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The Advantages and benefits of starting a business in Kuwait

Starting a business in Kuwait is a great investment that will continue to grow and develop in the years to come. In the eye of businessmen, and based on economists’ principals, Kuwait is an ideal place to invest in and operate a businesses. Kuwait’s economy began to develop in the beginning of the 20^th century, when oil was first discovered, and production began. The global demand for oil is continually increasing; therefore, the cash surplus expectations are very high. The promising figures are attracting investors from all over the world to invest in Kuwait. This is due to money security, which is always associated with decisions to invest in businesses and countries they are based in. It is important to note that the government of Kuwait is hard at work in attempts to amend the rules in order to facilitate the needs of foreign companies, which will in turn ease their integration into the Kuwaiti market. As a result, this will attract new investors. Below is a list of advantages, available in Kuwait, that an investor will consider whenever he/she makes the decision to invest, also this link will emphasize why to invest in Kuwait:

·         Corporate law/Tax exemption

·         Geographic location

·         Strength of currency

·         Purchasing Power

·         Dramatically growing economy/oil effects

Elements that Distinguish Kuwait in the Region

The overall environment in Kuwait is inspiring. For example, Kuwait’s weather is distinguished from that of the other Gulf countries. It is pleasantly cool in the winter, and less humid in comparison to other Gulf countries, such as the United Arab Emirates. Moreover, it is promising in terms of becoming a leading business center in the region. Kuwait has a lot of institutions that allow for a more organized transition. Moreover, the coastal areas allow for projects that would be desirable for locals and foreigners alike. Thus, tourists would be attracted to the country. In addition, business people would be more attracted to working in Kuwait, as it offers them different venues for entertainment. Lastly, many recent developments have directed efforts in the direction of making Kuwait a business center. His highness Sheikh Sabah Al Sabah is leading the way towards business advancements by declaring his top priorities as follows:

1.      Developing a plan that will result in establishing Kuwait as an international business center.

2.      Starting off the project “Silk City”.

3.      Supporting youth education (building universities and awarding scholarships) as Kuwait maintains a high percentage of youth in its total population.

True Success Story in the National Bank of Kuwait (NBK)

When discussing successful businesses in Kuwait, NBK’s name will definitely be brought up. The bank has proven itself, along the years, as number one in the region. The company has set an example for the whole Middle East with their wise leadership and strategic management. Their financial position has been recognized and credited globally. Below are examples of serious obstacles that have been overcome in order to achieve corporate successes, that NBK has overcome proving them to be a leading institution in their field:

1.      Overcoming the stock market collapse in the 1980s.

2.      Maintaining their work commitments during the Iraqi Invasion 1990.

3.      Overcoming the World crisis in 2008.

This is a nice video that tells about both NBK and Kuwait.

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Can Kuwait Become A Trade Business Center?

Kuwait plans to become a vital trade business center, one that can help Kuwait play a dominant role in the world of business. Many action plans have been implemented to start working to achieve this goal.

The steps needed to be taken

In order to shed some light on the benefits and requirements of the aforementioned plan, I have done a survey with a sample of Kuwaiti businessmen and  politicians. The purpose was to discuss the incentives and actions required to proceed with the plan.

Results of the Survey

All the subjects were attracted to the project. They expressed great interest in the positive effects that are going to result from the project. All the participants in the survey agreed that the project might take years until it can be materialized. In addition, they stressed the importance of team-work and the role of open communication in shortening the time necessary to complete the project. The following questions were used to conduct the survey.

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SETTING UP BUSINESS IN KUWAIT

Kuwait is an attractive business venue for most businesses because there are:

• Opportunities for major contracts, particularly in the oil industry.
• Requirement for imported goods, labour and technical expertise.
• Excellent communication and sophisticated trade infrastructure.
• The benefits that rise from having an actively pro-business Government.
• Advantages in the extensive use of English as the language of business.

For many companies the simplicity of operating within a system where taxes are for the most part non-existent, and everything is open negotiations, will have major attraction.
Kuwait’s modern economic history began with the discovery of oil in 1938, and soon after the Second World War, Kuwait became a major oil exporter.
When the oil prices rose in 1973, Kuwait experienced a construction boom that lasted until the early 1980′s. This provided opportunities for foreign contractors and investors. Despite the setbacks caused by the Iraqi invasion in 1990, Kuwait has:

• Commercial and Industrial Ports
• Desalination plants which provide a continuous water supply
• Electric Power Generation and Distribution
• An International Airport
• Roads and Freeways
• Merchant Shipping Fleet
• National Airline
• General and Specialist Hospitals and Clinics
• Schools and Universities
• Public Administration Buildings
• Public and Private Sector Housing
• Shopping Complexes and Office Buildings

International and Local Communication Network, Television and Radio Network and Internet Services
Kuwait is currently concentrating on several important economic goals, all of which are aimed at decreasing dependence on oil revenues, these include:

• Encouraging the private sector to assume responsibility for the economic development of the country. This includes the privatisation of certain Government operations
• The introduction of a Counter Trade Offset Programme

Overseas Investment
For almost two centuries Kuwaitis have been traders, and it is because of this trading background and the presence of an active merchant community in Kuwait that there is a marked tendency to give business preference to Kuwaitis. The economy is dominated by locally owned companies.
There are, however, business opportunities for foreign companies, as it is recognised that a major foreign contribution will be necessary to meet the Government’s objectives. While the intention will undoubtedly be, to retain Kuwaiti control of ventures in which foreign companies are involved, this should not prevent such companies from having profitable operations in Kuwait.


PRIVATISATION
The decline in oil prices had an adverse effect on the economy. A recent World Bank study has strongly recommended that the Kuwait Government should consider the privatisation of many of its agencies. Among the more likely targets for such a programme are:

1. Over 90 petrol filling stations that are owned and operated by the Kuwait National Petroleum Company (KNPC)
2. Some of the services provided by the Ministry of Communication (MOC)
3. The Ministry of Electricity and Water (MEW) facilities

The Kuwait Government faces a number of hurdles in implementing privatisation as:

1. Many of the above services are subsidised by the Government and are provided at very low cost to the user.
2. Many Kuwaitis are employed in the target industries and it is almost inevitable that privatisation will bring about job losses

One of the possible routes being proposed for privatisation is to grant concessions to the private sector. This will see marked improvement in service levels.


This article is from: Kuwait Company Laws and Regulations Handbook
 By Ibp Usa, USA (COR) International Business Publications