Kuwait is a member of both the Organisation of the Petroleum Exporting Countries and the GCC. Additionally, it is considered by many to be the most politically dynamic country in the Gulf, which has afforded it strong foundations to help tackle recent issues concerning parliamentary elections and accountability; it has also played a key mediating role in the 2017 diplomatic crisis between Qatar on one side and Saudi Arabia, the UAE and Bahrain on the other. By continuing with economic diversification efforts and reducing dependence on oil revenues, Kuwait is also adding momentum to several large infrastructure projects. The tabled projects are set to further integrate the country into the global economy.
This chapter contains a viewpoint from Emir Sheikh Sabah Al Ahmed Al Jaber Al Sabah and an interview with Prime Minister Sheikh Jaber Al Mubarak Al Hamad Al Sabah.Explore chapter
With billions of dinars worth of short-term spending plans and a new vision for economic transformation over the next two decades, Kuwait offers opportunities for investment across a range of sectors. While the country adopted a save and prosper approach during the oil boom years of 2010-14, the prolonged reduction in oil prices experienced since then has coincided with a renewed appetite for investment and reform that bodes well for private sector players. Funding mechanisms such as public-private partnership agreements, as well as capital projects funded by state-owned enterprises, are set to provide opportunities for international firms with the government actively seeking to attract foreign direct investment and highlighting the ICT, renewable energy and finance as sectors it would like to see developed by using international expertise over the following two decades.
This chapter contains interviews with Khaled Mahdi, Secretary-General, Supreme Council for Planning and Development and Sheikh Meshaal Jaber Al Ahmad Al Sabah, Director General, Kuwait Direct Investment Promotion Authority.Explore chapter
In a lower oil price environment such as the one that has persisted since late 2014, banking sectors in the GCC find themselves under heightened scrutiny. Kuwait is no exception, but where other banking sectors in the region have been compelled to face sizeable cutbacks in government spending, the nation’s deep reserves have enabled it to defend the development pipeline on which so much of the industry’s business depends. Although challenges through 2016 put pressures on profits and credit growth, these were not seen as threats to sector stability. Nevertheless, challenges remain. The recent economic downturn has highlighted the sector’s dependence on government spending, while an increasingly comprehensive regulatory environment is starting to affect some of the industry’s key ratios. Exploiting untapped areas of the economy and seeking new efficiencies are therefore emerging as the key priorities for the industry in the year ahead.
This chapter contains an interview with Mohammad Y Al Hashel, Governor, Central Bank of Kuwait.Explore chapter
Trade & Investment
Like most GCC economies, Kuwait is well known for its buy-side investment activity – a result of its historic ability to transform oil revenues into global investments aimed at securing future economic sustainability. However, as the nation enters a third year of lower oil prices, Kuwait’s attractiveness as a destination for inward investment has come under increasing scrutiny. The government is eyeing global capital flows to support its bold development strategy, and recent years have seen a number of innovations aimed at attracting foreign investment to the country. Challenges remain, however, and Kuwait still has progress to make on international ease of doing business indicators. In the meantime, falling oil revenues have highlighted the nation’s dependence on a single export category, and therefore diversifying its export base and removing barriers to trade have also emerged as central priorities.Explore chapter
After a year characterised by low trading volumes and a horizontal main index, the Kuwait Stock Exchange (KSE) opened 2017 as the fastest-growing market in the world. A number of factors combine to make the KSE a destination of interest for investors in 2017, chief among them being new management, which has begun to implement an ambitious reform programme. With the ultimate goal of securing an upgrade for the nation’s bourse from frontier- to emerging-market status, regulatory reform is set to dominate the agenda over 2017 and 2018. This timely overhaul of the exchange’s rules and processes will tackle the KSE’s twin challenges of low liquidity and scant foreign interest head-on.
This chapter contains an interview with Khaled Abdulrazzaq Al Khaled, Vice-Chairman and CEO, Boursa Kuwait.Explore chapter
Islamic Financial Services
Kuwait’s Islamic Financial Services industry is one of the fastest-growing segments of the financial sector, home to an increasing number of sharia- compliant banks and insurance companies. The emergence of these industries over recent decades has brought sharia-compliant capital to account for a significant proportion of total capital domiciled in Kuwait – around 45%, according to the World Bank, which is the second-highest rate in the GCC. Kuwait has also emerged as a player with weight in the global Islamic finance market. According to professional services firm EY, it is one of a core group of nine countries that account for 93% of industry assets, estimated to have exceeded $920bn in 2015. The World Bank reported that Kuwait’s share of global Islamic banking assets in 2016 was around 5.9% of the total, making it the fifth-largest sharia-compliant banking industry in the world that year.
