MUSCAT The Persian Gulf Arab state of Oman must introduce more economic reforms to support its efforts to lure foreign investors to its oil-dependant economy, economists and bankers said on Sunday. Anthony Wright, chief executive of Oman International Bank, told Reuters several factors were still hampering the sultanate's push to attract more foreign capital despite big strides in power sector privatization. "Oman is attracting some foreign funds for its power sector but the country needs to reduce red tape and relax labor laws to be more competitive," he said. "You still have to go to so many offices to set up a business here and that puts off many investors. Officials need to cut down on paperwork to speed up the process," Wright said. Oman has implemented several reforms in its bid to join the World Trade Organization (WTO), including increasing foreign ownership up to 70 percent and reducing corporate tax. It joined the world trade body last year and appears keen to privatize its economy away from oil dependance. ------------ Give Foreigners 100 Percent Ownership --------- But economists said more needed to be done. "One reform that will encourage more investment is to allow foreign investors 100 percent ownership. At the moment, the laws require foreigners to set up projects with local partners so some profits can be shared by Omanis," one economist said. Official figures show Oman needs foreign investments for projects worth $7.6 billion, including chemical and aluminum plants. Private investors already operate Al-Manah Power Plant and Oman has signed a deal with Britain's national power PLC to build a second private power plant at a cost of up to 50 million rials ($130 million) in the eastern town of Al-Kamil. In November, Oman awarded a project to build the 175-million-rial Barka Private Power Plant to U.S. firm AES Corp. An Economy Ministry official said Oman was in the process of changing foreign investment laws to simplify formalities. "We are working on simple details that would not only reduce bureaucracy but provide transparency on key issues so that an investor knows exactly what he is getting into before he bids for a project," he told Reuters. The economists said labor laws also needed to be adjusted. "Labor laws here require that 30 percent of the total number of workers in any company operating in Oman must be nationals and that can impose some difficulties if you cannot find enough locals with the required skills," one said. "Another problem is that you cannot employ foreigners to work on particular positions since some jobs are only reserved for nationals," he added. Oman, where foreign workers make up 25 percent of the 2.3 million population, has banned foreigners from several jobs to help create jobs for its nationals. It is seeking to provide 100,000 jobs for Omanis over the next five years. ---------- Favorable Oil Deals ------------------- Big international firms have already demonstrated that they could clinch favorable deals with the government but mainly in the oil and gas sectors, the backbone of the Omani economy. "Oman has no problems in attracting companies like Shell investing in the oil and gas sectors, perhaps the same strategy can be developed for other sectors," Deepak Atal, general manager of Ominvest, told Reuters. An oil industry expert said the energy sector operated under different but unspecified laws to help speed up investments. "Oil and gas projects do not necessarily follow commercial laws and virtually there is no red tape involved. They get special treatment because the government's economy heavily depends on their revenues. The same treatment should be applied to other sectors so the benefits can be enjoyed by investors of other projects," he said. (Reuter)