With its international trade showing robust growth and its foreign direct investment (FDI) flow continuing to strengthen, Oman is already an important destination for trade and investment in the GCC. In recent years, a new raft of policies and plans have been put in place to boost existing economic relationships still further. New special economic zones (SEZs), investor-friendly regulations, integrated infrastructure, transparent policies and digitalisation are all key elements of this drive. Bolstered by sustained economic growth, Oman is seeking to leverage its unique geostrategic location, as well as its solid reputation as a welcoming destination for global investors, to boost its global trading position.
Structure & Oversight
Under way since January 1, 2021, the sultanate’s long-term development plan, Oman Vision 2040, makes trade and investment one of its chief priorities. The strategy saw the launch of the National Programme for Investment and Exports Development, known as Nazdaher, which seeks to boost the competitiveness of the sultanate both locally and globally, fostering ties between Oman and businesses around the world. As of July 2024, Nazdaher’s portfolio consisted of some 37 projects worth a collective OR828m ($2.2bn).
The main coordinating body for trade and investment in Oman is the Ministry of Commerce, Industry and Investment Promotion (MCIIP). The ministry also oversees Invest Oman, the sultanate’s official investment promotion agency, which works along with a number of other key bodies, including the Oman Investment Authority (OIA) – the country’s sovereign wealth fund, set up in June 2020 to manage the sultanate’s investment. This investment is both domestic and overseas, with the OIA taking a stake in Elon Musk’s artificial intelligence (AI) company xAI in December 2024, for example. The OIA, in turn, heads Future Fund Oman, launched in January 2024 with OR2bn ($5.2bn) in capital. The fund is intended to support a range of investors, including small and medium-sized enterprises (SMEs), startups and foreign investors (see analysis).
Another important body on the sultanate’s trade and investment map includes the Muscat National Development and Investment Company, more commonly referred to as ASAAS. Founded in July 2014, this entity brings together Muscat Municipality with the Oman Tourism Development Company, TANMIA and the Social Protection Fund. The company’s primary objective is to increase the economic contribution of the non-oil sector, with a target portfolio of OR1bn ($2.6bn), including tourism, transport and construction projects, as well as retail units.
There are several authorities covering the sultanate’s industrial and free trade zones. The Public Authority for Special Economic Zones and Free Zones (OPAZ) in responsible for managing and attracting investment to the country’s free zones. The Authority oversees the Public Establishment for Industrial Estates, also known as Madayn, which operates the country’s industrial zones.
In March 2025 the Investment and Commercial Court was established by royal decree. This provides a specialised judicial framework for local and international investors to use, speeding up processes and allowing the development of a body of innovative rulings and procedures to boost further the attractiveness of Oman as an investment destination.
Incentivising Investment
Underpinning these organisations and programmes is a raft of laws and regulations. Many of these date back to 2019, when the sultanate initiated its Commercial Companies Law, Privatisation Law, Public-Private Partnership (PPP) Law, Foreign Capital Investment Law (FCIL) and Bankruptcy Law. These establish the legal framework for doing business in the sultanate in line with international best practices. Two additional laws, the 2022 Security Law and the 2023 Social Protection and Labour Law, completed the legislative update. The FCIL, in particular, saw a range of new incentives brought in to encourage foreign investment in the sultanate. The law, which came into effect in January 2020, removed the previous requirement for foreign companies based in the country to have Omani shareholders, allowing 100% foreign ownership in a wide range of sectors.
The areas of business that remain restricted are strategic industries, such as oil and gas. In this, foreign investors are still welcome – indeed, they have been crucial to the sector’s development – but must operate as part of joint ventures. The same applies to telecommunications and fisheries. In August 2024 the list of areas closed to foreign ownership was expanded to a total of 123 activities, although these are mostly small business areas, such as handicrafts and the preparation of the sultanate’s famous frankincense products. The industries that are open to 100% foreign ownership include sectors Oman wishes to see developed as part of its Oman Vision 2040 plan, which include construction, tourism, manufacturing and technology.
