FDI Overview
Oman’s inward FDI has fluctuated significantly over the past decade, reflecting both global investment trends and Oman-specific factors. Annual inflows have ranged from approximately USD 1.5 billion to USD 4 billion. The stock of FDI in Oman has grown to approximately USD 35-40 billion, concentrated in the oil and gas sector, petrochemicals, metals (Sohar Aluminium), and increasingly in logistics and free zone activities. As a share of GDP, Oman’s FDI inflows are moderate by regional standards – higher than Kuwait but lower than the UAE or Bahrain.
Sectoral Composition
Oil and gas continues to dominate FDI, reflecting Oman’s position as a mature petroleum province requiring ongoing foreign investment for enhanced oil recovery and gas development. Petrochemicals, particularly at Sohar industrial area, represent the second-largest FDI sector. Logistics and port infrastructure, driven by Duqm development, has emerged as a significant new FDI category. Green hydrogen projects, while still in early stages, represent potentially transformative future FDI flows. Tourism, manufacturing, and technology FDI remain relatively modest, reflecting both Oman’s early-stage development in these sectors and competition from GCC neighbours.
Source Countries
FDI source countries reflect Oman’s economic partnerships. The UK and US are traditional major investors, primarily in energy. China has emerged as a significant new source, particularly at Duqm. India, South Korea, and Japan invest primarily in energy and industrial projects. GCC investment, particularly from UAE and Kuwaiti entities, is present across multiple sectors. European investment outside the UK is growing but modest. Diversifying FDI sources beyond energy-sector investors from traditional partners is an ongoing challenge.
Lessons and Outlook
The FDI data reveals several patterns: investment follows regulatory reform (the 100 percent foreign ownership law boosted interest); FDI concentrates where Oman has clear advantages (energy, logistics, strategic location); investor confidence correlates with fiscal health and credit ratings; and competition for FDI within the GCC is intensifying as all Gulf states pursue similar investors. Oman’s FDI outlook depends on executing the green hydrogen and logistics strategies (which offer distinctive investment propositions), maintaining fiscal stability, and continuing to improve the business environment measured by international benchmarks.