The Report: Kuwait 2013
Oil production retains its key role in the economy, however plans are under way to encourage diversification away from hydrocarbons towards an economy that is more knowledge based. The political climate has been characterised of late by a number of disputes, often resulting in either the resignation of the government or the dissolution of parliament and thereby leading to the slow progress of some projects. However these issues are largely being overcome and Kuwait continues to develop and diversity at a strong rate. Intra-GCC trade continues to grow substantially thanks to several regional projects such as the GCC rail network. This increased regional integration is improving the competitiveness of businesses within this region, as the movement of people and goods becomes easier and cheaper.
Country Profile
Estimated to possess some 6% of the world’s proven oil reserves, Kuwait’s oil and gas industry promises to play a critical role in the economy for years to come. The nation is not however resting on this alone, and it is now pursuing a programme of economic diversification that is set to re-energise the private sector. The Kuwait Development Plan is a $107bn, 20-year programme aimed at achieving this goal and is well under way, with new transport networks, upgraded infrastructure, increased oil production and improved services all coming under the remit of its work. This chapter contains viewpoints from Emir Sheikh Sabah Al Ahmed Al Jaber Al Sabah; and David Cameron, UK Prime Minister. It also includes an interview with Péter Szijjártó, Hungarian State Secretary for Foreign Affairs and External Economic Relations.
Explore chapterEconomy
The economic outlook appears broadly positive in the short to medium term, with production of oil, the backbone of the economy, reaching 2.8m bpd in 2012 and continued budget surpluses forecast for 2013/14. Spending linked to the National Development Plan should help to support the expansion of the non-oil sector, particularly via planned investments in infrastructure and industry. This chapter contains interviews with Bader Al Saad, Managing Director, Kuwait Investment Authority; Faisal Al Ayyar, Vice-Chairman, Kuwait Projects Company; and Abdulwahab Al Bader, Director-General, Kuwait Fund for Arab Economic Development.
Explore chapterBanking
Despite a variety of ongoing challenges, Kuwait’s banking sector has performed well in recent years. The country’s 10 local banks and 11 foreign players make up one of the oldest banking sectors in the region and the third largest in the GCC. In the wake of the global financial crisis, the Central Bank of Kuwait (CBK) has introduced a raft of new regulations. Although these are likely to have a negative impact on profits in the short-term, they are expected to support sector growth in the long term. This chapter contains an interview with Mohammad Y Al Hashel, Governor, Central Bank of Kuwait.
Explore chapterCapital Markets
With the National Development Plan providing a stable foundation for future expansion, the government is working towards revamping legislation in order to allow for some restructuring. There are also efforts under way to diversify the bourse, which will include increasingly popular and varied sharia-compliant financial instruments. As the markets continue to recover, corporate debt issuance is also on the rise. This chapter contains interviews with Saleh Al Falah, Chairman, Kuwait Capital Markets Authority; and Faisal Sarkhou, CEO, KAMCO.
Explore chapterIslamic Financial Services
As the government continues to develop a regulatory framework for the sector, Islamic financial instruments are playing an increasingly prominent role in banking. The country is home to one of the largest and most diverse markets for sharia-compliant instruments, and as of September 2012, a full 42.3% of Kuwait’s total banking assets were Islamic. This chapter contains an interview with Mohammad S Al Omar, CEO, Kuwait Finance House.
Explore chapterInsurance
While the insurance market has grown steadily over the past decade, market penetration in Kuwait remains limited at 0.58%, the lowest in the GCC region. Encouraged by high growth rates and favourable entry requirements, the sector has grown from six companies in 1999 to 34 today. Despite steadily increasing competition through the first half of the 2000s, the industry as a whole posted solid growth in terms of gross written premiums during this period. Despite challenges, most agree that there is substantial potential for growth in Kuwait’s insurance industry.
Explore chapterEnergy
Hydrocarbons wealth has been the central pillar of Kuwait’s economy for nearly a century, and the nation’s proven oil reserves of around 101bn barrels underwrite its future economic wellbeing. However, the supply of non-associated natural gas, which the country discovered in 2006, has fallen behind demand, as domestic electricity generation infrastructure struggles to keep pace. Still, Kuwait has many options when it comes to resolving the challenges facing its energy sector: new fields and new technologies. This chapter contains interviews with Farouq Al Zanki, Former CEO, Kuwait Petroleum Corporation; and Sara Akbar, CEO, Kuwait Energy.
