Ref: Pauceanu, A. M. (2016). Foreign Investment Promotion Analysis in Sultanate of Oman: The Case of Dhofar Governorate. International Journal of Economics and Financial Issues, 6(2).

Alexandrina Maria Pauceanu*

Department of Marketing and Management, College of Commerce and Business Administration, Dhofar University, Salalah, Oman.

Sultanate of Oman is today ranked in the 70th position for the year 2016 out of the possible total of 189 economies that are found within the ease of operating business (for the year 2015 it was classified on 77th position). This is based on the 2016 ranking that was undertaken by the World Bank. Despite the fact that the country experienced a decline in its oil production level, an approach which is steady in the implementation of structural reforms have greatly contributed to the kind of output growth which is not oil (World Bank, 2014). The currently existing medium-term prospect of Sultanate of Oman looks very favorable. This has been given support for a kind of continuous positive outlook for energy prices, climate which is improved for both domestic and foreign and strong investment momentum. Oil prices have dropped to 60$/Barrel, which has had a negative impact on Sultanates economy; the country is surrounded by instability and has managed to remain stable throughout the turmoil of the so-called Arab spring (World Bank, 2014). If we use Hofstede Cultural Dimension model to make an educated guess about Sultanate of Oman cultural profile, it is fair to conclude that it can be characterized as hierarchical order and centralization state, defined by a collectivistic society which takes care of its own, that is neither masculine nor feminine dominant, with a high preference for avoidance of uncertainty (rigid codes of beliefs and behavior, for instance), and prefer to maintain time-honored traditions and norms while viewing societal and/or cultural changes with suspicion. The government of Sultanate of Oman has in the recent past been very keen in promoting more foreign investors in the country ,so as to sustain and enhance its economic growth for the purpose of realizing its main economic diversification strategy. Foreigners owning businesses is usually permitted as long as the unforeseen investment plans to put economic growth of the country as their main agenda. Additionally, there are no turf restrictions on repatriation of capital and exchange currency together with dividend transfer (World Bank, 2014). The Oman government is in possession of a regime of taxation which is substantial in the form of corporate tax and is in most cases very low without existence of individual earnings tax. There also exist labour laws in the country which are very flexible and promote escalation of productivity and at the same time. The cost which is non-salary incurred for employing a worker is also very low. Literature has indicated that the Dhofar Governorate people are regarded as highly hospitable and friendly within the region of the Middle East (World Bank, 2014). Foreigners can today compete with the locals in a move which is even more balanced, regarding the locals as extra striking to the employees, though in the real sense it should be those highly-skilled expatriates who have the skills and knowledge of the mobility rights perceived in this case (Al Hamadi et al., 2007). It is relevant to mention here the reinforced Omanisation strategy which is strongly reinforced but there is lack of skills among Omani workforce; this fact will affect the productivity and companys HR policies and their implementation. Asimilar policy emiraitisation is implemented in the neighbour country, United Arab Emirates. As it was mentioned before, the foreign investors keen to settle their businesses at Salalah Free Zone have the opportunity of participating in the definite export arrangements that are offered to the companys found in Sultanate of Oman by the institutions dealing with finances as well as of the Free Trade Agreements with USA and Singapore. The Salalah Free Zone region is undergoing development of multiple phases (Gulf States News, 2015). There are plans for this Free Zone to provide a variety of warehousing, industrial and research among others as well as office facilities and space for residence. The other private-public sector is Knowledge Oasis Muscat (KOM). Is a park of technology that is situated more than 30 miles from the main area of Muscat cit. KOM is defined as local, which is quite favorable for businesses that are foreign technology oriented, together with establishing blue chip multinationals, who have the desire of flourishing and innovating within the Gulf setting (Abdallah, 2015). The main incentive provided to the foreign investors comprise of being 100% foreign ownership (there is no need of local sponsors); there is a required minimum investment capital of around Omani Rials 20,000 in a position to access high-speed internet with rates that are very competitive, low level of omanisation required. KOM tenants have the ability of being registered on the tender board and hence capable of bidding for state tenders, no individual earnings tax imposed on the workers and foreign exchange control, a duty-free access of products to GCC countries from Sultanate of Oman, offering foreigners with networking meetings, environment and events that give encouragement of collaboration and mutual support (Abdallah, 2015). The Sultanate of Oman national development and the kind of experiences existing within its labour is the same as those that are experienced in the GCC countries, though the cost of foreign labour in Dhofar Governorate has been significantly minute when compared to other nations in the region (Economy, 2007). At all times, it provides the foreign businesspersons who are interested in the issues of economics and investment in the Sultanate with the chance of learning about resurgence that happens within the private sector, the various activities concerned, areas of operation and various levels and cooperation networks expansions and the kind of interrelationship that exists between the public and private sectors conforming to a kind of partnership which is genuine that support the trail of social and economic development in the country (Economy, 2007). As from the beginning of the 1990s, Oman has always embarked on a kind of effort of raising the small level of the flow of FDI. The speeding up process of FDI liberalization has resulted in the ability for Oman to expand more of its policies that are somehow open into the area of commerce and industry long measured as responsive and to give permission for some forms Industry and mining.

1- Why Oman needs to attract and promote more FDI nowadays? (2 marks)