Kuwait in brief Position of strength: Efforts to diversify and shift to a knowledge-based economy encourage infrastructure development and investment Viewpoint: Emir Sheikh Sabah Al Ahmed Al Jaber Al Sabah Looking east: Enhanced cooperation and investment across a range of sectors is strengthening ties between China and the GCC A rally year: Plans to move to a private sectorled, knowledge-based economy and careful spending should act to buffer against fiscal challenges Interview: Khaled Mahdi, SecretaryGeneral, Supreme Council for Planning and Development Strategic sales: Privatisation is part of a national plan to create a new economic model with reduced reliance on oil and gas revenue Shifting trade winds: Regional integration among emerging economies and a raft of new agreements bolster international trade Expanding scope: Improving the business environment to attract foreign investment is supporting the country’s diversification drive Page 20 The country saw a return to growth in 2018, with its current account moving back into surplus territory and credit growth resuming due to ample liquidity. Public debt remains well covered, inflation close to zero and the banking sector robust. GDP expansion was around 1.8% in 2018 and is forecast at 2.5% in 2019. Although diversification efforts are under way, oil and gas continues to contribute more than 40% to GDP, and oil comprised 91% of exports in 2018. Interview: Sheikh Meshaal Jaber Al Sabah, Director-General, Kuwait Direct Investment Promotion Authority Interview: Meshal Alothman, Director-General, Public Institution for Social Security Global village: Medium-term prospects suggest globalisation is set to continue for the foreseeable future Strong fundamentals: Prudent regulation and years of provisioning result in solid metrics and promising financial performance Let’s get digital: Financial technology is changing the local banking landscape with new mediums and accompanying regulations Roundtable: Adel Abdul Wahab Al Majed, Chairman, Kuwait Banking Association; and Vice-Chairman and CEO, Boubyan Bank; Michel Accad, Group CEO, Al Ahli Bank of Kuwait; and Elham Y Mahfouz, CEO, Commercial Bank of Kuwait Interview: Mohammad Y Al Hashel, Governor, Central Bank of Kuwait A swing in the balance: Following a retrenchment of overseas operations by numerous major banks, how are firms in emerging markets responding? Continuous improvement: Years of reforms have led to global recognition and greater inflows Interview: Khaldoun Al Tabtabaie, CEO, Kuwait Clearing Company Growth ahead: Major index providers upgrade Kuwait to emerging market status, spurring interest among foreign investors Strategic expansion: Calculated agreements aim to strengthen Kuwait’s presence in regional banking and investment Interview: Mohamed Al Osaimi, Acting CEO, Boursa Kuwait 35 36 37 41 47 48 50 51 55 60 61 62 63 The New Kuwait 2035 vision aims to deploy the nation’s oil wealth to diversify the economy. The private sector is vital to this, with partnerships and privatisation, improvements to the business environment and efforts to attract foreign direct investment (FDI) and harness knowledge from abroad all being key moves. Kuwait seeks to attract $200bn in FDI during 2020-35 to become a global centre for trade and finance.
