Investment opportunities in Kuwait
Investment is the key to development and progress and the Government of the State of Kuwait is pursuing an aggressive investment policy to meet its development goals. Kuwait has always been a country open to foreign direct investment and is currently further opening up to foreign capital.
Kuwait has introduced new corporate legislation to encourage and facilitate foreign direct investment. The new regulations are part of recent measures that the Government has taken to attract investments as well as foreign companies that will generate employment and help develop their embryonic private sectors as part of the 2015-2020 National Development Plan. The passage of the new Company law, the establishment of an institutional framework for Public-Private Partnerships (PPPs) and the Direct Investment Promotion Law are aimed at enhancing the confidence of investors and increasing investments in Kuwait.
Kuwait is currently laying the ground work for diversifying its economy which has seen it increase the focus on knowledge-based industries.
The new regulations with 337 articles incorporate tried and tested measures including the creation of a 'one stop shop' for incorporation and licensing of new businesses.
In order to ease operating in Kuwait, single share holders are permitted to set up businesses for the first time and transfer shares in companies.
The introduction of the new Foreign Direct Investment Law in June 2013 covers foreign investment in Kuwait. Executive Regulations have been issued in 2014 concerning its application. It has been enacted as a means of supporting the 25 year Kuwait Development Plan which aims at reducing dependency on oil and increasing private sector participation across a broader economic base.
The new law offers foreign investors several incentives, including the ability to own or increase ownership in a Kuwaiti Company to 100%, to operate through a 100% foreign owned branch and to benefit from income tax and customs duty exemptions.
The new FDI regime can be considered for both existing and new operations and investments except for, sectors included in the 'negative list'.
Kuwait Direct Investment Promotion Authority (KDIPA) which was set up as per the new regulations as a 'one stop shop' have recently issued a negative list as per the Council of Ministers Decision No. 75 (2015) which excludes the following sectors from the incentives and exemptions of the new FDI Law:
Extraction of crude petroleum
Extraction of natural gas
Manufacture of coke oven products
Manufacture of fertilizers and nitrogen compounds
Manufacture of gas, distribution of gaseous fuels through mains
Real Estate excluding privately operated building development projects
Security and investigation activities
Public administration and defence, compulsory social security
Activities of membership organizations
The current policy to promote FDI focuses on a number of sectors like infrastructure investments, waste-water treatment, communications, banking and financial sectors, information technology and software development, insurance, hospitals and Pharmaceuticals, land and sea freight, tourism and urban development.
Kuwait has a favorable investment climate, particularly after the introduction of investment friendly regulations. The high quality of life, its consistent oil reserves, low energy cost and a sound financial management and solid banking system make it an ideal destination for foreign investors. Further, Kuwait is blessed with a greater percentage of young consumers that guarantees a high demand for quality consumer products and services.
Availing the liberalized investment policy, US tech giant IBM became the first company to set up wholly foreign-owned operations in Kuwait and has embarked upon an ambitious expansion plans in collaboration with local industries. Giants like IBM plan to make Kuwait the hub for sales and services and reach out to the lucrative Gulf Market. Local firms have benefited from the rise in foreign investment. They have entered into partnerships with major IT giants like IBM to transform their business.
Kuwait's revenue from ICT has also soared beyond $ 28 billion it had earned between 2012-2015.
Legislation on bankruptcy, transparency, public tenders, competitions and commercial licenses is expected to boost trade and attract private investment.