Oman is rapidly emerging as a premier destination for Foreign Direct Investment (FDI), fueled by its strategic location, progressive reforms, and the allure of its Free Zones. As part of the ambitious Oman Vision 2040, the Sultanate is diversifying its economy beyond oil and gas, creating a business-friendly ecosystem that attracts global investors. In 2025, Oman’s Free Zones and FDI policies are at the forefront of this transformation, offering unparalleled opportunities for businesses worldwide. This blog dives into why Oman’s FDI landscape and Free Zones are a game-changer for investors, exploring key trends, benefits, and opportunities.

The FDI Boom in Oman: A Snapshot

Oman’s FDI has seen remarkable growth, reflecting its rising status as a global investment hub. By the third quarter of 2024, FDI reached a cumulative value of OMR 26.7 billion (approximately USD 69.3 billion), marking a 17.6% increase over the past five years. This surge is driven by strategic reforms, including the Foreign Capital Investment Law (FCIL) of 2019, which allows 100% foreign ownership in most sectors, eliminating the need for a local Omani partner. The “Invest Oman” platform has further streamlined investment processes, securing 29 projects worth OMR 1.2 billion by Q1 2024, with 59 more projects valued at OMR 3.2 billion in the pipeline.

Key sectors attracting FDI include:

• Manufacturing: Industrial products led non-oil exports, growing 45% in Q1 2024.
• Renewable Energy: Projects like the 588MWp Manah II solar farm highlight Oman’s green energy push.
• Logistics: Strategic ports and Free Zones position Oman as a trade gateway.
• Tourism and Hospitality: Cultural and eco-tourism projects are drawing global interest.
• Information Technology: The National Digital Economy Programme is accelerating tech investments.

Oman’s credit rating upgrade to ‘BBB-‘ by S&P Global Ratings in September 2024 underscores its economic stability, boosting investor confidence. The Sultanate’s “friends of all, enemies of none” foreign policy and strategic location at the crossroads of the Arabian Peninsula, East Africa, and South Asia make it a low-risk, high-reward destination for investors.

Why Free Zones Are Oman’s FDI Powerhouse

Oman’s Free Zones—Duqm Special Economic Zone (SEZAD), Sohar Free Zone, Salalah Free Zone, and Al Mazunah Free Zone—are magnets for FDI, offering a suite of incentives designed to simplify business operations and maximize returns. These zones are governed by the Public Authority for Special Economic Zones and Free Zones (OPAZ), which has signed transformative agreements, such as the seven pacts in July 2025 to develop the Al Dhahirah Economic Zone into a major industrial and logistics hub.

Key Benefits of Oman’s Free Zones

1. 100% Foreign Ownership: Unlike traditional setups requiring up to 30% Omani ownership, Free Zones allow full foreign control, streamlining decision-making.
2. Tax Exemptions: Businesses enjoy a 30-year tax holiday on corporate profits, zero VAT, and duty-free imports/exports, significantly reducing operational costs.
3. Fast-Track Licensing: Simplified registration and licensing processes enable rapid business setup, a critical advantage for startups and multinationals.
4. Lower Omanisation Requirements: Free Zones have relaxed mandates for hiring Omani nationals, offering flexibility in workforce planning.
5. Strategic Locations: Each Free Zone caters to specific industries:
   • Duqm SEZAD: Ideal for industrial, logistics, and green hydrogen projects, with a 2,000-square-kilometer trade hub.
   • Sohar Free Zone: Perfect for heavy industries and petrochemicals, hosting projects like the OMR 520 million polysilicon factory set to open in 2025.
   • Salalah Free Zone: A logistics and export hub with RO 301 million in petrochemical investments in 2025.
   • Al Mazunah Free Zone: Focused on trade with Yemen and GCC markets.

Case Study: Duqm SEZAD

The Duqm Special Economic Zone is Oman’s flagship project, envisioned as a global logistics and trade hub. Its proximity to major shipping lanes and a massive 2,000-square-kilometer area make it a hotspot for FDI. In 2025, Duqm is attracting investments in green hydrogen and renewable energy, with projects like the Duqm refinery enhancing its industrial appeal. The zone’s tax-free policies and streamlined processes have drawn major players like BP (UK), Huawei (China), and ACWA Power (Saudi Arabia).

Oman’s FDI-Friendly Policies

The Foreign Capital Investment Law (FCIL) of 2019 has revolutionized Oman’s investment landscape by removing barriers like minimum capital requirements and allowing 100% foreign ownership in most sectors, except restricted industries like oil, gas, and defense. Additional policies include:

• Incentives for Less-Developed Areas: Projects in underdeveloped regions receive extra tax breaks and operational exemptions.
• No Limits on Capital Repatriation: Investors can freely transfer profits, royalties, and capital, ensuring financial flexibility.
• U.S.-Oman Free Trade Agreement: U.S. investors enjoy national treatment, bypassing local sponsorship requirements.
• Investment Incentives Guide: The “Tas’eera” project and other initiatives reduce fees for 137 services and eliminate 20 others, easing the cost of doing business.

The “Invest Oman” Lounge, launched in 2023, serves as a one-stop shop for investors, offering 50 electronic services and facilitating projects across tourism, real estate, aviation, and industry. Oman’s global outreach, including participation in 21 investment events and hosting delegations from 23 countries in 2024, further amplifies its appeal.

Challenges and Solutions

While Oman’s FDI landscape is promising, challenges remain:

• Bureaucratic Delays Outside Free Zones: Setting up businesses outside Free Zones can be time-consuming due to licensing and Omanisation requirements. The government is addressing this through digitalization, with 76.5% of services digitized by 2025.
• Omanisation Quotas: Mandates to hire Omani nationals can strain smaller firms. Free Zones mitigate this with lower quotas.
• Sector Restrictions: 123 activities, including tailoring and commercial fishing, are reserved for Omani investors, limiting FDI in niche sectors.

Oman is tackling these hurdles through regulatory reforms, transparent tender systems, and workforce training programs to align with Vision 2040’s goals. �

Opportunities for Investors in 2025

Oman’s Free Zones and FDI policies open doors across diverse sectors:

• Renewable Energy: Invest in solar, wind, and green hydrogen projects, supported by government-backed incentives.
• Logistics and Trade: Leverage Oman’s ports and Free Zones for warehousing, distribution, and export-driven ventures.
• Technology and Innovation: Tap into the growing demand for AI, cybersecurity, and digital solutions as part of the National Digital Economy Programme.
• Tourism: Develop eco-tourism, cultural experiences, or hospitality projects, with tourism targeting 5% of GDP by 2030.
• Manufacturing: Capitalize on industrial growth, with land allocated in Rusayl, Sohar, and Samayil for industrial projects.

Why Invest in Oman Now?

Oman’s FDI and Free Zones offer a compelling proposition in 2025:

• Strategic Location: Access to GCC, African, and Asian markets via world-class ports and trade routes.
• Stable Environment: Political stability and a BBB- credit rating ensure a secure investment climate.
• Vision 2040 Alignment: Government support for diversification creates a future-proof investment landscape.
• Global Recognition: Oman’s rise in global competitiveness rankings reflects its investor-friendly reforms.

Conclusion

Oman’s Free Zones and FDI policies are a launchpad for global businesses seeking growth in a dynamic, diversified economy. Whether you’re a startup eyeing the tech boom or a multinational targeting logistics, Oman’s incentives and infrastructure make it an ideal destination. Explore opportunities through the “Invest Oman” platform or contact the Ministry of Commerce, Industry, and Investment Promotion for tailored guidance. The time to invest in Oman is now—seize the opportunity to be part of its economic renaissance in 2025!