OMAN’S FINANCIAL SERVICES AUTHORITY INTRODUCES CAPITAL MARKET INCENTIVES PROGRAMME

13 December 2024

Bini Saroj

The Financial Services Authority (FSA) of Oman has announced its Capital Market Incentives Programme (CMIP), a transformative initiative aimed at driving economic growth and attracting investment into the Sultanate.

Muscat: Spanning five years, the CMIP focuses on key reforms to strengthen Oman’s capital markets and support the development of businesses across various sectors.

Key Pillars of the CMIP

The CMIP is built around three strategic paths:

1. Facilitating New Public Joint-Stock Companies: The programme supports the establishment of public joint-stock companies by leveraging new and existing family businesses, creating a pathway for these entities to access additional capital and expand their operations.
2. Promising Companies Market on the Muscat Stock Exchange (MSX): A dedicated market for promising companies will cater to businesses transitioning from Limited Liability Companies (LLCs) and family-owned entities seeking investment or strategic exits. This initiative provides SMEs with new opportunities for growth and access to funding.
3. Encouraging LLC-to-Closed Joint Stock Company Transformation: The programme incentivizes LLCs to evolve into closed joint-stock companies, enhancing their governance and access to capital markets.

Impact on the Muscat Stock Exchange (MSX)

The CMIP’s reforms are poised to significantly enhance the MSX’s attractiveness for both local and international companies. Key measures include:

• Tax Incentives: The Ministry of Finance has introduced income tax incentives, while the Tax Authority now allows the payment of income tax in instalments for up to six months from the due date.
• Government Tendering Benefits: Tendering authorities will give preference to listed companies, benefiting businesses frequently involved in government procurement.
• Regional and International Investment Appeal: Listed companies can leverage financial incentives to attract regional and global investors. The reforms will likely enhance the perception of Oman’s market among international investors and rating agencies.

The Promising Companies Market: A Gateway for Growth

The newly established Promising Companies Market on the MSX aims to support businesses that have outgrown their LLC status or seek additional investment. Key benefits include:

• Access to Funding: SMEs and family-owned entities can secure funding that was previously inaccessible, facilitating growth and expansion.
• Path to the Primary Market: Over time, this market is expected to serve as a stepping stone for companies to transition to the primary market, contingent on sufficient liquidity and a steady supply of listed companies.

Sectoral Impact

The CMIP will particularly benefit sectors not traditionally regulated by industry-specific bodies, including mining, construction, technology, and real estate. Family-owned businesses in these industries stand to gain significantly from the programme’s reforms and incentives.

Looking Ahead

The CMIP marks a significant step in advancing Oman’s capital markets. However, its success will depend on regular collaboration between the FSA, market participants, and other stakeholders. Continuous interaction will be crucial to ensure companies maximize the available incentives and embrace the opportunities created by these reforms.

By fostering a dynamic and inclusive capital market, Oman’s FSA is paving the way for sustainable economic development and enhancing the Sultanate’s investment landscape.

In Conclusion

The introduction of Oman’s Financial Services Authority’s Capital Market Incentives Programme marks a significant milestone in the Sultanate’s economic development strategy. This initiative not only aligns with the goals of Oman Vision 2040 but also strengthens the financial infrastructure, paving the way for a more robust and diversified economy. As the programme unfolds, it promises to create new opportunities, enhance market liquidity, and contribute to the sustainable growth of Oman’s capital market.

ALKETBI TOUCH

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