VZCZCXYZ0000
RR RUEHWEB

DE RUEHMS #0044/01 0200927
ZNR UUUUU ZZH
R 200926Z JAN 10
FM AMEMBASSY MUSCAT
TO RUEHC/SECSTATE WASHDC 1145
INFO GULF COOPERATION COUNCIL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS MUSCAT 000044 
 
SIPDIS 
STATE FOR USTR (BUNTINJ). 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB PGOV MU
SUBJECT: OMAN INVESTMENT CLIMATE STATEMENT 2010 
 
Overview of Foreign Investment Climate 
 
As part of its development plan, Oman actively seeks to attract 
foreign investors. A hallmark of this openness to foreign 
investment is the recently implemented U.S.-Oman Free Trade 
Agreement (FTA) which Oman sees as a means to attract American 
investors. Areas that Oman specifically promotes for foreign 
investment are: manufacturing, information technology, tourism, and 
higher education.  Investors transferring technology and management 
expertise, and providing employment and training for Omanis, are 
particularly welcome.  The Omani Center for Investment Promotion 
and Export Development (OCIPED), which falls under the Ministry of 
Commerce and Industry (MoCI), is tasked with attracting foreign 
investors and smoothing the path for business formation and private 
sector project development.  OCIPED also provides prospective 
foreign investors with information on government regulations, which 
are not always transparent and sometimes contradictory.  Although 
MoCI/OCIPED have established a 'one-stop shop' for government 
clearances, the approval process for establishing a business can be 
slow, particularly with respect to land acquisition and labor 
requirements. Further, there is a marked difference between 
approvals given to majority Omani companies, which tends to proceed 
at a quicker pace than an American company. Some Omani business 
people report being able to obtain approval within three days, 
while American applicants tell of three-month delays. 
 
            With the implementation of the FTA, U.S. firms (with 
some exceptions, including legal services) may establish and fully 
own a business in Oman without a local partner.  U.S. companies may 
also now open branches in Oman before concluding any contracts or 
agreements with the government or local business.  These are 
significant changes from previous years and highlight the 
advantages the FTA has achieved for U.S. businesses. New U.S.-Oman 
FTA commitments have increased opportunities for U.S. financial 
service providers, as well as cross-border service providers in the 
areas of communications, express delivery, computer-related 
technologies, health care, and distribution, among others.  Other 
(i.e., non-U.S.) majority foreign-owned entrants are barred from 
most professional service areas, including engineering, 
architecture, law, or accountancy. Although U.S. investors are 
provided national treatment in most sectors, Oman has an exception 
in the FTA for legal services, limiting U.S.-ownership in a legal 
services firm to no more than seventy percent. 
 
            The Foreign Capital Investment Law (Royal Decree No. 
102/94) provides the legal framework for non-U.S. and non-GCC 
foreign investors. For most investments the law requires that there 
be at least 51% Omani ownership, although upon approval by the 
Ministry of Commerce and Industry the Omani share may be reduced to 
35%. There are exceptions; notably wholly foreign-owned branches of 
foreign banks are allowed to enter the market. Investors may also 
obtain approval by the Ministerial Cabinet to allow a 100% 
foreign-owned business entity. 
 
            Aside from ensuring that the investor satisfies the 
legal requirements for entry into the market, Oman does not screen 
foreign investment. If a concern were raised regarding a particular 
investor's entry into the market, the MoCI would be the government 
body tasked with reviewing the proposed investor. 
 
            Parastatals have been progressively privatized in Oman. 
The most successful privatization program to-date has been the 
electricity and desalinization privatization program. The 
telecommunications sector has also been increasingly privatized. In 
2004 the Qatari firm Qtel and the European telecommunications 
company, TDC, partnered with several prominent Omanis to form the 
Nawras Telecommunications Company. Nawras was the first private 
company to obtain a license to build their own telecommunications 
network and provide telecommunications services. However, the 
recent global recession has markedly slowed Oman's privatization 
process. The bidding process on state enterprises entering the 
private market is frustrated as potential investors are unable to 
obtain reliable dates for announcements of sales and in response to 
inquiries. The delays are generally not associated with corruption, 
and Oman has progressively improved its corruption perception 
index, rising to a ranking of 39 in the Transparency 
International's 2009 Corruption Perception Index. 
 
