Oman's "Tanfeedh" programme has been established to promote economic diversification in the Sultanate. Tanfeedh aims to reduce dependence on the oil and gas sector, focusing on five key business sectors – manufacturing, transportation and logistics, tourism, mining and fishing.
Relying on the fisheries sector may seem a bold decision; however, commercial fishing in Oman offers significant opportunity for both local and international investors. Most of Oman borders the Arabian Sea, giving the Sultanate a clear advantage over its neighbours for developing its fishing industry. Further, the prohibition of trawling in Oman's Exclusive Economic Zone and minimal pollution have helped the country's fish stocks to flourish. In 2016, fishing sector income rose by 12 per cent, contributing over OMR 200 million to Oman's GDP.
The Ministry of Agriculture and Fisheries is considering a range of aquaculture projects (commercial fish farming) worth in excess of US$2 billion. The implementation of these projects (and others focused on the fishing sector) is expected to double the Sultanate's fish catch over five years, to 500,000 tonnes per annum by 2020. Furthermore, the World Bank recently published a report which stated that Oman's second largest natural resource after hydrocarbons, its fisheries sector, is "just a few steps away from becoming a world class competitive industry".
Aquaculture projects are gaining popularity in Oman. Galfar Engineering and Contracting SAOG (Oman's largest construction company) was recently awarded a OMR 60.69 million (US$157 million) contract to construct a major fishing harbour at Duqm's Special Economic Zone. The fishing harbour is designed to accommodate more than 60 processing plants and related facilities. The government is now inviting investors to set up fish processing and related plants in the new development, which is due to be completed in 2020.
The more profitable aquaculture sector in Oman received a welcome boost in June 2016 when the state-owned Oman Aquaculture Development Company and the Ministry of Agriculture and Fisheries concluded a cooperation agreement to establish, operate and manage the Aquaculture Farming Centre in Al Bustan. The project aims to enable fish farms in the Sultanate to restock with locally grown fish, as opposed to incurring the expense of importing stocks from abroad. The government has awarded a further 19 licences for aquaculture projects, with total investment estimated at OMR 128 million (US$333.6 million).
Still there are undoubtedly significant hurdles which Oman must overcome if it is to develop a "world class" fishing industry: artisanal fishing continues to make a substantial contribution to the Omani catch; there is a lack of infrastructure in fish landing sights (the new harbours at Duqm and in other locations should help to address this); and the aquaculture sector remains in its infancy.
Foreign companies looking to invest in the Sultanate's fishing and aquaculture industry can utilise a number of different corporate vehicles. The most common of these are as follows:
Limited liability company (LLC)
The LLC is commonly used by foreign individuals and companies seeking a legal presence in Oman. The liability of individual members is limited to the value of their contribution to the LLC's capital. The minimum number of partners in an LLC is two and the maximum is 40. Typically, the capital of an LLC with foreign participation must be at least OMR 150,000 (approximately US$390,000). Generally, foreign ownership in Oman-incorporated companies is capped at 70 per cent (with certain exceptions) and requires local participation.
Representative foreign office
Companies may establish commercial representative or trade offices in Oman. These offices are restricted to marketing and promotional activities at retail level.
A foreign company that is counterparty to a contract with the government of Oman may open a branch in Oman. An Oman-registered branch of a foreign company may contract, own assets and incur liabilities, submit its own tax returns, obtain visas and work permits for its personnel, open and operate bank accounts and effect imports, all in connection with its government contract(s).
Duqm free zone company
Investors in the Special Economic Zone at Duqm may incorporate limited liability companies with up to 100 per cent foreign ownership and can benefit from attractive exemptions in relation to minimum capital requirements, tax and import/export duty.
Dentons is a global law firm with strong cross-border capabilities, and has operated in the Sultanate of Oman for 35 years (and in the Middle East for over 80 years). We have extensive experience in providing legal assistance to both foreign and local businesses operating in the country and we are keen to assist any business that is looking to explore the opportunities arising in Oman as a result of the Tanfeedh programme.