The executive regulations for the FCIL were issued in June 2020, further defining the nature of foreign investment projects and the benefits available to them. Such projects include any economic activity established in Oman by a foreign investor, either individually or in partnership with other foreigners or Omanis. Once a license for such a project has been issued by the Investment Services Centre of the MCIIP, the company investing is entitled to various exemptions, depending on where they are located. In general, the further from Muscat the project is located, the more likely it is to be exempted from land rentals, specified fees and taxes, as well as customs and non-customs duties.
Such projects can also be exempted for certain periods from rules concerning Omanisation, the sultanate’s labour market localisation programme. Under this scheme, each type of business is given a target ratio of Omani to non-Omani employees. The ratios vary depending on the sector and are aimed at building local capacity and providing more employment for Omanis in the private sector.
Another important localisation scheme is the in-country value (ICV) programme. Beginning with the oil and gas sector, this has been extended to other economic activities and encourages local sourcing of goods and services and local capacity development. Investors who follow ICV guidelines are prioritised for public sector contracts.
SEZs
The FCIL and other changes to business regulations have helped most of Oman align with the regulatory regime that had operated previously in the sultanate’s SEZs. These include: the free zones in Sohar, Salalah and Al Mazunah; the SEZ at Duqm (SEZAD), Khazaen Economic City and the industrial estates run by Madayn. All of these offer 100% foreign ownership and a one-stop shop for clearances and permits, as well as exemption from corporate income taxes, personal income tax, and import and re-import duties. The extent of the benefits also increases with distance from Muscat, the most economically developed part of the country. Sohar Free Zone – the closest to the capital – offers a 25-year corporate tax exemption, for example, while the furthest away – the Salalah and Al Mazunah free zones, both in the south of the sultanate – offer 30-year exemptions. SEZAD also offers 30-year exemptions to encourage investment in Oman’s newest port zone, located on the sultanate’s central coast (see analysis). In addition, repatriation of profits and capital is permitted for the same period.
Some zones also offer specific advantages. Located close to the Oman-Yemen border, Al Mazunah Free Zone offers the opportunity for Yemeni citizens to work there without requiring entry visas or permanent residence permits. Meanwhile, Sohar Free Zone enables resident businesses to take advantage of the sultanate’s free trade agreements (FTAs) with Singapore and the US.
There are several dedicated business parks offering incentive programmes. Innovation Park Muscat is one, with its Scientific Zone concentrating on health, energy, environment and water. Companies located there are entitled to land use agreements of up to 25 years and are exempt from income tax for five years, as well as import and export duties, and minimum capital investment requirements. Additionally, the 13 industrial cities overseen by Madayn, such as Knowledge Oasis Muscat, offer 100% foreign ownership, long land lease terms and nominal rental rates. Industrial projects receive a five-year tax exemption, while foreigners can constitute up to 65% of the workforce in some instances.
Sectoral Benefits
Companies from all sectors start with a base corporate tax rate of 15%, as well as an exemption from import duties on factory equipment and raw materials for factories. In addition, particular sectors receive targeted incentives to help drive investment. In the health sector, projects manufacturing pharmaceuticals and medical equipment receive a five-year tax exemption and incentives to favour local vendors. In mining, concession areas are granted for 20-30 years and concessionaires can explore all available minerals in the concession area. They are also exempt from Omanisation policies at the exploration stage.
In education, taxes applicable to private schools are either reduced or eliminated, considerations are made for the employment of non-Omani teachers, and advantageous banking and financing facilities are made available. In higher education, private universities may receive grants of up to OR3m ($7.8m), along with favourable terms on land use. Aviation projects are subject to reduced rates, while tourism projects can receive low rents – lower still if outside Muscat Governorate – five-year rent exemptions, special visas, specific development agreements for integrated projects and 25-50 year land use agreements, depending on the type and size of project.
