Kuwait: Investing

FDI in Figures

Kuwait has always been a country open to foreign investment and with the introduction of new laws in recent years, the country is even more open to foreign capital. In early 2003, a new law for FDI came into force. It allows 100% foreign ownership in a number of sectors. This law also makes available a number of tax breaks and other benefits which can attract new investors who in return must guarantee a set of quotas regarding the employment of Kuwaiti nationals.

A number of decisions has been taken since, allowing the opening of the stock market to non-Kuwaiti, the presence of foreign operators in the petrochemical industry and the entry of foreign banks in the country. A law on taxation of foreign companies (which decreased the maximum rate of tax on profits made by foreign companies, with the exception of investment earnings, from 55 to 15%), was adopted in January 2008. Although the opening of oil fields in the North to international oil companies seems blocked, broadening participation through "strenghtened" technical agreements is being considered. Legislation on free zones and BOTs (January 2009) and on creating an independent stock market regulator (January 2010) also contributed to a more favorable environment for international investment, both financial and direct.

The current policy to promote FDI focuses on a number of sectors which can benefit most from foreign investment and expertise. These include infrastructure investment such as water, waste-water treatment, power, and communications. Kuwait also tries to promote investment in the banking and financial sectors: investment aid, insurance, information technology and software development. Investment in hospitals and pharmaceuticals is also favored. Authorities are also keen to attract foreign capital into other sectors such as land and sea freight, tourism, real estate and urban development. A financing plan of USD 100 billion has in fact been approved by the Parlament in 2010.

Why You Should Choose to Invest in Kuwait

Strong Points

Kuwait presents several advantages. First, the country has a high quality of life, its oil reserves are consistent. The local population is young and a great consumer. They are very fond of foreign products, western brands and high technology. Their life and consuming style brings them closer to the western world. The cost of energy is very low. Kuwait  is endowed with a good financial management and a solid banking system. The Kuwaiti government is willing to diversify its economy and has launched an open policy to foreign investments. To close it up, the country's infrastructures are of high quality, the labor force provided by immigrants is inexpensive and the absence of taxes are some of the undeniable advantages to foreign investors.

Weak Points

Kuwait is a country that still depends largely on its oil sales. Its public administration is excessive since 90% of Kuwait's citizens are employed by the government and this constitutes 60% of its current expenses. The country remains too closed to foreign investment because of its laws restricting freedom of establishment to non-citizens. In addition, Kuwait does not insure sufficient protection to intellectual property.

Government Measures to Motivate or Restrict FDI

Kuwait's government, with the goal of attracting foreign investments to the country, issued a law in 2001, renewed in 2003, regulating Foreign Direct Investments. The new law allows foreign investors to own majority capital holdings up to 100% equity if their business activities are in the sectors that the government wants to develop, such as the projects of new infrastructures (water, power energy, drainage and communications). It applies also to some investing companies such as insurance, information technologies, hospitals, hotels, construction of housing zones, freight transportation, etc.  This new law provides the enterprises with tax exemptions that can last up to ten years. The law makes it easier to recruit foreign low cost labor. It also provides a guarantee against expropriation and ensures the right to repatriate their capital gains.  New investors are also protected against changes in legislation.  However, the right to benefit from this new law depends on the percentage of national labor force employed by the enterprise. The changes provided by this law do not benefit foreign investors that expose obstacles to its application and exclude investors in the upstream oil development sector even if they can have joint venture companies in the petrochemical industries.

Procedures Relative to Foreign Investment

Freedom of Establishment

The freedom to establish a company/enterprise is very limited and controlled.  Non-Kuwaitis cannot hold more than 49% of the capital of a company.  Establishing a new office, branch or creating a new company is subject to the existence of a citizen agent.  All permits have to be established on his name.

Acquisition of Holdings

Purchasing shares from the stock market has to be done through a broker authorized by the Kuwait Stock Exchange.

Obligation to Declare

There are no special rules to declare if the acquisition is less than 5% of the capital holdings.  If the acquisition is higher, a special procedure must be followed.

Competent Organization For the Declaration

Kuwait Stock Exchange

Requests For Specific Authorizations

Some sectors, such as pharmaceutical, telecommunications, medical equipment, etc. require authorizations from the ministries that control each specific activity.

Investment Opportunities

Investment Aid Agency

Kuwait Investment Authority.
Kuwait Foreign Investment Bureau.

Tenders, Projects and Public Procurement

Tenders Info, Tenders in Kuwait
Globaltenders, Tenders & Projects from Kuwait
DgMarket, Tenders Worldwide

Other Useful Resources

Doing Business with Kuwait by M. Paul Kennedy.
 U.S.  Commercial Guide for Doing Business in Foreign Countries.
Chamber of Commerce of Kuwait.

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