            Industrial establishments must be licensed by (MoCI). 
In addition, a foreign firm interested in establishing a company in 
Oman must obtain relevant approvals from other ministries, such as 
the Ministry of Environment and Climate Affairs and the Oman 
Chamber of Commerce and Industry.  Foreign workers must obtain work 
permits and residency permits from the Ministry of Manpower and the 
Royal Oman Police's Immigration Office. To speed the approval 
process the MoCI has created a "one-stop-shop" where 
representatives from relevant ministries are present to receive 
 
forms and applications. 
 
            The recently implemented income tax law for Oman 
establishes a flat tax rate of 12% for all businesses, with 
tax-free exemption of the first RO 30,000 ($78,023). In the past, 
foreign branches (other than companies registered in GCC countries) 
were taxed at a rate of up to 30%. Oman will now have the lowest 
tax rate in the region. In addition, foreign airlines and shipping 
companies are completely exempt from taxation based upon reciprocal 
treatment by foreign governments. Higher education institutes, 
private sector schools, training institutes, and private hospitals 
are also exempt from tax. 
 
                        Commercial law in Oman is continually 
evolving. Business contracts are enforced, although the judicial 
process is slow, averaging 548 days to enforce a contract. 
Insolvency laws are nascent, at this time only allowing for 
complete dissolution rather than restructuring. Many businesses opt 
to simply shut their doors rather than go though the insolvency 
process, which can take up to four years. Oman recently adopted an 
eCommerce law although it has yet to be tested in the courts 
system. Oman is ranked 65 in the World Bank's Doing Business Report 
¶2010. Oman offers a variety of investment incentives which focus on 
industrial development. 
 
 
Conversion and Transfer Policies 
 
               Oman does not have restrictions or reporting 
requirements on private capital movements into or out of the 
country.  The Omani Rial is pegged to the dollar at a rate of 
0.3849 Omani Rials (O.R.) to the U.S. dollar and there is no 
difficulty in obtaining exchange.  In spite of some recent currency 
speculation, the government has firmly and publicly stated that it 
is committed to maintaining the current peg.  Oman continues to 
hold firm in opting out of the proposed GCC common currency. As 
with many of its Gulf neighbors, Oman has not yet issued government 
bonds. 
 
               The Central Bank of Oman (CBO) regulates local banks 
on all lending practices to individuals and corporations inside the 
Sultanate. The financial institutions are controlled by a strong 
and effective regulatory system. Oman's banking regulatory 
framework was put to the test in 2009 with the "Diamond Frame 
Portfolio" case. The Diamond Frame Portfolio was a Ponzi scheme 
which attracted a large number of uninformed Omani investors. In 
December 2009, the architects of the scheme were convicted of 
fraudulent banking practices and practicing banking activities 
without a license. 
 
Oman also has anti-money laundering regulations, and commercial 
banks work with the Central Bank and the Royal Oman Police to 
identify suspicious transactions.  Additionally, a Ministerial 
Decision from MoCI requires companies conducting financial 
transactions in certain trade sectors to report clients they 
suspect may be participating in money laundering or the financing 
of terrorist organizations.  The decision also mandates that these 
establishments develop and offer special training to their 
employees in order to ensure that precautionary measures against 
illegal transactions are in place and that suspicious incidents are 
properly reported. These regulations remain untested. 
 
               Individuals have to be resident in Oman or have an 
investor's visa to open a bank account and transfer funds.  For 
foreign bank transfers, Omani banks require complete documentation 
of the source of funds before approving the transaction.  The 
government is also in the process of further strengthening its 
regulatory regime by incorporating several Financial Action Task 
Force recommendations into law. 
 
