Muscat,
The Financial Services Authority (FSA) today outlined the “Capital Market Incentive Programme (CMIP)” based on Royal directives to launch a package of incentives that contribute to developing the investment and business environment in the Sultanate of Oman in a manner that serves economic development and achieves the goals of Oman Vision 2040.
The programme makes use of various financing options provided by the capital market for various categories of companies.
This was unveiled at a press conference organised by the FSA along with other departments, including the Ministry of Finance, the Ministry of Commerce, Industry and Investment Promotion, Muscat Stock Exchange (MSX) and Estidamah (National Programme for Fiscal Sustainability and Financial Sector Development).
The abovementioned departments have been entrusted with studying available options for developing the capital market and providing financing tools that suit the nature of different segments of companies, including small and medium enterprises (SMEs).
The CMIP seeks to provide non-traditional sources of financing for various economic projects and to consolidate the capital market by attracting local and foreign investments and utilizing them in financing economic projects, notably through the launch of new projects, the establishment of joint-stock companies or the conversion of existing establishments and companies into joint stock companies.
This is envisaged to generate investment opportunities for local and foreign investors, expand investor base, enhance the liquidity of the stock exchange and upgrade Muscat Stock Exchange (MSX).
The programme also aims to transform the capital market into a national economic system and to enable the capital market to play its desired role as a long-term financing tool for economic projects. The capital market would henceforth lend support to local and foreign investors, preserve existing companies and ensure their sustainability and growth by transforming them into joint stock companies that enjoy transparency and disclosure. It would also adopt the best standards of governance and sound management that guarantee the survival and sustainability of the firms for decades.
The capital market incentive programme will continue for 5 years from the start of the actual implementation of each of the three phases:
(1) The first phase deals with encouraging the establishment or transformation of household firms and private companies whose market value exceeds RO 10 million into joint stock companies.
(2) The second phase focuses on establishing a subsidiary market within Muscat Stock Exchange called (the Promising Companies Market). This serves as a common practice in many financial markets that target private firms and household companies, SMEs and startups whose market value exceeds RO 500,000.
(3) The third phase encourages the conversion of limited liability companies into closed joint stock companies. It targets companies whose market value exceeds RO 500,000 that employ not less than 20 Omani workers.
The market value of companies in all three phases will be based on an assessment by an evaluator to be accredited by the FSA.
Abdullah Salim Al Salmi, CEO of the Financial Services Authority, said that the issuance of the Royal directive on launching the capital market incentive programme constituted a step forward in supporting economic growth. The launch of the programme paved the way for diversifying the private sector and empowering it to play a greater role in leading businesses and commercial activities, he added.
Al Salmi pointed out that the abovementioned capital sector development options also reflect the government’s keenness to develop the business environment in the private sector and achieve the goals of Oman Vision 2040.
Al Salmi added that the “Promising Companies Market” as a subsidiary market at Muscat Stock Exchange will provide a suitable environment for private firms, household companies, startups and SMEs to flourish and gain experience in dealing with financial markets, notably by exercising alternatives to finance their projects and maintain their expansions.
This step, he explained, would provide all to prepare for transformation into joint stock companies to be listed in the regular market after fulfilling the requirements, said Al Salmi, noting that “this subsidiary market is expected to be launched after its endorsement determinants are approved before the end of this year 2024”.
For his part, Mahmoud Abdullah Al Oweini, Secretary General of the Ministry of Finance, said that the capital market incentive programme, approved by His Majesty the Sultan, achieves the goals sought by the “National Programme for Fiscal Sustainability and Financial Sector Development”. This programme, he added, supervises the implementation of a number of pillars, including activating the role of the capital market and enhancing attractiveness for foreign investments in cooperation with the government departments concerned.
For his part, Haitham Salim Al Salmi, CEO of Muscat Stock Exchange, stressed the importance of launching the incentive programme, which, he said, would significantly contribute to enhancing the status of companies by providing additional fiscal options.
On the other hand, Dr. Saleh bin Said Masan, Undersecretary of the Ministry of Commerce, Industry and Investment Promotion for Commerce and Industry, stressed that launching a path to encourage the transformation of limited liability companies into closed joint stock companies constitutes an opportunity for the firms’ growth and enhances public confidence in the companies.
Halima Rashid Al Zar’ee, CEO of the Authority for Small and Medium Enterprises Development (ASMED), said that startups constitute one of the most important drivers of economic growth in countries. She added that the step made to enable the establishment of a market for promising companies market at the Muscat Stock Exchange would have a positive impact in encouraging emerging companies, household businesses and SMEs to transform into joint stock companies.
