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