Expropriation and Compensation 
 
               Oman's belief in a free market economy and desire 
for increased foreign investment and technology transfer make 
expropriation or nationalization extremely unlikely.  In the event 
that a property must be nationalized, Article 11 of the Basic Law 
of the State stipulates that the Government of Oman provide prompt 
and fair compensation.  Further, under the U.S.-Oman Free Trade 
Agreement, Oman must follow international law standards for 
expropriation and compensation cases, including access to 
international arbitration. 
 
 
 
Dispute Settlement 
 
               Oman is a party to the International Convention for 
 
the Settlement of Investment Disputes between States and Nationals 
of other States (ICSID) and the New York Convention of 1958 on the 
Recognition and Enforcement of Foreign Arbitral Awards, although no 
specific legislation/decrees have been issued for the conventions' 
implementation.  However, the ultimate adjudicator of business 
disputes within Oman is the Commercial Court. The Commercial Court 
has jurisdiction over most tax and labor cases, and can issue 
orders of enforcement of decisions.  The Commercial Court can also 
accept cases against governmental bodies; however the Court can 
only issue, but not enforce, rulings against the government.  If 
the value of the case is less than $26,000, the Commercial Court's 
decision is final. If the value exceeds $26,000, the case is taken 
up by a Court of Appeal. Parties may appeal their case to the 
Supreme Court for a final disposition. Cases can only be reopened 
after judgment if new documents are discovered or irregularities 
(e.g., forgery, perjury) are found.  There is no provision for the 
publication of decisions, and the decisions do not carry precedent. 
U.S. firms should note that the Commercial Court is relatively new, 
replacing the Authority for Settlement of Commercial Disputes, and 
many practical details regarding the new Court have yet to be 
finalized. 
 
               Oman maintains other judicial bodies to adjudicate 
various disputes.  The Labor Welfare Board under the Ministry of 
Manpower hears disputes regarding severance pay, wages, benefits, 
etc.  The Real Estate Committee hears tenant-landlord disputes, the 
Police Committee deals with traffic matters, and the Magistrate 
Court handles misdemeanors and criminal matters.  All litigation 
and hearings are conducted in Arabic. Binding international 
arbitration of investment disputes between foreign investors and 
the Omani government is recognized, although it has to be enforced 
as there has yet to be a dispute of this nature. Omani courts 
recognize and enforce foreign arbitral awards, and international 
arbitration is accepted as a means to settle investment disputes 
between private parties. 
 
               The Oman Chamber of Commerce and Industry has an 
arbitration committee to which parties to a dispute may refer their 
case when the amounts in question are small.  Local authorities, 
including 'walis' (district governors appointed by the central 
government), also handle minor disputes.  Although Oman is a member 
of the GCC Arbitration Center, located in Bahrain, the Center is 
not yet firmly established and is not widely used. 
 
Performance Requirements and Incentives 
 
               Oman is subject to trade related investment measures 
(TRIMs) obligations. At this time, it is not alleged that Oman 
maintains any measures that violate the WTO TRIM text. 
 
               Oman offers several incentives to attract foreign 
investors. Incentives include: 
 
*    A five-year tax holiday, renewable once for an additional five 
years; 
 
*    Low-interest loans from the Oman Development Bank (now 
available on a very limited basis, and only for small firms); 
 
*    Low-interest loans from the Ministry of Commerce and Industry; 
 
 
*    Subsidized plant facilities and utilities at industrial 
estates; 
 
*    Feasibility studies supplied by the Ministry of Commerce and 
Industry; 
 
*    Exemption from customs duties on equipment and raw materials 
during the first ten years of a project, with packaging materials 
exempted for five years; 
 
*    The lingua franca is English; and 
 
*    No personal income tax. 
 