This chapter contains an interview with Mazin Al Nahedh, Group CEO, Kuwait Finance House.Explore chapter
The Kuwait insurance industry entered 2017 after a challenging period, which saw premium growth maintained but profitability declining year-on-year. High levels of competition and low oil prices make a reversal of this trend in the short term a daunting prospect. However, a number of developments in the pipeline – including a new legislative framework and the introduction of mandatory health coverage for expatriates – have the potential to provide a timely boost to Kuwait’s insurers. There is clearly scope for the expansion of insurance activity in the Kuwaiti market. The domestic industry plays a relatively small role in the economy, with banks and investment companies accounting for 94% of the financial system as of December 2015, according to the Central Bank of Kuwait. Insurance density in Kuwait, which stands at around 0.9% of GDP, is low even by regional standards.Explore chapter
Driven by measured government-backed investments, and in spite of the downward pressure from oil prices, the Kuwait transportation sector continued to grow in 2016-17. Improving connectivity regionally and globally – via air, land and sea links – is viewed as a state priority and a promising mechanism to drive non-oil economic growth. In support of government objectives, such as enhancing local and regional integration, boosting trade volume and creating new job opportunities, several major infrastructure projects are under way in the country, including the expansion of Kuwait International Airport and the construction of the Sheikh Jaber Al Ahmad Al Sabah Causeway. These fall under the KD34bn ($112.5bn) Kuwait Development Plan 2015-20 framework, which aims to push through major economic reforms, implement a pipeline of bold projects to empower the private sector, and establish Kuwait as a regional trade and financial centre by 2035.
This chapter contains an interview with Sami Fahad Al Rushaid, Chairman, Kuwait Airways.Explore chapter
With about 6% of the world’s proven crude oil reserves Kuwait plays a major role in global energy markets. However, its reliance on a single commodity which is prone to significant fluctuations in value also presents challenges for the economy as a whole, and the energy sector in particular. According to estimates from the US Energy Information Administration, Kuwait’s total export revenues in 2015 were $40bn, compared to $119bn in 2012. Although the country has accumulated significant savings over the years, giving it fiscal buffers to weather lower oil prices in the short term, falling income has given greater impetus to long-term plans to boost production, increase upstream efficiency and diversify downstream industry, so that Kuwait can optimise the value of its natural resource endowment and pass on the benefits to its citizens.
This chapter contains an interview with Jamal Jaafar, CEO, Kuwait Oil Company.Explore chapter
Construction & Real Estate
With the country beginning to clear a backlog of major projects in energy, infrastructure and housing, the construction sector in Kuwait has seen a resurgence of activity in recent years. The government’s five-year National Development Plan committed to spend KD34bn ($112.5bn) over the 2015-20 period, and KD12bn ($39.7bn) worth of projects were signed off in the plan’s preliminary year. The country has seen its first successful construction project completed on a public-private partnership (PPP) basis, and according to National Bank of Kuwait, there is a further KD10bn ($33.1bn) in PPP projects in the pipeline for schemes ranging from power and water to education, health and transport. Real Estate meanwhile accounts for 6% of Kuwait’s non-oil GDP with the impressive scale of real estate activity apparent from satellite images showing a new city in the country’s south being reclaimed from the sea over the course of 15 years. Several new communities being built by the government to provide homes for more than 100,000 Kuwaiti married couples, will provide ample new opportunities to develop residential, retail and commercial property in the years ahead.
This chapter contains interviews with Khaled Al Mashaan, Vice-Chairman and CEO, ALARGAN and Yasser Hassan Abul, Minister of State for Housing Affairs.Explore chapter
ICT sits at the heart of the government’s 2035 strategy, New Kuwait, launched in 2017, but Kuwait has already made great strides in the digital economy. In the “Global Information Technology Report 2016” by the World Economic Forum, the country was among the biggest risers, and regulatory reforms are being put in place to usher in an era where tech companies help speed up the evolution towards a diversified and knowledge-based economy. State funding is being used to create an ecosystem that will help start-ups develop, while larger firms and state agencies work to boost efficiency and productivity through a growing range of solutions that streamline processes and allow the real-time analysis of consumer behaviour. Although ICT covers all sectors of the economy, its true significance is partially captured by government data on the industry. According to the latest data available from the Central Statistical Bureau, the communications sector generated KD1.294bn ($3.92bn) in GDP in 2015, up marginally from KD1.292bn ($3.91bn) the previous year. This was equal to 5.2% of non-oil GDP and 3.2% of overall GDP at current prices.