Page 30 By the book: Targeted legislation and issuances give a boost to the financial system’s shariacompliant segment Interview: Mazin Al Nahedh, CEO, Kuwait Finance House Interview: Raed Jawad Bukhamseen, ViceChairman and CEO, Kuwait International Bank Extending coverage: After two decades of rapid growth, the industry charts a more sustainable path Worth the wait: A long overdue law brings big changes to the sector Digital disruption: Insurance technology taps premium growth potential in emerging markets Wider network: Large-scale infrastructure projects are in the pipeline as the country aims to become a regional centre for transportation Interview: Kamil Al Awadhi, CEO, Kuwait Airways Interview: Saud Al Naki, Vice-Chairman, Public Authority for Roads and Transportation From the ground up: Major seaport project boosts connectivity and strengthens partnerships Ticket to ride: A combination of large-scale infrastructure investment and vehicle-sharing platforms are boosting urban mobility 66 71 72 74 78 79 85 91 92 93 95 Page 66 Kuwait’s Islamic financial services (IFS) sector has expanded in recent years, building upon the country’s reputation as an emerging centre for sharia-compliant banking, insurance and investment products. This is reflected by Kuwait accounting for 6.3% of the world’s Islamic financial assets in the second quarter of 2018. The government has enacted a series of laws aimed at further developing IFS, and there remains strong demand for sharia-compliant products. Aim high: The industry is investing heavily to move up the value chain and away from its historical role as a crude oil exporter Interview: Hashem Hashem, Deputy Chairman and CEO, Kuwait Petroleum Corporation Front and centre: Two projects aim to dramatically improve local refining capacity and petrochemicals production Alternative means: Solar power could help lower the energy import bill and recover oil from mature wells Interview: Emad Sultan, CEO, Kuwait Oil Company Cheaper and greener: As costs decline, renewable sources of energy are seeing an inexorable rise, particularly among developing economies Back in action: Long-term development plans and a rebounding economy drive major infrastructure projects Northern gateway: As urban populations undergo rapid growth, planners are striving to develop the north of the country Over land and sea: China’s implementation of a new trade network is energising the global construction industry On the up: Higher oil prices support a growing roster of private and public mixed-use developments Finding balance: After a strong recovery, the market for investment properties remains subject to broader demographic factors Urban adaptation: Rapid urbanisation and young, growing populations put pressure on emerging markets to solve housing deficits Expanded service: Telecoms providers diversify offerings to increase their revenue and customer base 100 105 106 108 109 110 114 119 120 124 128 129 132 Interview: Salim Al Ozainah, Chairman and CEO, Communication and Information Technology Regulatory Authority Come on-line: Investment in next-generation technology improves communication speed and capacity Bridging the divide: The ever-expanding digital economy is creating widespread opportunities in the developing world Building blocks: New industrial zones and petrochemical products spark expansion Interview: Abdulkarim Taqi, Director-General, Public Authority for Industry Outsized impact: Support for small and medium-sized enterprises is increasingly recognised as key to sustainable growth Shop talk: Performance rebounds as retailers look to secure a larger customer base E-commerce evolution: Online shopping is set to expand in emerging markets despite logistical and payment challenges Lease of life: Private sector participation is expected to increase to meet rising demand Investing in health: Advancing medical technology leads to improved patient care and cost savings High standards: Recent reforms look to improve the quality of teaching and encourage private sector participation Digital classroom: Investment in education technology surges as markets around the world recognise its transformative potential EY New rules: Tax reforms are aimed at shoring up the post-oil economy Interview: Alok Chugh, Partner, Government and Public Sector Leader MENA, EY ASAR – Al Ruwayeh & Partners By the book: New rulebook lays out the legal framework governing Boursa Kuwait as well as regulations for short selling and swaps Viewpoint: Ahmed Barakat, Managing Partner, ASAR – Al Ruwayeh & Partners Time to rest: Selection of hotels Listings: Directory of government bodies and useful private organisations Facts for visitors: Handy tips for all travellers 136 137 138 142 147 148 152 157 160 163 168 173 178 181 184 189 192 195 196 Kuwait is undergoing a major revamp of its transport and logistics networks via the air, land and marine transport development programmes within the New Kuwait 2035 vision. The country is keen to attract foreign investment and participation in this revitalisation, with the government working hard to encourage public-private partnerships and reduce bureaucratic obstacles to investment.
Page 85 Page 100 In addition to having the sixth-largest proven oil reserves in the world, Kuwait is one of the top energy investors. A range of mega-projects are under way in refining, petrochemicals, new oilfield development and mature oilfield recovery that should see the sector lessen its dependence on crude oil exports and move to associated, higher-value outputs in pursuit of economic diversification. Major infrastructure works from roads and schools to airports and hospitals are either under way or in the design phase in Kuwait, with perhaps the most ambitious project being the 700,000-inhabitant Silk City mega-development in the north. Higher oil prices and overall economic recovery saw the construction sector grow by 3.5% year-onyear in the first quarter of 2019 to $818.2m.
Page 114 As Kuwait works to ease its dependence on hydrocarbons, manufacturing is one of the sectors the government is looking to further develop. At the intersection of hydrocarbons and industry, petrochemicals have received considerable attention and investment. Indeed, refined petroleum products is the top industrial segment, followed by chemical products and metal products.
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