Under the Industry Organization and Encouragement Law of 1978, 
incentives are available to licensed industrial installations on 
the recommendation of the Industrial Development Committee. 
"Industrial installations" include not only those for the 
conversion of raw materials and semi-finished parts into 
manufactured products, but also mechanized assembly and packaging 
operations.  Firms involved in agriculture and fishing may also be 
included.  Foreign firms operating in Oman must meet Omanization 
requirements. For manufacturing enterprises, the Omanization 
requirement is 35%, for service industries the Omanization 
requirement is up to 90%. A current list of Omanization 
 
requirements by sector may be obtained at: 
http://www.manpower.gov.om/en/omani/index.asp . 
 
Omani and American-owned commercial enterprises, and foreign 
industrial producers in joint venture with local firms that produce 
goods locally, need to meet standard quality specification. 
Additionally, the price of goods should not exceed by 10 percent 
that of similar imported goods to be given priority during 
government purchases. The government offers subsidies to offset the 
cost of feasibility and other studies if the proposed project is 
considered sufficiently important to the national economy.  Only in 
the most general sense of business plan objectives does proprietary 
information have to be provided to qualify for incentives. 
 
Foreign investors are not required to purchase from local sources 
not to export a certain percentage of output, nor do they have 
access only to foreign exchange in relation to their exports. 
Offsets on government procurements are very rare, almost never 
mentioned to a U.S. bidder, and, if they are requested, would 
originate with the Ministry of Defense. U.S. and foreign firms are 
able to participate in government financed/subsized research 
programs on a national treatment basis, and are at times solicited. 
 
 
Right to Private Ownership and Establishment 
 
               Under Oman's foreign capital investment law, 
non-Omanis are not allowed to conduct commercial, industrial, or 
tourist-related businesses, or participate in any Omani company 
without a license issued by the Ministry of Commerce and Industry. 
Pursuant to the FTA, however, U.S. investors are no longer required 
to obtain a license to operate from the MoCI. 
 
               According to Oman's commercial companies law, all 
actions by private entities to establish, acquire, and dispose of 
interests in business enterprises must be announced in the 
commercial register, and may be subject to the approval of MoCI. 
Subject to the licensing and taxation previously noted, foreign and 
domestic entities can engage in all legal forms of remunerative 
activity.  Government entities do not compete with the private 
sector, and public policy favors the privatization of public 
utilities. 
 
Protection of Property Rights 
 
               Securitized interests in property, both moveable and 
real, are recognized and enforced in Oman. Foreign nationals are 
able to obtain mortgages on land in designated areas; the 
Integrated Tourist Complexes. Individuals record their interest in 
property with the Land Registry at the Ministry of Housing. The 
legal system, in general, facilitates the acquisition and 
disposition of property rights. 
 
Oman is a member of the World Intellectual Property Organization 
(WIPO) and is registered as a signatory to the Paris and Berne 
conventions on intellectual property protection. Oman has also 
signed the WIPO Copyright Treaty and the WIPO Performances and 
Phonograms Treaty. Oman is also a signatory to the International 
Convention for the Protection of New Varieties of Plants. 
 
Trademark laws in Oman are Trade Related aspects of Intellectual 
Property Rights (TRIPs) compliant. Trademarks must be registered 
and noted in the Official Gazette through the MoCI. Oman's 
copyright protection law extends protection to foreign copyrighted 
literary, technical, or scientific works; works of the graphic and 
plastic arts; and sound and video recordings.  In order to receive 
protection, a foreign-copyrighted work must be registered with the 
Omani government by depositing a copy of the work with the 
government and paying a fee.  The government has enforced copyright 
protection for audio and videocassettes, and destroyed stocks of 
pirated cassettes seized from vendors.  The government has extended 
protection to foreign-copyrighted software. Retailers may not 
import or sell non-licensed software. The government designated 
MoCI as the primary investigative authority for intellectual 
property issues; its efforts are supported by the Royal Oman 
Police. 
 
            Additionally, Oman provides strong intellectual 
property rights protection under the U.S. - Oman FTA.  After 
revising its industrial property and copyright laws to comply with 
its FTA obligations, Oman now offers increased IPR protection for 
copyrights, trademarks, geographical indications, and patents. 
Pursuant to the FTA, Oman will also improve enforcement and 
protection of undisclosed test data from unfair commercial use. FTA 
related revisions to IPR protection in Oman build upon the existing 
intellectual property rights regime, already strengthened by the 
passage of WTO-consistent intellectual property laws on copyrights, 
 
trademarks, industrial secrets, geographical indications and 
integrated circuits in 2000. 
 