Connecting Investment
Food security projects are allowed a 25-year right of use for land for fish farming projects, along with favourable land lease terms and electricity pricing, and loans at 3% backed by the Oman Development Bank. They are also able to benefit from Oman’s FTAs with the US and Singapore and with the other GCC countries, as well as customs exemptions with the European Free Trade Association (EFTA) states. In addition, if the project is in the Musandam Governorate, benefits include an exemption on customs duties for construction materials and equipment, and a 10-year exemption from the 5% local tax and 15% corporation tax.
In September 2021, Oman began a new programme granting long-term residency to foreign investors. An investment of at least OR250,000 ($650,000) qualifies investors for long-term residency permits of five or 10 years. Residents benefit from the fact that the sultanate has the most affordable cost of living in the GCC, according to a 2025 cost of living index for the MENA region.
FTAs
Oman is a member trade and investment agreements, all of which provide particular benefits for investors in the sultanate. The GCC operates a Customs union among its member states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. This means unified customs tariffs and standardised customs regulations among GCC members, with no tariffs or movement restrictions between them. Goods produced in Oman, for example, are considered domestically produced goods in the UAE. There is also mobility of labour for GCC citizens, who enjoy equal rights in all GCC countries in terms of shareholding and other business activities.
The GCC also has FTAs with Singapore and the EFTA. The former includes zero Customs duties for GCC products entering Singapore and vice-versa for around 99% of Singaporean products. Singaporean investors are also allowed 100% ownership of companies in sectors such as telecommunications, IT and financial services. Omanis, meanwhile, can own up to 70% of a Singapore-based company. The EFTA FTA gives Omani industrial products and fish and marine products Customs duty exemptions in EFTA countries. EFTA investors are allowed to fully own Oman-based companies in construction and engineering, hotels and hospitality, and financial services, and are subject to the same income tax rates levied on Omani companies.
Oman also has an exclusive FTA and economic integration agreement with the US. This allows investors to build facilities in Oman and export from there to the US without paying US customs duties, although the country is subject to the 10% baseline tariff levied on all countries by US President Donald Trump in April 2025. This establishes the sultanate, with its well-positioned ports and airports, to act as a conduit for trade – a particularly valuable asset at a time of increased macroeconomic uncertainty.
A further international agreement is the Greater Arab Free Trade Area (GAFTA). Launched in 1998, this accord brought Oman and the other GCC states together with Egypt, Iraq, Jordan, Lebanon, Libya, Morocco, Sudan, Syria, Tunisia and Yemen. In 2005 most Customs duties between these states were waived. However, due to turbulence across the Arab world in the years since, GAFTA continues to await a fuller agreement and implementation. One of its other objectives was to prepare Arab states for membership of the World Trade Organisation (WTO), which Oman joined in November 2000. The sultanate remains committed to the rules and regulations of the WTO, which are periodically reviewed and updated to align with international best practices.
Further FTAs and other trade agreements are also in the pipeline. Negotiations on a GCC-EU FTA were being revived and upgraded in November 2024, a month after the first-ever summit of EU and GCC leaders was held. In 2023 the EU was the GCC’s second-largest trading partner, representing 11.1% of its total trade in goods with the world.
November 2024 also saw the announcement that a UK-GCC FTA was in its final stages of negotiation. The UK is Oman’s largest external investor, contributing around OR13.7bn ($35.6bn) of cumulative FDI by the end of the third quarter of 2024. Talks on an Oman-India Comprehensive Economic Partnership Agreement, meanwhile, were being advanced in early 2025, with the sultanate the third-largest export destination among the GCC member states for Indian goods and services (see analysis).
Performance
Trade powered ahead in 2023, contributing some 45.3% of Oman’s GDP, or OR18.4bn ($47.8bn). That represented growth of 18.6% since 2020, with that expansion continuing into the first half of 2024. Those six months saw trade contribute OR9.8bn ($25.4bn), raising its share of GDP to 46.7%.
