Definition
Foreign direct investment (FDI) is a cross-border investment in which an investor based in one country acquires a lasting ownership stake, typically ten percent or more, in an enterprise located in another country. FDI differs from portfolio investment because it implies managerial control or significant influence over the foreign enterprise. For developing economies, FDI brings capital, technology transfer, management expertise, and access to global supply chains.
Context in Oman
Oman actively courts FDI through a favourable regulatory environment. The 2019 Foreign Capital Investment Law removed the previous requirement for majority Omani ownership in most sectors, allowing 100 percent foreign ownership. Free zones at Duqm, Sohar, Salalah, and Al Mazunah offer tax holidays, customs exemptions, and streamlined licensing. Invest Oman, the investment promotion agency, serves as a one-stop shop for foreign investors. Major FDI sources include the United Kingdom, India, the UAE, the United States, and China. Key sectors attracting FDI are petrochemicals, logistics, tourism, renewable energy, and mining.
Key Data Points
| Metric | Value |
|---|---|
| FDI inward stock (2023 est.) | ~USD 23 billion |
| FDI inflows (2022) | ~USD 3.6 billion |
| Top source countries | UK, India, UAE, US, China |
| Foreign ownership limit (general) | 100 % since 2019 |
| Number of major free zones | 4 |
Vision 2040 Connection
Vision 2040 targets a significant increase in FDI as a percentage of GDP, aiming to make Oman one of the top investment destinations in the GCC. Policy reforms include improving ease of doing business rankings, expanding free-zone incentives, and signing new bilateral investment treaties to provide legal protections for foreign capital.
Further Reading
- [[What is a Free Zone]]
- [[What is a Special Economic Zone]]
- [[Oman Company Formation Guide]]