 
 
 
 
Transparency of Regulatory System 
 
               The government of Oman recognizes that its 
regulatory environment may hamper investment and commercial 
activity. Because decisions often require the approval of multiple 
ministries, the government decision-making process can be tedious 
and may be perceived as non-transparent. Obtaining licenses for 
some business activities, particularly labor certifications, can be 
time consuming and complicated. Other licenses may be rapidly 
secured through the new "one-stop shop" at the MoCI. Despite the 
creation of the "one-stop-shop_ some firms may still find the 
documentation requirement for licensure perplexing due to the lack 
of widely disseminated policies of the various ministries at the 
shop. 
 
               Oman's labor laws, which require minimum quotas of 
Omani employees depending on the type of work, form another 
potential impediment to foreign investment.  The government's 
Omanization effort has been the subject of criticism in the Omani 
private sector, which sees it as harmful to productivity and 
restrictive in hiring and firing policies.  U.S. companies are not 
exempt from Omanization requirements under the FTA. 
 
               Proposed laws and regulations are not published in 
draft form for public comment. However, there has been a recent 
move towards greater transparency in two areas. First, the Telecom 
industry is regulated by the Telecommunications Regulatory 
Authority (TRA). The TRA oversees the process of liberalization and 
privatization of the telecommunications sector.  Chaired by the 
Secretary General of the Ministry of National Economy, the TRA's 
committee members include officials from the Royal Oman Police.  In 
order to meet Oman's FTA commitments, the TRA has issued new 
procedures for businesses to qualify for Class I licenses and has 
submitted for public comment its proposal to issue Class II 
licenses. 
 
               Second, the government has issued a series of 
regulations aimed at increasing transparency and disclosure in its 
financial markets.  The Capital Market Authority (CMA) has ordered 
all public companies to comply with a set of standards for 
disclosure.  Under the requirements, holding companies must publish 
the accounts of their subsidiaries with the parent companies' 
accounts.  Companies must fully disclose their investment 
portfolios, including details of the purchase cost and current 
market prices for investment holdings.  The new initiatives also 
require publication of these financial statements in the local 
press.  At the same time, the Central Bank has introduced new rules 
to limit the level of "related party transactions" (financial 
transactions involving families or subsidiary companies belonging 
to major shareholders or board members) in Oman's commercial banks. 
The new rules will help increase transparency in financial 
transactions in local banks and the Muscat Securities Market (MSM), 
and will help clarify the activities of publicly traded companies. 
Finally, the CMA has moved to shorten the time period companies 
have to file their financial statements after the close of the 
fiscal year from three months to two, shorten the time period in 
which companies have to hold their annual meeting after the close 
of the fiscal year from four months to three, and require that an 
internal audit be completed for joint stock companies with capital 
of over five million RO (USD 13 million). 
 
 
 
Efficient Capital Markets and Portfolio Investment 
 
               There are no restrictions in Oman on the flow of 
capital and the repatriation of profits. Foreigners may invest in 
the Muscat Securities Market (MSM) so long as they do so through an 
authorized broker.  Access to Oman's limited commercial credit 
resources is open to Omani firms with some foreign participation. 
At this time there is not sufficient liquidity in the market to 
allow for the entry and exit of sizeable amounts of capital.  Joint 
stock companies with capital in excess of $5.2 million must be 
listed on the MSM.  According to the recently amended Commercial 
Companies Law, companies must have been in existence for at least 
two years before being floated for public trading. Private, 
publicly traded firms in Oman are still a relatively new phenomenon 
(the Muscat Securities Market was founded in 1988). Publicly traded 
firms remain a minority of businesses, and the majority of 
businesses remain family enterprises. Therefore, private firms have 
 
not developed sophisticated defense mechanisms to prevent hostile 
takeovers. 
 
