Friday 15 / November / 2024
Muscat: Abolishing the requirement of OMR150,000 as minimum capital investment to start a business will help launch “hundreds” of new enterprises, according to experts.
Oman’s decision to abandon the minimum capital requirement for investment in Oman is being hailed, with experts saying the decision will help expand small businesses, overhaul the economy and spur investments following the drop in oil prices.
“The decision will contribute to the healthy growth of SMEs (small and medium-sized enterprises) because it will reduce the number of steps they must go through before starting a business in Oman. It’s a significant step,” Khalid bin Al Safi Al Haribi, Deputy CEO for Operations, Riyada (Public Authority for SMEs Development) told the Times of Oman (TOO).
“It’s difficult to quantify but according to our estimates, it could influence hundreds of SMEs in a year,” he said.
Earlier on Saturday, the ministry of commerce announced the decision to scrap the capital requirement threshold (currently OMR150,000) in a bid to attract more local and foreign investment in the Sultanate.
“It will increase the number of non-Omanis willing to invest in Oman. In the past, it was necessary to physically bring papers and evidence to prove the liquidity of your business. That rule has gone now,” he said.
Foreign investors will, however, continue to have a local partner with at least a 35 percent stake.
“It (the rule) is still there,” Al Haribi said.
“It’s a good decision,” said Anvwar Al Balushi, chairman of the Anvwar Asian Investment Group.
“This will encourage foreigners as well locals...This is just a beginning. Also, any ministry connected with the commerce ministry should also be flexible as it will ensure a healthy environment for investment in Oman,” he said.
Others lauding the decision said Oman needs to move from resource economy to manufacturing and servicing industry.
“The decision will encourage entrepreneurs who do not have much capital but have lots of ideas,” said an investment expert, who wished to remain anonymous.
“But Oman needs to move from being a resource-based economy to manufacturing and other services industries. This move should help in changing the economic structure. It has taken many years but it’s a move in (the) right direction,” he said.
He said Oman, in the future, also needs to do away with the ‘local partner’ clause.
“Sponsorship is a double edged sword. Doing away with it in the long term will benefit. In the UAE, there are certain areas where you don’t need a local partner to invest,” he said, hastened to add, “It, however, also depends on the market.”
Members of the Oman Chamber of Commerce and Industry said the decision will help those who are serious about doing business in Oman but faced problems previously.
“The idea is to give much more confidence to the private sector,” Ahmed Al Hooti of the OCCI told the Times of Oman.
He said having a local sponsor makes things easier for an expat investor.
“Logically, the local partner makes things easier. In many cases, we’ve found that people (expats) who start a business and have knowledge about the country still face a lot of problems. We encourage them to have a local partner for logistic, marketing and management reasons,” Al Hooti added.
