The Oman Investment Authority sovereign wealth fund has launched an OMR2bn ($5.2bn) fund to attract foreign direct investment (FDI) and to bolster investments in small and medium-sized local businesses (SMEs).

Around 90% of the previously announced Oman Future Fund will focus on FDI, while the remaining 10% will go into SMEs and venture capital, according to Oman Observer.

Oman’s finance ministry is a strategic partner of the Future Fund. The partnership, first announced in May, will be supported by other government agencies and companies, including majority-state-owned telecommunications provider Omantel.

Omani officials have been making strides to diversify the sultanate’s economy away from fossil fuels. In 2019, the government introduced a new foreign capital investment law (the ‘New FCIL’). The 2019 law replaces earlier legislation and allows investors from abroad to conduct any commercial activity in or from Oman without the need for a legal entity or local commercial agent there.

Because of that, the country has managed to attract 235 FDI projects between 2019 and 2023, figures by GlobalData’s FDI Projects Database show. Top inbound sectors are communications and media, driven by a country-wide fibre network installation project and tourism.

However, despite the legislative changes made to attract a wider range of industries, Oman remains heavily dependent on oil and gas resources. According to Moody Analytics, oil and gas continue to generate between 68% and 85% of government revenue. 

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This has proved to be a problem in the past. In 2016, as a result of low global oil prices, Oman’s budget deficit rose to $13.8bn, or around 20% of the sultanate’s GDP. This has prompted officials in Muscat to issue debt to cover its deficit. 

Overall, Oman ranks 59th globally in terms of inbound greenfield FDI projects and fifth within the Middle East – behind the UAE, Saudi Arabia, Qatar and Israel.