               The Sultanate has two loan programs to promote 
investment.  MoCI administers a program designed to promote 
industrial investment.  Formerly interest free, the program now 
charges 4 percent interest, with generous repayment terms.  MoCI 
loans will match equity contributions in the Muscat capital area, 
or 1.25 times equity for other locations.  Projects with a high 
percentage of local content or employing large numbers of Omanis 
are given priority, as are tourism projects outside the capital 
area.  The Oman Development Bank also administers a loan program to 
support development of smaller loans to industry, agriculture, 
fisheries, petroleum, mining, and services. 
 
               The commercial banking sector currently consists of 
17 licensed banks, including seven local commercial banks and ten 
foreign incorporated banks; Bank Muscat is the country's largest 
financial institution.  The public banking system in Oman is 
comparatively sound. The 2009 CBO Summary of Oman's public banking 
sector for 2008 reported total assets of $37 billion. The Summary 
also estimated that the gross non-performing loan exposure within 
the banking sector is $764.63 million. Two local 
government-sponsored specialty banks also operate within the 
Sultanate.   The banking law issued in November 2000 allowed for 
more efficient control over the financial sector by the 
authorities. The rules and regulations introduced in 2003 by the 
CBO ensure proper and efficient management of the banks. The effect 
of this circular was enhanced by the implementation of a Code of 
Corporate Governance, as well as by amendments to the Capital 
Market Law and the Commercial Companies Law, which stipulate that 
boards of director of all jointly listed companies must appoint an 
internal audit committee, an internal auditor, and a legal advisor. 
 
 
Competition from State-Owned Enterprises (SOEs) 
 
               In general, private enterprises are allowed to 
compete with public enterprises under the same terms and conditions 
with access to markets, and other business operations, such as 
licenses and supplies. Public enterprises, however, have 
comparatively better access to credit. State-Owned Enterprises 
(SOEs) are active in a variety of fields, namely utilities, 
telecommunications, the national air line, and food production. 
Board membership of SOEs is composed of various government 
officials, with a senior official, usually cabinet-level, serving 
as chairperson. 
 
               The two largest sovereign wealth funds in Oman are 
the General Reserve Fund of the Sultanate of Oman and the Oman 
Investment Fund. The majority of the Funds' assets are invested 
abroad, although their dealings are opaque. Omani sovereign wealth 
funds are not required by law to publish an annual report or submit 
their books for an independent audit. 
 
Corporate Social Responsibility (CSR) 
 
               There is a general awareness of corporate social 
responsibility among businesses in Oman. Several companies 
routinely host competitions in elementary and secondary schools for 
academic performance and artistic skill; other companies sponsor 
civil-society events. The larger Omani have CSR policies; however, 
most of Oman's smaller enterprises do not knowingly follow CSR 
principles such as the OECD Guidelines for Multinational 
Enterprises. Foreign companies operating in Oman, however, are 
generally OECD compliant. 
 
Political Violence 
 
               Politically motivated violence is virtually unknown 
in Oman.  Since October 2000, there have been some orderly, 
peaceful demonstrations, with the most recent occurring during 
Israeli military operations in the Gaza Strip in December 
2008-January 2009.  The Omani government, which must approve all 
demonstrations, keeps a watchful eye on these few events and 
maintains effective control of the participants. 
 
Corruption 
 
               Ministers and Under Secretaries (deputy ministers) 
are not allowed to hold offices in public shareholding companies. 
However, many influential figures in government still maintain 
private businesses and some are also involved in private-public 
projects.  These activities either create or have the potential to 
create conflicts of interest. 
 
               Most major contracts are awarded through a slow, 
 
rigorous, but generally transparent tender process.  Pursuant to 
the U.S.-Oman FTA, Oman advertises most tenders in the local press, 
international periodicals, and on the Tender Board's website, 
although a few sensitive projects are not publicized and not 
subject to FTA obligations.  Also, bidders are now requested to be 
present at the opening of bids, and interested parties may view the 
process on the Tender Board's website.  Disputes arising from the 
tendering process are reviewed domestically. 
 
