Antiquity of FDI in Oman

 

Antiquity of FDI in Oman

Oman is a small state that produces oil with a population of approximately 4 million people. Before oil was discovered in the state around 1960s, much of its population were working in agriculture sectors while the rest of the population were engaged in activities such as fishing and trading. However, after oil was discovered in the 1960s, the economy of Oman gets transformed because of oil export. Due to the financial surplus that resulted from oil revenue around the 1970s and 1980s, Oman was able to finance local development programs without inputting foreign capital. Oman had less focus on entry behavior regarding foreign entry and ownership procedural requirement. Taking an example of both 1974 and 1978, the law governing investments in Oman prioritized giving local investor's better chance than foreign investors and Oman policy makers were less interested in obtaining foreign capital. 

Increased export of oil resulted in fall in prices of the oil, which lead to the deficit in 1998 of around 122 million from 19732. This deficit made Oman discern that it cannot hide from globalization. Oman also realized that it cannot find a way to venture into World Trade Organization (WTO) without taking hand in lowering tariffs and taking other obligations required for WTO membership such as conducive environment for foreign direct investment (FDI). Consequently, Oman started incorporating new technology and information while securing the existing relevance technology. Oman is attempting to widen its economy and lower as much as possible its normal routine of oil dependency as the key source of its income by opening doors to foreign investors.

Law and order situations, institutional standard and social climate are appealing points to attract FDI and gives much better position to Oman among top 30 countries of the world. Industrial development policies and labor cost ranking for Oman is still far behind and rank Oman amongst less favorable countries for FDI opportunities. Skilled labor access and foreign market access still appear as big obstacles on the way to derive big share of FDI inward. 

Fortunately, an encouraging comment Oman has received from World Investments Report (WIR) that Oman’s government is steadfast to ensuring their strategies are market-oriented and to attract more FDI. In all terms, Oman requires keen considerations while formulating policies specifically for the FDI carrying and supportive sectors.