Muscat, Oman — In a significant policy shift, the Omani government has expanded its list of commercial activities prohibited to foreign investors, adding 28 new sectors. This move aims to bolster local entrepreneurship and protect industries integral to Omani heritage and identity.
Background and Legal Framework
On September 1, 2024, the Ministry of Commerce, Industry, and Investment Promotion (MOCIIP) issued Ministerial Decision No. 435/2024, amending the previous Ministerial Decision No. 209/2020. This amendment aligns with Article 14 of the Foreign Capital Investment Law (Royal Decree No. 50/2019), which mandates the creation of a list specifying activities off-limits to foreign investors.
Newly Prohibited Activities
The updated list encompasses a diverse range of sectors now exclusive to Omani nationals. Key additions include:
- Manufacture of traditional Omani items such as halwa (a local dessert), khanjar (traditional dagger), and kimma (Omani cap).
- Tailoring services for both Arab and non-Arab men’s and women’s apparel, including sports and military uniforms.
- Automotive services like electrical repairs, battery recharging, radiator cleaning, tire services, and car washing.
- Wholesale and retail sales of fruits, vegetables, cooking gas, honey, and traditional handicrafts.
- Operation of motor vehicle fuel stations and diesel fuel stations.
- Real estate brokerage, manpower recruitment, and general building cleaning services.
The comprehensive list of all 28 prohibited activities reflects the government’s intent to maintain tighter control over industries deemed crucial to national identity and economic stability.
Government’s Rationale
The Omani government emphasizes that this decision seeks to balance attracting quality foreign investments with encouraging domestic entrepreneurial projects. By reserving certain sectors for Omani investors, the policy aims to:
- Support small and medium enterprises (SMEs) owned by Omanis.
- Generate employment opportunities for citizens.
- Preserve national identity and protect industries related to Omani heritage.
The government asserts that these measures will empower local businesses to thrive in sectors historically significant to Oman. The decision is part of broader efforts to diversify the economy while ensuring that local enterprises have competitive opportunities to grow and prosper.
Impact on Foreign Investors
Foreign investors currently operating in the newly prohibited sectors may face challenges, including potential disruptions to business operations, contract terminations, and financial losses. For prospective investors, the restrictions may limit opportunities, prompting a need for strategic adjustments in investment plans. Legal experts advise foreign businesses to conduct thorough due diligence before entering the Omani market.
While the decision may be seen as restrictive, the government has assured that sectors critical to economic diversification, such as technology, manufacturing, and tourism, remain open to foreign participation. Investors are encouraged to explore alternative avenues for collaboration, including joint ventures with Omani nationals.
Response from the Business Community
The business community’s reaction to the expanded restrictions has been mixed. Some local entrepreneurs welcome the decision, viewing it as a long-awaited opportunity to strengthen their market presence without competing against established multinational corporations. Omani business owners believe that the policy will create a more level playing field, enabling SMEs to thrive in traditionally competitive sectors.
Conversely, some foreign investors express concern about the unpredictability of market regulations and the possibility of further restrictions in the future. Investors who have previously operated in restricted sectors may face difficulties in restructuring their business models or divesting their existing assets.
Economic Implications
The expanded list of prohibited activities may have implications for Oman’s broader economic landscape. By limiting foreign participation in certain sectors, the government aims to increase the contribution of local businesses to the national GDP. However, there are concerns that a reduction in foreign investment may impact the flow of capital, technology transfer, and international expertise — all critical components of economic growth.
Experts suggest that the success of the policy will depend on the government’s ability to support local businesses through training, financing, and infrastructure development. Additionally, transparent regulatory processes and clear communication will be essential to mitigate any negative impact on investor confidence.
A Strategic Shift in Economic Policy
Oman’s decision to expand the list of restricted activities aligns with its broader strategy of promoting economic self-reliance and reducing dependency on foreign labor and investment. The policy is also seen as a step toward fulfilling Oman Vision 2040, the nation’s long-term development plan aimed at sustainable growth and economic diversification.
As Oman navigates the complexities of globalization while prioritizing local development, the challenge will be to strike a balance between protecting domestic interests and remaining an attractive destination for strategic, high-value foreign investments. Time will reveal whether this bold move strengthens Oman’s economy or results in unintended consequences for its investment climate.
The expanded restrictions signify a critical juncture in Oman’s economic narrative, where tradition and progress intersect. The global business community will be closely watching how these changes unfold and impact the nation’s aspirations for growth and development.