               Although Oman is not a signatory to the OECD 
convention on combating bribery, Sultan Qaboos has dismissed 
several ministers and senior government officials for corruption 
during his reign.  In one of Oman's biggest corruption scandals in 
several years, over 30 government and private sector employees, 
including the Under Secretary of the Ministry of Housing, 
Electricity, and Water, were convicted in October 2005 on counts of 
bribery and forgery, among others.  Oman has not yet signed the UN 
Convention against Corruption.  In 2009, Transparency International 
ranked Oman 39 out of 180 countries in its "Corruption Perception 
Index," a noticeable decline from its 28th place ranking in 2005. 
 
Bilateral Investment Agreements 
 
               After consultations with Congress, the United States 
began Free Trade Agreement (FTA) negotiations with Oman in March 
¶2005.  On January 19, 2006, U.S. Trade Representative Rob Portman 
and Omani Minister of Commerce and Industry Maqbool bin Ali Sultan 
signed the FTA.  Following Congressional approval of the FTA in 
September 2006, President Bush signed the FTA into law on September 
26, 2006.  On January 1, 2009, the U.S.-Oman FTA entered into 
force.  The FTA provides that U.S. investors shall receive national 
treatment and treatment no less favorable than it affords to 
investors of any other country. The FTA also ensures that U.S. 
investors are protected from expropriation. Oman is also a member 
of the Gulf Cooperation Council, which allows for freedom of 
investment between its members. 
 
OPIC and Other Investment Insurance Programs 
 
               Oman is eligible for Export-Import Bank of the 
United States (EXIM) financing and insurance coverage. 
 
Labor 
 
               Oman's 2003 Labor Law governs employee/employer 
relations in the private sector, and enumerates the protections 
afforded both Omani and migrant workers.  The law sets the minimum 
working age at 15, provides clear guidelines on wages and working 
hours for Omani citizens, and specifies the penalties for 
noncompliance with its provisions.  In 2006, in conjunction with 
the U.S.-Oman Free Trade Agreement, Oman made significant 
amendments to the 2003 Labor Law.  The amendments and associated 
Ministerial Decisions allow for more than one union per firm, 
require employers to engage in collective bargaining over terms and 
conditions of employment, and specify guidelines for conducting 
strikes.  The amendments also prohibit employers from firing or 
otherwise penalizing workers for engaging in union activity, and 
increase the penalties for hiring underage workers or engaging in 
forced labor. 
 
               The minimum wage for Omanis working in the private 
sector, including salary and benefits, is 140 R.O. (about $363) per 
month.  Work rules must be approved by the Ministry of Manpower and 
posted conspicuously in the work place.  The workweek is five days 
in the public sector and generally five and one-half days in the 
private sector.  The labor law and subsequent regulations also 
detail requirements for occupational safety and access to medical 
treatment.  There is no minimum wage for non-Omanis.  Omani law 
requires at least one 24-hour rest break per week and mandates 
overtime pay for hours in excess of 48 per week.  In addition, 
non-Omanis in retail, personal service outlets, construction, and 
petroleum fields typically work up to seven days a week, depending 
on their contracts.  Oman relies heavily on expatriate labor, 
primarily from India, Bangladesh, Pakistan, and Sri Lanka, to 
perform menial and physically taxing work.  Working conditions in 
Oman for many expatriate workers are difficult. Expatriates, mainly 
from Western countries, fill many managerial positions. 
 
