Economic Update

Published 28 Feb 2017

Last year saw a surge in activity on Oman’s Invest Easy portal – a one-stop shop for investment and business procedures – with the authorities also rolling out key reforms aimed at attracting investors.

According to the latest figures from the Ministry of Commerce and Industry (MoCI), more than 193,000 commercial transactions were carried out through the online service in 2016 – a 448.6% increase on 2015.

New company registrations, amendments to commercial names and import licence applications were among the procedures completed.

Reforms pay dividends

One of the major developments for prospective foreign investors in Oman last year was the removal in October of the proof of capital requirement, which mandated that new businesses provide a bank statement demonstrating a minimum of OM150,000 ($390,000) within the first sixth months of operation.

In all, the number of processes involved in starting a company in Oman has been cut from 18 to six.

This change came on the back of a much-improved performance in the World Bank’s “Doing Business 2017” report, in which the sultanate’s rank in the starting a business category rose by a considerable 127 places.  

According to the report, it now takes just six or seven days to complete the process of starting a new business in Oman, which compares favourably with the MENA average of 20.1 and the OECD high-income average of 8.3.

Given the recent leap in its standings, the sultanate now ranks first among economies in the GCC for starting a business.

These developments reflect well on the cooperative approach of the MoCI to managing the Invest Easy portal. Since the latter’s launch in 2014, the MoCI has engaged entrepreneurs, law firms and government ministries in an ongoing dialogue, resulting in regular improvements to the functionality and efficiency of the system.

Key trade figures down

While the business environment made rapid gains in 2016, both imports and exports eased in the January-to-September period, according to the latest figures from the Ministry of Finance.

Oil and gas exports experienced the largest drop, falling by 32.9% y-o-y to OM4.16bn ($10.8bn), while non-oil exports were down 24.1% at OM1.8bn ($4.9bn).

Merchandise imports, meanwhile, shrunk by 21.4% to OM6.56bn ($17.1bn) on lower flows from China (35.4%), India (34.8%), Japan (47.9%) and the US (31.1%). While the UAE – the sultanate’s largest source of imports – saw its exports to Oman grow by 9.6% y-o-y to OM3.26bn ($8.47bn), this was offset by declines in other import categories.

Iran trade boosts Customs revenues

Despite the overall downturn, an increase in bilateral trade between the sultanate and Iran brought a welcome boost to government revenue.

Iranian trade with the sultanate increased by 396.2% y-o-y in the first half of 2016, and re-exports through Oman grew by 23%, according to figures from the Oman National Centre for Statistics and Information. The growth in trade was reflected in a 37.8% increase in Customs revenues in the first 10 months of the year.

“Bilateral trade between Oman and Iran exceeded $1bn by the end of October last year. In 2015, it was nearly $560m,” Ali bin Masoud Al Sunaidy, Oman’s minister of commerce and industry, said in January. The minister was speaking at Iran Solo, a five-day exhibition held at the Oman Convention & Exhibition Centre in Muscat to promote trade and commerce between the two countries.

Economic ties

The surge in bilateral trade was complemented by news of growing cooperation across a number of sectors. The Oman-Iran Joint Economic Committee met on September 25 in Tehran, signing three memoranda of understanding, relating to the trade, industry and insurance sectors.

This followed the announcement in March of last year that Iran’s largest auto manufacturer, Iran Khodro, would begin building cars in Oman in 2017 as part of a $200m joint venture with the Oman Investment Fund.

A long-discussed $1.5bn natural gas pipeline between Iran and Oman also remains on the table, and senior officials from the National Iranian Gas Exports Company met with Oman’s oil ministry and three international energy companies – Shell, Total and Korea Gas Corporation – to discuss implementation of the project late last year.  

Following a meeting between Mohammed bin Hamad Al Rumhy, Oman’s minister of oil and gas, and Bijan Namdar Zanganeh, his Iranian counterpart, in early February, Zanganeh said they were expected to finalise talks on the pipeline in early March.