The government is making an effort to attract expatriates to own businesses and make long-term living more accessible in the Sultanate, with a spike of new legislations that are aimed at boosting the economy.
At the same time, Oman in the last four years has eased rules on the foreign ownership of properties as it seeks to attract investment and boost the economy that has been hit by lower oil prices since 2014.
The new announced rules say expatriates will have full control of companies which they established in Oman. Particularly in medical, scientific, research and technical areas and reduce dependency on sponsorships. Moreover, the top graduates in local universities will be preferred to get a residency permit for a long stay without sponsorship.
The rules will boost falling property prices as more expatriates would need to buy their own houses as they seek to own companies in Oman. One of the most attractive business areas that has been announced last year is the mining of minerals. Expatriates are now encouraged to start business in this sector. Oman is rich with minerals such as zinc, copper, silicon, cobalt, iron and chromite. The government has also early this year unveiled a national strategy for mining, targeting foreign investors.
The government is also highlighting its free zones and logistics areas in Suhar, Duqm and Salalah and actively seeking foreign ownership to boost developments. In these cities, the infrastructure there include airports, ports and excellent road networks to the capital Muscat. Also, property developers are concentrating in building housing areas for investors to buy near the areas of their investments.
Many observers now hope that the decisions will woo new investors to the country, to drive up growth and development to give boost to the real estate market as well. But still, many expatriates in the country have questions about how exactly the new regulations would function and the benefits they will bring to Oman. To start with, expatriates would no longer need a local partner if the venture is above RO150,000. The incentive is introduced to reduce a headache for the previous laws that required sponsorship in this category of businesses.
It would also aid Oman’s ambitions to attract rich expatriates and not just skilled workers like it has been doing in the last 40 years. While skilled workers offer knowledge on work-based sectors, rich investors would drive forward entrepreneurship and create value added economy.
The new rules would mean Oman will no longer be on the shadows of regional countries like the UAE and Qatar when it comes to attract multi-million dollar investments. Since the new announcement aimed at revamping foreign laws, the government has already received over 2,000 interests in establishing businesses in Oman from local based expatriates.
But how would the new incentives work for property developments?
The higher number of investors doing business in Oman would mean more of them would find it convenient to buy houses in Oman rather than paying rent. At the same time, those who would prefer to rent, owners of apartments buildings would welcome such investors. Both ways, the property market would benefit and lift it up from the current slowdown. But the bigger picture goes beyond higher foreign investments index and a boost in the property business. The economy would surely receive a shot in the arm. The government’s coffers would fill up with corporate tax at 15 per cent. At the same time, Oman plans to introduce the valued added tax (VAT) from January 2019. Both the corporate tax and VAT will contribute to nearly 9 per cent of its Gross Domestic Product (GDP) by 2022 if all goes according to plan.
It would also boost the Foreign Direct Investment (FDI) inflow by a further 15 per cent than at the current level in the next four years. The higher FDI would spur growth of non-oil investments by supporting the private sector in areas not accessed by expatriates before.
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