The Report: Kuwait 2024

Kuwait, with one of the region’s most dynamic political systems and the world’s six-largest crude oil reserves, has seen significant GDP growth in recent years. As part of its efforts to diversify away from a reliance on hydrocarbons, New Kuwait 2035, a long-term economic development framework, aims to transition the country from resource-based industries to knowledge-based ones.

Country Profile

Situated between Iraq and Saudi Arabia at the north-western corner of the Gulf, Kuwait operates as a constitutional monarch, and is a founding member of both the GCC and the Organisation of the Petroleum Exporting Countries. Despite its modest land size, the country holds the world’s sixth-largest crude oil reserves, which have served as a robust foundation for sustained economic development and prosperity. With one of the most dynamic political systems in the region, the hope is that the executive and legislative branches of government can work together to advance the policy changes and strategies needed to fulfil the ambitions of the long-term development plan, New Kuwait 2035. This chapter contains a viewpoint from the Emir, Sheikh Mishal Al Ahmad Al Jaber Al Sabah.

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Kuwait’s GDP has undergone significant expansion in recent years, with the spike in global oil prices enabling the country to maintain a trade surplus amid domestic political changes, international geopolitical tensions and economic uncertainties. Guided by medium- and long-term development plans, the country is in the process of diversifying its economy as it shifts its focus from resource-based to knowledge-based industries. Increased privatisation is central to that drive, with government entities dominating economic activities and high public expenditure historically returning budget deficits. The development of the ecosystem for small and medium-sized enterprises is intended to provide a stable foundation from which a more versatile business community can grow.

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Trade & Investment

Kuwait’s government is actively seeking sizeable private and international investment in its economic diversification and privatisation drive, having made significant amendments to the country’s investment laws. A strong hydrocarbons sector feeds downstream industry, providing readily available feedstock and significant incentives for private investors to enter the country’s industrial markets. In recent years, a political impasse has impeded progress, a trend exemplified in February 2024 by the emir’s dissolution of Parliament. The creation of a more business-friendly political environment could significantly benefit the country, and in such a scenario regulatory changes are poised to contribute positively, fostering increased investment inflows and supporting a robust balance of trade. This chapter contains an interview with Sheikh Meshaal Jaber Al Sabah, Director-General of the Kuwait Direct Investment Promotion Authority.

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Increased oil revenue, consolidation and new digital offerings are fuelling the sector’s growth potential. Kuwait’s banks are among the largest and most robust in the region, ranking first in the GCC in terms of average net growth in total banking assets and net profit for 2022. Although supply chain constraints saw global oil prices tumble in 2020, Kuwait’s economic fortunes, and those of its banks, rebounded, with 2022 recording the highest credit growth since 2015. Competition is increasing in the digital banking segment, with the drive for digitalisation at full speed as banks try to cut costs, improve efficiencies and deliver more flexible services to customers. This chapter contains interviews with Basel Al Haroon, Governor of the Central Bank of Kuwait; Isam Al Sager, CEO of the National Bank of Kuwait; and Sheikh Ahmad Duaij Jaber Al Sabah, Chairman of the Commercial Bank of Kuwait.

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Islamic Financial Services

Kuwait is one of the largest Islamic finance markets in the world, hosting five Islamic banks and one foreign Islamic bank, eight Islamic investment companies, one Islamic finance company and 14 takaful (Islamic insurance) companies. These segments have seen strong growth since the Covid-19 pandemic and have capitalised on the rapid global expansion of Islamic finance, with sharia-compliant banks growing faster than their conventional counterparts. While sukuk (Islamic bonds) have experienced growth around the world, especially in the green sukuk sector, Kuwait’s domestic market for them has been limited by legislative delays hindering the trading of such bonds on the country’s stock exchange. This chapter contains an interview with Abdulwahab Iesa Al Rushood, Acting Group CEO of Kuwait Finance House.

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Kuwait’s insurance sector is characterised by the strong presence of several key players and the entry of new competitors in what is seen as a relatively compact market. While the sector has historically maintained a smaller scale than its GCC counterparts, in recent years a new law and several policy amendments have spurred growth in the industry. The introduction of compulsory insurance requirements in the auto sector and for foreigners has encouraged the uptake of a variety of insurance products. While there is room for expansion, the potential for advancement in this area lies in enhanced marketing strategies and increased digitalisation. This chapter contains an interview with Mohammad Al Otaibi, Head of the Insurance Regulatory Unit.

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Capital Markets

Despite global economic volatility and uncertainty in recent years, Kuwait’s capital markets have demonstrated continued resilience and adaptation. Innovative products are set for launch, along with a new central counterparty system, which should put Kuwait more firmly on global investors’ maps. The central counterparty system will launch alongside a new platform for trading bonds, sukuk (Islamic bonds) and exchange-traded funds. Boursa Kuwait, the country’s oldest stock exchange, continues to provide investors with the expertise of the region’s oldest market, and companies with access to funding in an economy in which investors have deep pockets and policymakers are looking to push forwards with diversification efforts. This chapter contains interviews with Mohammad Saud Al Osaimi, CEO of Boursa Kuwait; and Alex Krunic, former CEO of Kuwait Clearing Company.

