December 2018

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Member News: Nuno Neves is the cluster general manager for both Park Inn by Radisson Hotel Muscat and Park Inn by Radisson Hotel & Residence Duqm.  He shares about the changes in Duqm, from the perspective of an Oman hotelier.  The hotel has been experiencing a significant improvement in occupancy and revenue as regional traffic picks up.
What sorts of guests do you typically see at the hotel and residence?
Duqm is a stopover destination for tourists from Muscat to Salalah. The Khareef Season this year was much better than previous years. Hotels in Duqm mostly get their business from walk-in tourists, especially those from the Gulf Co-operation Council (GCC) countries.
Is much happening in Duqm today?  Are you seeing an increase in traffic due to projects being awarded?
The projects are there, but it’s difficult to predict when they will be implemented. Still, already the Park Inn Duqm hotel occupancy and revenue increased by over 25% compared to last year, mainly because of stopover tourists, business travelers, investors, and works awarded.
You also manage Park Inn Muscat — do you have any thoughts on the country’s hospitality sector as we wrap up 2018?
What’s worth noting is the activity and progress we’ve seen in Oman in recent years.  STR Global, a source for premium global data benchmarking, analytics and marketplace insights, revealed in a 2017 report that Oman’s hotels had increased by 4% in 2017, while there was a significant drop in most other Gulf countries.
This report also provides property performance data and allows interested parties to follow trends in occupancy, average daily rate (ADR), revenue per available room (RevPar) and more.
The research agrees with my own feelings based on global professional experience and what we’re seeing daily in our hotels: now is a time of growth for the hospitality sector in Oman.
CDM 7201

Member News: Nasser Hamood al Rawahy, Deputy Chairman of The State Audit institution inaugurated the new office premises of Crowe Mak Ghazali, member firm of Crowe Global. Marc J Seivers, Ambassador of the United States to Oman, was the guest of honour at the event.

Welcoming the invitees, Davis Kallukaran, Managing Partner of Crowe Oman said: “Business models are undergoing rapid transformation ever since the world stepped into the digital revolution. Artificial intelligence, Blockchain, Machine Learning and Cryptocurrency are no longer fancy terminologies but the future of business. These are the tools with which businesses are talking to each other. Moving ahead you cannot live without it. Either you embrace it or you die. We have to be in the race to attract the right talents by employing the state of the art infrastructure and hence our investment in our own office.”

Ghazali Mak, as the firm was known originally, has evolved over the years into Crowe Mak Ghazali, the Oman member firm of Crowe Global.

From Oman Observer

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Oman’s immense investment into infrastructure development in recent years, coupled with its drive to diversify the economy away from oil and gas, has led to a rise in interest by US companies in foreign direct investment into the Sultanate.

This was recently highlighted by a visit to the US city of Houston of a delegation representing the Special Economic Zone Authority in Duqm (SEZAD), led by H.E. Yahya bin Said Al Jabri (Chairman of SEZAD). The event was attended by more than 70 companies, the majority of which operate in the US oil and gas sector.

The US-Oman Free Trade Agreement (FTA), entered into on 1 January 2009, has been key to leveraging foreign investment interests by offering incentives that aim to improve bilateral trade relations.

Key benefits of the FTA

Following several years of negotiation the FTA was entered into on 1 January 2009. The agreement is designed to offer a number of benefits to both Omani and US companies, including:

  • eliminating the majority of tariff and non-tariff barriers;
  • enhancing protection for investors (including enabling investors to fully own businesses without the requirement for engaging a local partner);
  • reducing the minimum share capital requirement for an Omani-incorporated, US-owned entity to OMR 20,000 from OMR 150,000;
  • removing the requirement to have entered into a contract with the Omani government (including contracts with companies partly owned by the Omani government) prior to registering a branch office of a US entity;
  • expediting the movement of goods and provision of services; and
  • safeguarding intellectual property rights, labour and environmental standards, as well as dispute resolution procedures in order to improve the regulatory climate for bilateral trade and investment.

Complying with rules of origin

It should be noted, however, that potential beneficiaries must ensure compliance with certain requirements. In the context of preferential tariff treatment, for example, a product should qualify if it has been wholly grown, produced or manufactured in the US or Oman. There are detailed rules relating to products which do not wholly originate in either country but have been manufactured using component parts from other countries. In general, a product which has been substantially transformed as a result of the manufacturing process will probably qualify for preferential tariff treatment, provided that the value of materials produced in Oman or the US, plus the direct costs of processing operations performed in Oman or the US, is at least 35 per cent of the value of the product at the time it is imported.

Recent successes

A number of recent news stories have highlighted successes stemming from the FTA across a variety of sectors. In November 2018, California-based company GlassPoint Solar which registered in Oman under the FTA in 2011, entered into an MOU with Occidental of Oman to develop plans to establish a mega-solar thermal energy plant with the aim of facilitating oil production in Occidental’s Mukhaizna field. The solar steam produced by the proposed plant would be utilised by Occidental in order to assist in enhanced oil recovery or EOR.

An additional example involves a café named 3rd Street Donuts, owned by Omani entrepreneur Mundhir Al Alawi. Marc J Sievers, US Ambassador to Oman, recently attended the opening ceremony of the 3rd Street Donuts café in Seeb during the Discover America Festival in Oman. The café has taken advantage of the benefits of the FTA by importing duty-free US flour, along with other ingredients used in its products.

3rd Street Donuts demonstrates that small and medium-sized enterprises (SMEs) have the opportunity to utilise the FTA, in addition to larger companies. This is particularly important in Oman, where there is a drive to increase the contribution of SMEs towards the country’s GDP.

Taking advantage of the FTA

At Dentons, while we see the FTA as useful a tool which can utilised to great effect by both US and Omani companies alike, it is critical that both the Omani and US governments continue to raise awareness of the FTA so that potential beneficiaries are fully informed as to how they can make best use of the significant advantages afforded to them. Separately, sufficient guidance and assistance must be available to participants to ensure that the administrative requirements of the FTA are appropriately addressed. The US Embassy in Oman has developed a number of useful resources offering guidance in this area, which can be accessed here.

Dentons is the world’s largest law firm with strong cross-border capabilities, and has operated in the Sultanate of Oman for 36 years (and in the Middle East for over 50 years). We have expertise in advising US and Omani clients on how best to utilise the incentives afforded by the FTA. As the expansion of global markets and value chains continues to make the world a smaller place, we keep you informed about the rules and practices governing the establishment of FTA companies in Oman, and work with local Omani companies to develop and implement the right strategies for trade with the US.

Our associate firm, S&A Law Firm, provides dispute resolution and advocacy services throughout Oman, possessing a deep knowledge in all the main areas of dispute resolution, including litigation, arbitration and mediation.