This chapter contains an interview with Qusai Al Shatti, Acting Director-General, Central Agency for Information Technology.Explore chapter
Characterised by high penetration rates, early adoption of new technology and healthy average revenue per user, the Kuwait telecommunications sector is a small but profitable market in which three major regional providers compete. Faced with the erosion of traditional voice and text revenue streams, all three companies are focusing on strategies to improve services while also monetising data as they seek to carve out new roles in the digital lifestyle economy. Kuwait is a mature market where each of the three operators know success will likely depend on how they adapt to – and generate revenues from – the next generation of change in an increasingly digitised society. A new industry regulator could also further shape the business practices of major players as they build connections with international technology partners to gain a competitive edge.
This chapter contains an interview with Salman bin Abdulaziz Al Badran, CEO, VIVA Kuwait.Explore chapter
The state-owned oil industry is by far the largest sector in Kuwait’s economy, representing more than half of GDP, 95% of exports and roughly four-fifths of state revenues. As oil and its byproducts are used to make more than 300,000 products globally, the country’s petroleum-based industries and petrochemicals hold significant growth potential. By comparison, non-petroleum industrial manufacturing is limited, as Kuwait lacks many of the natural resources necessary to establish alternative major industries. Relative security, political stability, economic performance, infrastructure projects and proximity to labour markets in Asia are all positive factors supporting the growth of Kuwait’s industry, but challenges include its domestic market size, limited supply of industrial land, production costs and considerable licensing and permitting issues. However recently announced government plans to boost Kuwait’s industrial output by 25% in the next few years bodes well for sector growth.
This chapter contains an interview with Faisal Awwad Al Khaldi, Deputy CEO, Kuwait Steel.Explore chapter
Driven by rapid urbanisation, the influx of the expatriate workforce, and a rising population of the young and affluent, Kuwait’s retail industry has grown dramatically over the past 10 years. High GDP per capita and the growing popularity of modern retail concepts and formats have also helped to position the country as a major hub for global luxury brands, earning Kuwait City a ninth place ranking among the top cities worldwide for retailing in property consultancy JLL’s 2016 “Destination Retail” report. However, after several years of rapid growth, subdued consumer confidence somewhat slowed momentum in the sector in 2015-16. Between government reductions in expenditure, demographic changes within the expatriate community and inflated commodity prices, the market is down across most classes and categories. However, in spite of this, a wide and growing array of international retailers are expected to level out the market ahead of another retail boom over the medium to long term.Explore chapter
Over the last five years Kuwait’s health care industry has gained significant momentum, adequately responding to rapid population growth by simultaneously addressing capacity constraints and improving the quality of health infrastructure. Despite the decline in oil prices and a budget deficit of over KD12bn ($39.7bn), health care spending remains a priority for the government. Although the state has traditionally acted as the main payer in the health care system, covering roughly 86% of expenditures in the country in 2014, government objectives are now aimed at increasing private sector participation to meet the growing demand for health care and reduce the burden on the state budget.
This chapter contains an interview with Dr Ahmed Al Saleh, CEO, Health Assurance Hospitals Company.Explore chapter
Driven by the need to accommodate rising enrolment and government efforts to address long-standing issues in public education, the education sector in Kuwait is undergoing significant reform in 2017. Government-directed reforms and investments include those initiated in the general education segment under Kuwait’s Integrated Education Reform Programme and School Education Quality Improvement Project. These are aimed at helping to improve and enhance the country’s basic education offering. Since 2014 the government has also been more actively seeking to engage the private sector on development, primarily by offering investor-friendly policies and public-private partnerships.
This chapter contains an interview with Adnan Shihab-Eldin, Director-General, Kuwait Foundation for the Advancement of Sciences.Explore chapter
This chapter contains an overview of the tax framework under which local and foreign investors operate, including a look at the value-added tax being rolled out in Kuwait and across the GCC, a rundown of the remittance, excise and corporate taxes in place and an outline of the tax incentives and credits under the new investment law.Explore chapter
This chapter contains an overview of the legal framework under which local and foreign investors operate in Kuwait, including a look at the amendments made to the Companies Law and an examination of the New Agency Law which is taking effect after 50 years.
This chapter contains a viewpoint from Philip Kotsis, Partner, Al Tamimi & Co.Explore chapter
The guide contains listings of some of the leading hotels and resorts in Kuwait and contacts for important government offices and services. It also contains useful tips and information for first-time or regular and business and leisure visitors alike.Explore chapter
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