Kuwait Looks to Foreign Investment to help with $111 Billion Modernisation Plans
According to the United Nations Conference on Trade and Development’s website, Kuwait, the fourth-biggest oil producer in the Organization of Petroleum Exporting Countries (OPEC), was the lowest recipient of foreign direct investment among the six Gulf Cooperation Council states in 2010 with US$6.5bn. Saudi Arabia, the biggest Arab economy, was the highest with US$170.5bn, followed by the UAE with US$76.2bn.
In an attempt to rectify this, the Kuwait government intends to modify its foreign direct investment laws in order to make it far easier for potential investors. Kuwait has plans to spend $111 billion before 2015 on modernising its economy and diversifying from its oil dependency, and are hoping that foreign investors will contribute half.
To try and attract more foreign investment, in 2007, politicians passed a law to reduce the tax burden on international companies for the first time in more than 50 years, reducing corporate tax on foreign firms to 15 percent from as much as 55 percent; with little success.
Sheikh Meshaal Jaber Al-Ahmad Al-Sabah, head of the Kuwait Foreign Investment Bureau, said that “foreign investors coming to Kuwait find obtaining necessary licenses a very difficult and prolonged process, as well as getting land needed” for projects. “The proposed amendment should overcome shortcomings of the law. We hope it will be passed this year.”
“Some government agencies still don’t understand the importance of international investors, and so take too long”to grant approvals required by the law, he said said.
The proposed amendment will also demand the establishment of an independent authority to consolidate “all efforts to promote investment opportunities in Kuwait to the foreign market.”
By. Joao Peixe of Oilprice.com