Viewpoint: Philip Kotsis
The progress of a nation’s economic and commercial sectors depends greatly upon the implementation and support of a robust and efficient legal framework, which corresponds to the requirements needed to effectuate the growth of commerce, industry and investment. Legal experts in the GCC have witnessed a discernible and leading effort in Kuwait to reform key aspects of its legal regime to support and advance its economic and commercial goals.
The vision of the Emir Sheikh Sabah Al Ahmad Al Jaber Al Sabah for Kuwait’s transformation into a preeminent centre for commerce and finance by 2035 is being achieved through a wide range of developments and is supported through the promulgation of legal reforms to reflect Kuwait’s objective of moving forward towards a more investor-friendly economy.
Two notable reforms in the Kuwaiti legal system in the past few years that have netted visibly positive results have been the establishment of the Kuwait Authority for Partnership Projects (KAPP) and the Kuwait Direct Investment Promotion Authority (KDIPA).
KDIPA was established through Law No. 116 of 2013 and has successfully attracted local and foreign direct investment in Kuwait. KDIPA has been able to break the mould of restrictive regulations common in GCC legal systems, by issuing licences for foreigners to establish 100% foreign-owned Kuwait entities. The unique strategy, implemented by KDIPA, allows foreign investors to set up businesses in Kuwait, provided that they bring technical, economic or innovative benefits, while also affirming a commitment to employ and train Kuwaiti nationals, utilise local goods and services, and help contribute to local market needs. KDIPA offers a detailed tax credit framework to incentivise foreigners to further their commitment of Kuwaiti development.
KAPP was established through Law No. 116 of 2014 regarding public-private partnerships (PPPs). It aims to improve the implementation of a robust and ambitious PPP regime in Kuwait. KAPP maintains the responsibility of initiating and overseeing PPP projects in Kuwait, which have so far seen a great deal of interest and participation from a variety of local and foreign technical and financial companies and institutions. These projects are shaping the physical and economic landscape of Kuwait, not only through major projects like the construction of electric, solar power and desalination plants, but also through numerous other smaller local PPP endeavours, such as schools, parks and local infrastructure improvements.
We have witnessed significant progress in legal reforms which, quite arguably, are forging the path of legal reform in the GCC, including: the New Companies Law of 2016; the New Commercial Agencies Law of 2016, which regulates commercial agencies, distributorships and franchises in Kuwait; the New Law Establishing the Anti-Corruption Authority of 2016, which governs the Public Authority for Combating Fraud for the purposes of preventing corruption; the New Capital Markets Authority and Law of 2015, which replaced existing capital markets legislation with the issuance of new detailed and forward-facing laws and regulations; the New Consumer Protection Law of 2014, which safeguards consumer rights and creates an instrument of control to ensure these rights are properly defended; the New Environmental Protection Law of 2014, which improves the regulation and protection of the Kuwait environment; and the New Anti-Money Laundering and Counter-Terrorist Financing Law of 2013, which outlines a strict framework for the prevention, regulation and punishment of money laundering and terrorist financing issues.
The creation of improved legislation shows that Kuwait is dedicated to the advancement of its legal regime in the public and private sectors. These positive steps have helped ignite the push towards financial and business development, and are serving as a strong foundation for the transformation of Kuwait into an economic and commercial centre in the years to come.
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