As a significant oil and gas-producing nation, Oman’s exports have long been dominated by hydrocarbons. Indeed, in 2023 these accounted for $35.8bn of the sultanate’s $59bn in total exports, according to the IMF. In the first 10 months of 2024, oil and gas took an even bigger share, reaching OR13.8bn ($35.9bn) – up 21.1% year-on-year (y-oy), according to statistics from the National Centre for Statistics and Information (NCSI). This was due in part to an increase in oil refining capacity, along with healthy global oil prices.
Non-oil exports stood at OR5.1bn ($13.3bn) in the first 10 months of 2024, down 16% y-o-y. Overall, though, recent years have seen non-oil exports increasing – from $15bn in 2021 to $19.4bn in 2023. Re-exports have also shown steady growth, from $3.4bn in 2021 to $3.9bn in 2023. The first 10 months of 2024 also saw an increase in re-exports, up 17.3% y-o-y to OR1.5bn ($3.9bn). The UAE is the top destination for Oman’s re-exports, taking OR494m ($1.3bn) of the total in the first 10 months of 2024. Iran was second, with OR309m ($803m), and Kuwait third, with OR106m ($275m). The UAE is Oman’s top non-oil trading partner, receiving OR839m ($2.2bn) in exports over the same period – an increase of 10.8% y-o-y. Saudi Arabia ranked second, with OR663m ($1.7bn), followed by South Korea, with OR580m ($1.5bn).
Non-oil exports were dominated by minerals, totalling OR1.5bn ($3.9bn) in the first 10 months of 2024; ordinary metals and related products, at OR1.1bn ($2.8bn); and plastic and rubber and related products, with OR808m ($2.1bn). In terms of re-exports, the top products were transport equipment, worth OR338m ($878bn); electrical equipment and machinery, with OR315m ($819bn); and foodstuffs, beverages and tobacco, with OR151m ($392m).
As for imports, in the same 10-month period, Oman imported OR13.8bn ($35.8bn), a figure up 11.4%, y-o-y. Minerals were also top, valued at OR3.9bn ($10.1bn); machinery, electrical appliances and equipment, at OR2.4bn ($6.2bn); and chemicals and related products, totalling OR1.3bn ($3.4bn). The top country of origin for imports was the UAE, with OR3.3bn ($8.5bn), followed by China, with OR1.5bn ($3.8bn), and Kuwait, at OR1.4bn ($3.5bn).
Oman has shown a favourable balance of trade for decades, with the last few years recording a positive of OR1.5bn ($3.9bn) in 2020 rising to a recent peak of OR10.6bn ($27.5bn) in 2022 before dipping slightly to OR7.8bn ($20.2bn) in 2023. The current account has also been in the black since recovering from a deficit in 2020 during the Covid-19 pandemic. In 2022 the IMF recorded a current account surplus of $4.4bn, followed by $2.6bn in 2023.
Investment Inflows
Oman continues to attract healthy levels of FDI. NCSI figures show the FDI total for 2023 at OR25.5bn ($66.2bn), a figure that had already been surpassed by the end of the first 10 months of 2024, when it stood at OR26.7bn ($69.3bn). The bulk of this went to oil and gas, with OR21.1bn ($54.9bn), followed by manufacturing, with OR2.1bn ($5.6bn), and then financial services, totalling OR1.4bn ($3.5bn). In terms of countries, the UK held the top spot for FDI, with OR13.7bn ($35.5bn). The US came second, amounting to OR5.3bn ($13.6bn), followed by the UAE, with OR837m ($2.2bn).
In March 2025 the MCIIP announced that FDI in the sultanate had grown by 17.6% over the past five years. Invest Oman has been key to bringing in some of this investment, with 2023 – its first year of operations – seeing it land 29 projects in the sultanate, worth a total OR1.2bn ($3.1bn). Industry, followed by health care and renewable energy, have been the leading sectors receiving this investment.
