New laws a powerful boost for Ease of Doing Business in Oman

Monday’s Royal Decrees promulgating a series of landmark laws have been hailed as a watershed in the Omani government efforts to modernise its business regulatory environment and thereby enhance the Sultanate’s appeal as a destination for foreign direct investors. The Foreign Capital Investment Law, Public-Private Partnership Law, Privatisation Law, and Bankruptcy Law, represent the cornerstones of a new legislative and regulatory framework that effectively catapults Oman into a league of investor-friendly nations of the world, according to a Muscat-based analyst. “These new statutes are critical to the Omani government’s goal of diversifying the economy, as well as attracting much-needed foreign capital into the country,” said Alkesh Joshi (pictured), Partner – Business Tax Advisory, EY Oman. “Furthermore, they will have a positive impact on Oman’s goals to obtain favourable ratings from international credit ratings agents, as well as secure a better ranking from the World Bank in its Ease-of-Doing-Business Index.” With the promulgation of the five new laws, the Omani government has delivered on its pledge to reform and modernise the nation’s legislative framework in order to create a more conducive environment for attracting Foreign Direct Investment (FDI) into the country, said Joshi. “These signature laws represent the bedrock of any country’s legal framework that is designed to give comfort to foreign investors that their investments are safe and value-generating,” the analyst explained. “Foreign investors look for the three ‘Cs’ in a country’s legal environment: Consistency, Clarity, and Certainty, which Oman has now set in stone through the promulgation of these new laws. This represents a huge step forward in putting Oman’s economy in a positive direction.” Also remarkable is the “breathtaking speed” with which all of these landmark statutes have been set into law, Joshi noted. “In the past, we used to lament the slow pace of legislative reform. But, with Monday’s Royal Decrees, we find that Oman is making a quantum leap in the modernisation of its regulatory framework. Having elicited feedback on these laws in their draft stage, the government lost no time in enshrining them into law, which attests to its ambitions to swiftly open up the economy.” Joshi singled out the Bankruptcy Law as among the most momentous of the five new statutes enacted on Monday. “Countries with a good Bankruptcy Law generally enjoy a far better ranking in the World Bank’s Ease of Doing Business Index. We witnessed this in India, with the Sultanate now replacing provisions on bankruptcy in the old Commercial Companies Law (CCL) with a full-fledged law. This is a huge step forward.” Equally significant, he stated, is the Foreign Capital Investment Law (FCIL), which is likely to allow 100 per cent ownership to foreign investors in their companies — a provision that meets a key expectation of prospective investors. Importantly, all five new laws are essentially interlinked and integral to the goal of driving foreign investment inflows into the Sultanate, according to Joshi. “The Foreign Capital Investment Law, for example, effectively amends and replaces an older version that was enacted in 1994, nearly 25 years ago. The new version allows 100 per cent foreign capital investment in certain sectors, which will be identified when the law is published in the official gazette. The law comes into effect in January 2020, and until then, it will serve as a guide for companies looking to explore the Omani market,” he added.