MUSCAT: Oman’s longstanding drive to diversify its predominantly hydrocarbon-dependent national economy has gained strong impetus in recent years on the back of a combination of landmark legislative actions, policy interventions, reinforced organizational mandates and enhanced investment regimes, according to the International Monetary Fund (IMF).
The UN global financial agency said in its newly published report, focusing on its 2023 Article IV Consultation with the Sultanate of Oman, that economic diversification efforts have “accelerated” in recent years.
“Realizing the urgent need for Oman to diversify its sources of income as the energy transition unfolds, several policy actions have taken place since 2019 to expand non-hydrocarbon activities and develop hydrocarbon downstream activities,” the Fund stated.
The diversification strategy, it said, picked up pace in 2019 with the rollout of a number of groundbreaking laws to strengthen the overall regulatory framework, the report noted. Notable are the Commercial Companies Law (CCL), Privatization Law, Public-Private Partnership Law, Foreign Capital Investment Law (FCIL), and Bankruptcy Law, that were issued in 2019, in addition to the Security Law in 2022, the Social Protection Law and Labour Law in 2023. The Foreign Capital Investment Law (FCIL), in particular, authorizes full ownership of non-citizen and single-shareholder companies across most sectors.
Complementing these legislative underpinnings are actions by regulatory bodies, notably the Capital Market Authority (CMA), requiring shareholders and board directors, for example, to enhance transparency and improve corporate governance. Following in its footsteps, Oman Investment Authority introduced its Rawabet reform program to improve performance, governance, and management in state-owned enterprises (SOEs).
The Fund highlighted in particular the role of the Oman Investment Authority (OIA) in fuelling economic diversification. “OIA’s role in the diversification agenda is to attract FDI and joint ventures through regional and international partners, improve the performance and governance of SOEs to lift their contribution to growth and facilitate strategic divestments, and support the development of SMEs and the venture capital ecosystem in Oman,” it stated.
Entrusted with the country’s national and international assets, OIA has since been structured into three sub-funds: the Future Generation Fund (FGF) - the international investment arm of the country; The National Development Fund (NDF), which manages domestic investment; and the newly established Oman Future Fund (OFF), focused on brownfield and greenfield projects, targeting SME participation.
Also playing a pivotal role is the Ministry of Finance, which is overseeing the implementation of the National Program for Fiscal Sustainability and Financial Sector Development (Estidamah). Launched in January 2023, Estidamah aims to entrench fiscal sustainability, as well as develop financial technology, and the legal and judicial system of the financial sector. Part of its remit is to develop human capital in the sector to improve its role in supporting funding opportunities for economic diversification, particularly for SMEs.
Equally important is the role assigned to the Ministry of Commerce, Industry and Investment Promotion (MOCIIP), according to the IMF. Following its restructuring in 2020, the Ministry currently incorporates investment promotion into its mandate.
“The restructuring aims to enable MOCIIP to support business formation and private sector development, in addition to attracting foreign investment to Oman’s targeted sectors. MOCIIP is the implementing government entity of the National Program for Investment and Export Development (Nazdaher) and has recently launched Invest Oman and the Investment Services Center to help streamline procedures and promote investment opportunities,” the report explained.
Likewise, the Fund acknowledges the role of the Public Authority for Special Economic Zones and Free Zones (OPAZ) which, through recent policy initiatives, has repositioned SEZs as key enablers of economic diversification and development.
Rounding off the list is the role of Hydrom, which is mandated to facilitate green hydrogen investment in Oman by outlining and allocating government-owned lands, in addition to structuring large scale projects and overseeing their execution.
Oman Observer is now on the WhatsApp channel. Click here