Recent notable projects include the United Solar Polysilicon plant in the Sohar Free Zone – a OR520m ($1.4bn) investment that was also enabled by the OIA and Future Fund Oman. Another major project was the Sultan Haitham City development, with some OR439m ($1.1bn) in investment secured. Invest Oman has also developed a digital platform to promote the sultanate and to provide a one-stop-shop for investors seeking information. In September 2024 more than 70 strategic investment opportunities worth an estimated OR166m ($431m) were identified by Invest Oman. These opportunities encompass areas such as AI, the circular economy, renewable energy and tourism.
Green Hydrogen
SEZAD reported robust growth in the year to June 2024, with some OR6bn ($15.6bn) in cumulative investment at that point. This was up 55% y-o-y, driven by projects such as the Vulcan Green Steel Plant, Hyport Duqm and the ACME Green Hydrogen Company Project. Indeed, green hydrogen has been a major factor in attracting foreign investment to the sultunate. In March 2023 the Oman Hydrogen Company secured $20bn in commercial agreements with companies from Europe, the Middle East and Asia for green hydrogen production.
Inaugurated in February 2024, Duqm Refinery has begun operations, as has Duqm’s multi-purpose fishing, shipping, Customs and government berth facilities at Duqm Port. Oman’s other SEZs have also performed well. Total investment in Salalah Free Zone reached OR4.6bn ($12bn) by the middle of 2024, with Sohar Free Zone seeing OR1.3bn ($2.7bn), and Al Mazunah Free Zone OR139m ($361bn). Khazaen Economic City reached OR460m ($1.2bn), while the industrial cities totalled OR7.5bn ($19.5bn) in cumulative investment by the same date.
In February 2025 OPAZ announced progress with the development of several new industrial cities in Mahas, Musandam, Al Mudhabi, Thumrait, Seeh Al Sarya, Madha, Al Suwaik and Shinas. Developments included new infrastructure, master plan design and land allocation. The following month, it also announced a 50% reduction in fees for SMEs investing in its SEZs, free zones and industrial cities.
In February 2025 Chinese automobile firm Jetour announced plans for a $18bn electric vehicle production and battery plant, while a dedicated Chinese industrial complex was also announced for Khazaen Economic City. This will involve an OR200m ($520m) investment from Omani-Chinese investment firm Muscat Changming. Later, in March Taiwan’s semiconductor manufacturer EONH Private Holdings announced plans for a chip plant in Oman, along with a training and research centre.
Outlook
Amid a myriad of macroeconomic and geopolitical uncertainties – especially surrounding trade disruptions and potential tariffs – many investors will be thoroughly evaluating opportunities that enable strong growth while also minimising risk. In such an environment, Oman stands to benefit greatly from its long-established reputation for welcoming overseas investment and its geostrategic location on some of the world’s most important shipping lanes. At the same time, Oman is well-positioned as an entry point to a region – the GCC – that is not only a geographic intermediary, but also a creator of new patterns in global trade. Trade for emerging markets is expected to grow by an estimated $673bn through to 2033, according to Boston Consulting Group, with the GCC’s member countries a major facilitator of this expansion.
In addition, recent moves to open up the sultanate by removing barriers to foreign ownership and providing a highly digital, transparent and investor-friendly regulatory environment will also give it a strong edge in attracting further investment. A talented workforce, a raft of Customs agreements and other FTAs, along with a solid, stable political environment are also all pluses for the sultanate. The results of all this are already evident – in 2024, the sultanate ranked 21st in the world for investment, according to the US CEO World survey. With its economy continuing to grow – the IMF predicts 2.6% real GDP growth in 2025, followed by 3.6% in 2026 – Oman is expected to benefit from its strategic location and increased FDI in the coming years.
Read More from OBG