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Energy & Utilities

Kuwait’s upstream oil activities and crude oil exports are the central pillars of the country’s economy. In recent years the government has embarked upon an economic diversification drive to reduce vulnerability to oil price volatility and generate sustainable long-term growth. Renewable energy production is also targeted for expansion as Kuwait works towards fulfilling its climate commitments, while natural gas reserves are being harnessed to a greater extent and will play a central role in the national energy transition. Opportunities for foreign investment are present throughout the energy sector, with both public-private partnerships and 100% foreign business ownership offered in selected areas. This chapter contains an interview with Ahmed Jaber Al Eidan, CEO of Kuwait Oil Company.

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Transport & Logistics

The strengthening of Kuwait’s transport and logistics sector is central to the government’s overall diversification drive, as it underpins activity across the economy. Major infrastructure developments are taking place throughout the sector with more in the pipeline, as the relevant authorities and entities work to boost passenger and freight capacities. Action is being taken to resolve operational bottlenecks and support projects that have been put on hold, as the sector holds significant potential to unlock latent economic activity and attract high levels or international investment. For example, the Kuwait Ports Authority is working to establish the country as a regional commercial centre, in line with the goals of New Kuwait 2035. This chapter contains an interview with Dheeraj Bhardwaj, Group CEO of City Group.

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Construction & Real Estate

Kuwait’s construction and real estate sectors are significant contributors to the country’s economy, propelled by government initiatives, private investment and oil revenue. New Kuwait 2035, the country’s long-term plan for economic diversification and sustainable growth, elevates the sectors’ importance with the intention of increasing the quantity and quality of infrastructure projects, while evolving legislation aims to create a more favourable business environment. As demand for affordable housing grows, the government is promoting the development of commercial and mixed-use projects to diversify the economy and attract businesses. The focus on promoting public-private partnerships is meant to stimulate growth and reduce the burden on public finances. This chapter contains an interview with Khaled Al Mashaan, Vice-Chairman and CEO of ALARGAN Group.

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The industrial sector has remained resilient despite recent local and global economic headwinds. The country’s manufacturing base was buffeted by the global Covid-19 pandemic and the impact of measures to counter it. Disruptions in supply and production chains were then further exacerbated by geostrategic uncertainty and conflicts. Despite all this, the sector continues to prosper, providing a reliable base at a time when other areas of the economy have faced volatile pricing and long-term risk. The new 12-year national industrial strategy aims to make the country a global centre for innovative and sustainable competitive industries. Efforts are also under way to diversify the types of industrial activity in the sector.

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The New Kuwait 2035 long-term development plan focuses on reducing the country’s oil dependency by fostering economic diversification and building up the private sector. Among other goals, the plan seeks to establish the country as a prominent global ICT centre. This involves prioritising work on digital infrastructure to elevate the country’s global standing. Increased ICT expenditure is expected to be drive by the further adoption of 5G, artificial intelligence and the internet of things. Digitalisation has already transformed many government services, and the country’s emphasis on IT development is expected to boost national technology expenditure and create opportunities for integrating technological solutions into ancillary industries. This chapter contains interviews with Omar Alomar, Chairman and CEO of the Communication and Information Technology Regulatory Authority; and Maziad Alharbi, CEO of stc Kuwait.

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Education & Health

Kuwait’s education landscape is poised for notable change as the sector awaits the publication of a new national education development plan designed to align learning outcomes with the evolving needs of the economy. The health care sector, meanwhile, is on the cusp of significant transformation, with the Health Assurance Hospitals Company ready to assume responsibility for the medical needs of the country’s large expatriate population, which should boost the efficiency and quality of public sector facilities. As these initiatives progress, the government has prioritised providing quality education, aligning health care outcomes with New Kuwait 2035 objectives and managing resources for sustainable development. This chapter contains an interview with Ahmad Nasrallah, CEO of Dar Al Shifa Hospital.

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Legal Framework

While it is common knowledge that laws in the Middle East include certain restrictions on foreign parties doing business that do not otherwise apply to citizens, significant strides have been made in the region in recent years. These reforms have facilitated foreign investment and participation in businesses. Kuwait has led the way with a number of reforms and was a pioneer with the promulgation of the Foreign Direct Investment Law in 2014, which has since been replicated in one form or another in other GCC countries. The country has also seen recent developments that have impacted investment procedurally and substantively. This chapter contains an interview with David Walker, Partner at ASAR Legal.

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The Guide

This section includes selected listings of Kuwait’s hotels, as well as helpful tips for business and leisure travellers planning to visit the country.

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Table of Contents

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