The Basic Law of Oman: Principles for Business

The Basic Law of the Sultanate of Oman, promulgated as Royal Decree 101 of 1996, holds a unique place in Oman’s pantheon of laws.

All other royal decrees are statutes that govern a particular area of law, setting out specific rules and providing guidance for governmental authorities to enact further regulations.

The Basic Law is different. It forms the bedrock of all Omani law. As its name suggests, the Basic Law is a foundational document that is very broad in scope. Although the Basic Law does contain specific directives, such as on succession procedures for the position of Sultan, it mainly addresses the overall structure of Omani government, including the legislative and judicial framework. The Basic Law enshrines the fundamental rights of the citizens and the guiding principles of the State.

Several of these principles, in particular, can be illuminating to companies that seek to do business in Oman:

“The basis of the national economy is justice and the principles of a free economy … constructive, fruitful co-operation between public and private activity … to achieve economic and social development that will lead to increased production and a higher standard of living for citizens ….”

The above-quoted text, from the first of the Economic Principles listed in Article 11 of the Basic Law, is perhaps the most important to companies, because it embodies the Sultanate’s economic approach. The Omani government views foreign investment and cooperation between the public and private sectors as key to increasing the nation’s workforce skills, economic development and living standards. As we have seen in our own work, most Omani businessmen and government officials are very welcoming, professional and helpful because they truly want Oman to be ‘Open for Business’.

“Freedom of economic activity is guaranteed within the limits of the Law and the public interest, in a manner that will ensure the well-being of the national economy.”

This principle sums up another key feature of the Sultanate’s approach to business: Oman has not let its zeal for further economic development cause it to abandon prudent and upstanding business practices. We have often heard Omani businessmen and government officials make clear that they want long-term, responsible development, not the ‘fast buck’ or ‘hit-and-run profits’. Oman is most interested in long-term, conservative and sustainable business.

“The State encourages saving and oversees the regulation of credit.”

This principle, in some ways, may be the best sign of all for companies seeking to do business in Oman. It reflects Oman’s culture of financial conservatism, which has helped the Sultanate avoid the excesses that have put some of its neighbors under severe stress. Omanis plan carefully not just to be open for business today, but for generations to come.