               "Omanization," the localization of labor, is a high 
priority for the government. Approximately 30,000 young Omanis 
enter the workforce each year. Most of these new entries look to 
government employment, as Omanis make up 84% of the public sector's 
labor force. Only 18% of the private workforce is Omani. In July 
2009, the Ministry of Manpower published Omanization percentages 
for years 2009-2010 for each sector of the economy. Omanization 
rates for 2010 for selected sectors are as follows: 
 
*         Information Technology 
 
o    Senior Management                                        9% 
 
o    Sales and Marketing                                       100% 
 
o    Technical Support and Infrastructure             15% 
 
o    Applications and Services Development        15% 
 
*         Consultancy Services 
 
 
o    Engineers 
25% 
 
o    Draftsman 
70% 
 
o    Material Supervision                                       45% 
 
o    Land Survey 
80% 
 
o    Accountants 
60% 
 
o    Administrative Posts                                       90% 
 
*         Banks 
90% 
 
For 2010, Omanization rates across all sectors are to increase from 
2 to 10 percent. The Ministry of Manpower will not issue a labor 
clearance for companies that fail to hire qualified Omanis to meet 
the labor targets.  If qualified Omanis are not available, the 
Ministry may issue labor clearances pending future availability of 
qualified Omanis to fill such positions.  The Ministry also assists 
companies in training Omanis for high-demand positions if the 
companies agree to hire them once trained. Under the U.S.-Oman FTA, 
the Omani government may set Omanization targets of 80% for U.S. 
companies in the Sultanate, excluding managers, board members, and 
specialty personnel. Private companies have expressed concerns 
about the work ethic of Omanis compared with expatriate staff, as 
well as absenteeism of local workers who are harder to dismiss 
because of the protections they enjoy under local employment laws. 
 
               Oman is a member of the International Labor 
Organization (ILO).  Oman has ratified four of the eight core ILO 
standards, including those on forced labor, abolition of forced 
labor, minimum working age, and the worst forms of child labor. 
Oman has not ratified conventions related to freedom of association 
or collective bargaining, or the conventions related to the 
elimination of discrimination with respect to employment and 
occupation. 
 
Free-Trade Zones/Free Ports 
 
               The government plans to establish free-trade zones 
to complement its port development projects.  The government has 
heavily invested in the "Salalah Free Zone." The Salalah Free Zone 
Company (SFZC) is working with the government to finish the first 
phase of the project, which includes the establishment of roads and 
utility lines, as well as the leveling of industrial plots.  An 
incentive package includes a 30-year tax holiday, duty-free 
treatment of all imports and exports, and tax-free repatriation of 
profits.  Additional benefits include streamlined business 
registration and a low 10 percent Omanization requirement. 
U.S.-based Octal Petrochemicals, India-based TVS Group, and 
government-supported Salalah Methanol are the anchor tenants.  The 
government is also establishing a free zone adjacent to Sohar Port. 
In addition, the government opened a free trade zone at an interior 
border crossing point with Yemen (al-Mazyounah) in 1999. 
 
Foreign Direct Investment Statistics 
 
               Systematic information on foreign direct investment 
is limited.  As per Capital Market Authority statistics from 
December 2009, foreign participation, including that from GCC 
nationals, equaled 23% in terms of shares held in the Muscat 
Securities Market.  Foreign capital constituted 24% of the shares 
held in finance, 21% in manufacturing, and 23% in insurance and 
services. 
 
               The largest foreign investor is Royal Dutch Shell 
Oil, which holds 34 percent of Petroleum Development Oman, the 
state oil company, and 30 percent of Oman Liquid Natural Gas. 
 
Other companies, such as Occidental Petroleum, BP Amoco, Novus 
Petroleum, Hunt, British Gas, and Nimr have also invested in Oman's 
petroleum and gas sectors.  Two U.S. firms, Gorman Rupp (water 
pumps) and FMC (wellhead equipment), have entered into industrial 
joint ventures with Omani firms.  Both joint ventures involve 
modest manufacturing operations.  Since 1999, Oman has witnessed 
increased foreign direct investment through the privatization 
process.  Major foreign investors that have entered the Omani 
market recently include AES (U.S.), Suez-Tractabel (France), Alcan 
(Canada), LG (Korea), Veolia (France), SinoHydro (China), and 
National Power (U.K.).  Bechtel constructed an aluminum smelter on 
behalf of Sohar Aluminum. 
Schmierer