Laws need more clarity to attract financial capital

A man’s commercial laws are least understood and many investors say the reason that trade regulations in the country are opaque because such laws are not well defined and lack clarity.
Investors are sometimes put off from investing their money in the country because there are no clear rules to protect investments or how foreign companies can overcome restrictions in employment and contract arbitrations between partners.
The present system in commercial laws are tangled up in a maze of thick bureaucracy, thinly defined policies with many shortcomings.
In 2016, the World Bank assisted Oman in drafting new trade laws to address the “missing link” in the international standards. That was the third draft revision on such laws that aimed at enticing foreign investments and make Oman “business friendly” to match global standards.
For example, laws that deal with multiple partners that involve foreign investors are not clear enough.
The negotiation of agreements, purchase contracts and rights to government’s benefits such as utility subsidies or land allocations lack clear guidelines. A clear legislation to revamp commercial laws needs refinement to help Oman more conducive to the international market.
One of the biggest concerns with investors is security of their capital once it is repatriated into the country. They say there is a legal threshold that has many loopholes and ambiguities.
Having said that, Oman has successfully attracted a few multi-million dollars investors because these companies have enough political clout to overcome uncertain business storms.
However, smaller investors with a capital of a few million dollars find the choppy waters of investments bouncing precariously in the ocean of Oman’s commercial laws indistinctness. One of the stumbling blocks in the past was the minimum capital requirement to stimulate the investment climate to make Oman more attractive.
Medium scale companies with a capital of a few million dollars are enough to boost the economy. These investment categories are easy to pull in than a hundred million dollars capital.
This is where trade laws that are easy to follow and implement can make the biggest impact.
It remains that Oman must be competitive and ambitious enough to become one of the world’s lucrative markets for investors. The country has already announced the 2040 Economic Plan.
The last 20-year plan, that came into force in 1980, had many economic targets but not all of them were fulfilled. This time, Oman has the chance to put in motion achievable regulatory reforms.
We are not talking about robust commercial laws but user-friendly steps that would turn the heads of investors. The Capital Market Authority (CMA) should be given precedence and take the lead instead of being sidelined in the background.
Though the 2040 Plan is ambitious enough but it must have implementable trade laws strategies that are easily achievable.
Investment polices must match the international requirements and meet the demands of the global markets. Local companies that are 100 per cent owned by Omanis stand to benefit as well from the relaxation of commercial laws.
Many of them never take off from the rigidity of the present trade laws. Flexibility in areas such as partnership and the taxation need also to be revisited.
There are so many sectors that need to be liberalise from pharmaceutical, services and the industries. It is also critical that the amendment of the commercial laws meet the requirements of all investors.
The Sultanate has already forecast the Gross Domestic Product (GDP) growth of up to 5 per cent for next year though the projection could be impacted by oil price fluctuations, according to the government estimation.
But the regional political state of affairs and the global economy could change all that. This is why it is important to close all the existing loopholes in trade laws to pull in more investors.
The contractual confusion on the minimum capital for foreign investments or partnership with a local partner need to be smoothed out as well to make it worthwhile.