Muscat: On Sunday, the Financial Services Authority (FSA) announced the 'Capital Market Incentive Programme' (CMIP), a strategic initiative in response to Royal directives. This program is designed to foster the development of the investment and business environment within the Sultanate of Oman, aligning with the objectives of Oman Vision 2040 and contributing to economic growth.
The CMIP leverages a variety of financing options available within the capital market to support different company types.
This initiative was introduced during a press conference, which also featured representatives from various 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). These entities have been tasked with exploring the possibilities for capital market development and tailoring financing solutions to meet the diverse needs of various company segments, particularly small and medium enterprises (SMEs).
The primary goal of the CMIP is to secure non-traditional sources of financing for a range of economic projects and to consolidate the capital market by attracting both local and international investments. These investments will be utilized to fund new projects, establish joint-stock companies, or facilitate the conversion of existing entities into joint-stock companies.
This initiative is projected to create investment opportunities for both local and international investors, broaden the investor base, improve the liquidity of the stock exchange, and elevate the standards of the Muscat Stock Exchange (MSX).
Furthermore, the CMIP aims to transform the capital market into a pivotal component of the national economic system, ensuring its role as a long-term financing instrument for economic projects.
The capital market will, as a result, provide support to both local and international investors, safeguard the sustainability and growth of existing companies by transforming them into joint-stock companies that adhere to transparency and disclosure standards. Additionally, it will adopt the highest standards of governance and management practices, ensuring the long-term viability and sustainability of these companies.
The Capital Market Incentive Program is set to be sustained for a period of five years, commencing from the commencement of each of the three distinct phases:
(1) The initial phase is dedicated to the encouragement of the establishment or transformation of household firms and private enterprises with market values exceeding OMR10 million into joint-stock companies.
(2) The subsequent phase focuses on the establishment of a subsidiary market within the Muscat Stock Exchange, referred to as the Promising Companies Market. This initiative aligns with a common practice observed in numerous financial markets, aimed at supporting private firms and household enterprises, as well as small and medium enterprises (SMEs) and startups, whose market values exceed OMR500,000.
(3) The final phase encourages the conversion of limited liability companies into closed joint-stock companies. It is targeted at entities with market values exceeding OMR500,000 that employ a minimum of 20 Omani workers.
The market valuation of entities across all three phases will be determined by an accredited evaluator, approved by the Financial Services Authority (FSA).
Abdullah Salim Al Salmi, the CEO of the Financial Services Authority, has expressed that the issuance of the Royal directive for the launch of the Capital Market Incentive Program represents a significant step forward in fostering economic growth. He further emphasized that the initiation of this program paves the way for the diversification of the private sector, thereby empowering it to assume a more prominent role in leading businesses and commercial activities.
Al Salmi highlighted that the aforementioned options for capital sector development also reflect the government's commitment to enhancing the business environment within the private sector and achieving the objectives outlined in Oman Vision 2040.
He added that the 'Promising Companies Market' within the Muscat Stock Exchange will create an ideal setting for private firms, household enterprises, startups, and SMEs to thrive and gain valuable experience in navigating financial markets, particularly in securing financing for their projects and sustaining their expansions.
This initiative, he explained, will lay the groundwork for these entities to transition into joint-stock companies listed on the regular market, subject to fulfilling the requisite requirements. Al Salmi noted that the 'Promising Companies Market' is anticipated to be established following the approval of its determinants, with the expectation of completion by the end of 2024.
Mahmoud Abdullah Al Oweini, the Secretary General of the Ministry of Finance, stated that the Capital Market Incentive Program, sanctioned by His Majesty the Sultan, is in alignment with the objectives of the ‘National Programme for Fiscal Sustainability and Financial Sector Development’. He further elaborated that this program oversees the implementation of several pillars, including the activation of the role of the capital market and the enhancement of its attractiveness for foreign investments, in collaboration with relevant government departments.
Haitham Salim Al Salmi, the esteemed CEO of the Muscat Stock Exchange, underscored the critical significance of initiating the incentive program, emphasizing its pivotal role in elevating the status of corporations by offering additional fiscal opportunities.
Dr. Saleh bin Said Masan, the Undersecretary of the Ministry of Commerce, Industry and Investment Promotion for Commerce and Industry, highlighted the potential of establishing a pathway to facilitate the transformation of limited liability companies into closed joint stock companies. He posited that this initiative presents a golden opportunity for the growth of firms and bolsters public confidence in their operations.
Halima Rashid Al Zar’ee, the CEO of the Authority for Small and Medium Enterprises Development (ASMED), underscored the pivotal role startups play in driving economic growth across nations.
She further elaborated that the move towards creating a market for promising companies at the Muscat Stock Exchange is poised to have a beneficial effect on encouraging emerging companies, household businesses, and small and medium enterprises to transition into joint stock companies.