Explore chapterConstruction & Real Estate
Driven by a national development strategy, a raft of new projects are taking shape in the construction industry, all of which provide opportunities for both domestic and foreign contractors. Meanwhile, real estate is in the early stages of a recovery, with legislation and the high purchasing power of a young and expanding population helping the sector to regain lost momentum. This chapter contains an interview with Adel Al Roumi, President, Partnerships Technical Bureau.
Explore chapterTelecoms & IT
With the introduction of 4G, the highly competitive telecoms market is likely to see growing use of smartphones and data services. The future development of the sector would be greatly aided by a new telecoms law and the emergence of an independent regulator. The need for this is clear and the Ministry of Communications has a plan to address this. In IT, state spending remains the primary growth driver, alongside the wealthy, young and tech-savvy consumer base.
Explore chapterRetail
Kuwait’s mall culture is currently at the forefront of a resilient and growing retail sector that continues to draw the interest of both international brands and foreign investors. The number of shopping centres continues to grow and international brands find opportunities in local markets, with luxury segments showing a strong recovery and growth. The automobile industry has also performed well, with annual growth of 8-9% on the back of solid fundamentals. Recent years have seen the rapid rise of hypermarket retail, representing the sector’s most dynamic vector, with limited familiarity with modern grocery retail formats presents an opportunity for investors.
Explore chapterTransport & Logistics
Kuwait is forging ahead with infrastructure upgrades as part of its $107bn National Development Plan to support all modes of transport. Home to 6% of the world’s oil reserves, hydrocarbons continue to define Kuwait’s current transport infrastructure, yet contemporary strategic goals – in line with Vision 2035 – look to develop the entire sector with diversification as the central focus. If political stability endures then the sector can expect to reap substantial rewards as mega-projects receive government approval in the near term. This chapter contains an interview with Marwan Boodai, CEO, Boodai Group, and Chairman, Jazeera Airways.
Explore chapterIndustry
Significant national budget surpluses provide ample funding to invest in industry and support the goals of the National Industrial Strategy 2015-35. The development of technology parks and a focus on electronics and electrical goods can boost the sector. Manufacturing remains the segment’s backbone, though the utilities segment also grew by an impressive 75.2% from 2006 to 2011. While the construction sector looks set for strong growth, the precise scale of immediate opportunities has yet to be determined. This chapter contains an interview with Anas K Al Saleh, Minister of Commerce and Industry.
Explore chapterEducation & Health
The Ministry of Education is moving ahead with plans to develop schools on a public-private partnership basis in order to deal with pressure from the country’s rapidly expanding youth population. Kuwait’s health care industry is also on the verge of a major period of development and expansion. The planned establishment of an independent regulatory body in the near future is a sign of market maturation. While the Ministry of Health will likely continue to play a central role for years to come, particularly in terms of health care provision for nationals, the private sector is increasingly active, and could potentially serve as a major foreign direct investment draw over the course of the coming decade. This chapter contains an interview with: Adnan A Shihab-Eldin, Director-General, Kuwait Foundation for the Advancement of Sciences.
Explore chapterLegal Framework
This chapter, written in conjunction with Al Tamimi & Co., contains a rundown of the recently issued New Companies Law (NCL). In line with the reforms being implemented in various economies throughout the world, Kuwait, through the introduction of the NCL, is introducing new provisions and amending previous ones to allow more flexibility in establishment and operations, facilitate the incorporation process, make it more efficient, and alleviate other hurdles placed by the Old Law on new and existing investors who are interested in establishing and operating companies in Kuwait.
Explore chapterTax
This chapter, written in conjunction PKF Bouresli, provides a detailed review of the rules and regulations that are applicable to foreign entities doing business in Kuwait. This chapter also contains an interview with Tariq M Bouresli, Managing Partner, PKF Bouresli.
Explore chapterThe Guide
The Guide features a rundown of Kuwait City’s leading hotels and contact information for various institutions, including government ministries, foreign consulates and embassies, emergency services, tourism companies and local media. This chapter also includes information on society and etiquette, language, transport and visas for business visitors.
Explore chapterTable of Contents
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