Gulf region, the UAE and Bahrain also aren’t bad as alternatives to Oman.
Remember to never settle on one country immediately. Be sure to do your research and compare your alternatives.