US FDI into Oman tops $13 bn bolstered by FTA

MUSCAT, DEC 9

The Oman-United States Free Trade Agreement (FTA), signed in 2006 and enforced on January 1, 2009, celebrated its 15th anniversary on Monday, December 9, 2024, with a symposium organized by the Ministry of Commerce, Industry and Investment Promotion.

Speaking at the symposium, Jose W Fernandez, Under-Secretary for Economic Growth, Energy, and the Environment, stated, “We commend the annual trade surpassing $3 billion since 2021, the $13 billion in US investments in Q2 2024, and the Sister Ports initiative as clear indicators of the robust economic activity and cooperation between our nations. We call for even stronger ties and greater shared prosperity.”

The agreement has played a key role in enhancing bilateral relations, fostering collaboration across multiple sectors. Oman’s reputation as a model of moderation and balance has cemented its status as a reliable partner for the United States in the region.

Ana Escrogima, US Ambassador to Oman, reflected on the partnership’s progress over the years. “Today we reflect and appreciate all that we have achieved in the past 15 years. We all agree that the FTA has deepened trade ties year by year. Just last year, US foreign direct investment to Oman increased by 36.3 per cent, strengthening our position as Oman’s second-largest foreign investor and creating opportunities for Americans and Omanis,” she said. Escrogima emphasised the broader impact of the agreement, describing it as an “ecosystem of partnership, trade, and trust” built over nearly two centuries. She highlighted this ecosystem as the FTA’s greatest accomplishment, capable of driving future trade growth.

The FTA has significantly boosted trade between Oman and the United States by eliminating tariffs on most consumer and industrial products. This reduction encouraged the flow of goods, transforming Oman’s trade balance from a deficit of approximately RO 108 million in 2009 to a surplus of RO 487 million in 2022.

Faisal al Rawas, CEO of OCCI, said: "Over the past fifteen years, Oman and the United States have made significant strides in strengthening foreign trade and joint investment. By simplifying export procedures for both American and Omani companies and providing a legal framework that instills confidence in investors from both countries, doors have been opened for products, goods, and services to access each other's markets. This progress has been accompanied by collaboration in various areas of mutual economic interest."

Rebecca Olson, CEO of the Oman American Business Council (OABC), underscored Oman’s exclusive position as one of only 14 countries globally to have a free trade agreement with the United States. “Fifteen years ago, Oman was given duty-free access to the largest market on earth,” she said, highlighting the unique opportunities the FTA has created.

The agreement has also attracted increased US foreign direct investment (FDI) in Oman, particularly in the energy, logistics, and infrastructure sectors. In Q2 2024, the United States emerged as Oman’s second-largest foreign investor, contributing $13 billion. These investments have driven economic growth, enhanced infrastructure, and fostered skills transfer and workforce development.

Aligned with Oman Vision 2040, the FTA has supported the country’s economic diversification efforts. It has stimulated growth in non-oil sectors such as manufacturing, logistics, and tourism. Small and medium-sized enterprises (SMEs) in Oman have benefited from improved access to the US market, fostering innovation and entrepreneurship.

The agreement’s alignment of Oman’s trade and investment laws with international standards has enhanced transparency and governance. Additionally, it has complemented Oman’s efforts to position itself as a regional logistics hub, leveraging its strategic location and world-class ports such as Duqm and Salalah.

Beyond its economic advantages, the FTA has strengthened cultural and educational ties between the two nations. Omani students and professionals have gained access to US educational institutions and training programs, fostering mutual understanding and collaboration.

Furthermore, the agreement has positioned Oman as a gateway for US companies to the Gulf Cooperation Council (GCC) region, enhancing regional trade dynamics. Oman’s strategic location and advanced logistics infrastructure have enabled it to act as a conduit for US goods to markets in the Middle East and Asia.

The Oman-US FTA represents a strategic partnership that has significantly contributed to Oman’s economic development and integration into the global economy. It has also solidified bilateral relations and positioned Oman as a competitive player in international trade.