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In this page: FDI in Figures | Why You Should Choose to Invest in Kuwait | Procedures Relative to Foreign Investment | Investment Opportunities

 

FDI in Figures

In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.

After a sharp slow down in 2011, the FDI influx towards Koweït is on the increase since then and totalled USD 1.8 billion in 2013.

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 "strengthened" 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. In 2014, 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.

Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).

 

Country Comparison For the Protection of Investors

  Kuwait Middle East & North Africa United States Germany
Index of Transaction Transparency* 7.0 6.0 7.0 5.0
Index of Manager’s Responsibility** 7.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 4.0 9.0 5.0
Index of Investor Protection**** 6.3 5.0 8.3 5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

 
Foreign Direct Investment 201120122013
FDI Inward Flow (million USD) 3,2603,9312,329
FDI Stock (million USD) 15,21218,91321,242
Performance Index*, Ranking on 181 Economies 160--
Potential Index**, Ranking on 177 Economies 60--
Number of Greenfield Investments*** 313337
FDI Inwards (in % of GFCF****) 14.114.28.3
FDI Stock (in % of GDP) 9.510.311.5

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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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.

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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.

Learn more about Foreign Investment in Kuwait on Globaltrade.net, the Directory for International Trade Service Providers.

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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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Learn more about Investing in Kuwait on Globaltrade.net, the Directory for International Trade Service Providers.

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Last Updates: January 2015