Video: Kuwait | Discover the Opportunity
“Kuwait vision 2035” articulates H.H. the Amir’s aspirations and states that it aims to “transform Kuwait into a world class financial and commercial centre, with the private sector leading economic activities, fostering competitiveness, increasing productivity, supported by viable public institutions, while maintaining the deep rooted values and national identity, towards achieving balanced economic and human development, supported by adequate infrastructure, legal framework, and enabling business environment. “
This is also reflected in the current National Development Plan (NDP) that highlights seven pillars stemming from this vision to enable it to attain intended goals, namely:
- Efficient government administration
- Diversified & sustainable economy
- Quality infrastructure
- Sustainable living environment
- High quality healthcare
- Creative human capital
- Distinguished international status
Kuwait is rich with strategic oil resources.
According to the Organization of Petroleum Exporting Countries (OPEC) database, Kuwait has approximately 101.5 billion barrels of proven oil reserves (including the Kuwaiti share of proven reserves in the Divided Zone). This makes it the fifth -largest oil reserves in the world after Venezuela, Saudi Arabia, Iran, and Iraq. Currently, Kuwait’s oil production capacity estimated at 3 million bpd. However, Kuwait plans to increase its capacity to 4.0 million bpd by 2020.
Kuwait has one of the most vocal and vibrant democracies in the region, as enshrined in Article 6 of its 1962 Constitution which stipulates that “The System of Government in Kuwait shall be democratic under which Sovereignty resides in the people the source of all powers”. It has a single chamber “The National Assembly” which is composed of 50 elected members every 4 years, through a free and fair electoral process. Females 21 years and above were granted the right to vote in May 2005 and the right to nominate themselves in June 2006. In the election held in May 2009, 4 elected women have become first female MPs. In 2016 elected parliament, there is one female MP. There are no formal political parties in Kuwait. Kuwait is divided into 6 governorates.
Kuwait has a strategic geographic location in the northern Gulf, with a total area of 17,819 sq. km. Its strategic location makes Kuwait a thriving trading center in the region adjacent to three major markets (Iraq, Saudi Arabia, and Iran) and beyond.
The main objectives to be reached by the end of the four-year Development plan from the base year 2008?2009 are:
- To raise the share of the private sector from 37% to 44% of GDP.
- To increase the share of the national labor force from in the private sector from 4.8% to 8%.
- To raise the share of R&D from 0.2 % to 1.0% of GDP.
The Development plan hopes also to establish at least 150 SMEs, and 50 BOT projects, as well as training not less than 3000 nationals annually to develop human capital.
The second mid-range economic development plan (2015/2016-2019/2020) followed allocating around US$ 103 billion worth of investments over the 5 year period of the plan, with focus on 30 strategic projects in 9 crucial sectors:
- North Zone Development
- Electricity & water
- Oil & gas
- Urban development
- Transport & communications
- Tourism & media
The second plan targets identified 2013 as the base year and included increasing:
- the share of the private sector from 26.4% to 41.9% of GDP
- the share of non-oil sector from 45.1% to 64.0% of GDP
- the share of Kuwaitis in private workforce from 6.8% to 8.2%
- the share of R&D from 0.1 % to 1.0% of GDP
Kuwait follows civil legal system with Islamic law mainly significant in personal matters. Kuwait enjoys a transparent and a sound legal system with proper separation of legislative, executive, and judicial branches.
There is a host of economic laws, which are conducive to the investment climate, of which laws pertaining to new corporate taxes, commercial companies, commercial licenses, encouraging competition, protecting consumers, intellectual properties, copyrights and related rights, public tendering and e-transactions. Other laws approved for fostering the role of the private sector in the economy through the promotion of direct investments, privatization program and public private partnership (PPP), and opening new areas for private investment like electricity generation & water desalination projects.
Kuwait enjoys sound macroeconomic conditions, reflected in a moderate but sustainable economic growth, financial stability, curtailed inflationary pressures maintaining a balance in both its “internal” budgetary balance, and its “external” current account balance. Kuwait’s GDP per capita classifies it within the group of very high-income countries. Furthermore, according to UNDP classification, Kuwait belongs to the very High Human Development group,
Kuwait’s banking and financial system enjoys a sound monetary policy and prudent oversight, which enhances its resilience in mitigating financial crises, controlling inflation, and sustaining a strong currency and a fairly stable KD exchange rate.
The KD was pegged to a basket of currencies, representing Kuwait’s main trading partners, during the period 1975 to the end of 2002. However, this was then changed in the period from January 2003 to May 2007, when the KD pegged to the dollar, given that the U.S. dollar had the most weight in its impact on the KD. However, since then the KD reverted to be pegged to an undisclosed basket of currencies to avoid imported inflation stemming from the weakened US dollar and until the current date.
The Central Bank of Kuwait supervises a whole network of banking and financial institutions that are comprised of: 11 commercial banks, 12 Branches of non-Kuwaiti banks, 79 investment companies, 40 exchange companies, 113 investment funds and two financing companies.
The Kuwait Stock Exchange (KSE) is the first in the Gulf Cooperation Council (GCC) and reached a market value of more than KD 24.4 billion at the end of the third quarter in 2016 according to the Arab Federation of Exchanges Database. Furthermore, its average daily trading volume reached 3.6 million shares worth KD 372.3 million with a total number of 216 listed companies during the same period.
Kuwait is classified as a low risk (A3) by the globally operating French credit insurer Co
face, which generally means that the political and economic situation is relatively good, with stable and efficient commercial environment.
Services in Kuwait
Kuwait has one of the highest mobile phone penetration in the world at 220% and is on the rise Moreover, the country’s internet penetration rate reached 82.08% in 2015, positively affected by its smart phone savvy youth, who makes up 60% of the total population (age groups 5-34 years old), and with high purchasing power.
Public Transport: Public Bus services are provided throughout the country by Kuwait Public Transport Company, established in 1962, along with City Bus, and KGL. Taxi services are also widely available and are provided by different companies and owners including roaming taxies.
Kuwait paved more than 6,609 km of highway roads and related road networks and plans to reach 7,179 km by the end of 2020 with the aims to continuously improvement infrastructure in line with the country’s needs. Furthermore, Kuwait has an advanced sewerage system that prevents rain floods.
The country has two dry cargo shipping ports at Shuwaikh and Shuaiba, and several terminals to export oil at Al Ahmadi Port, Al Shuaiba Port, and Abdullah Port. In addition to that, the new mega Mubarak Al Kabir Port will be completed in the North of the country.
- Kuwait provides comprehensive, modern, and free health service to its citizens through an extensive number of infirmaries, specialized clinics, and hospitals. The latter include: Sabah hospital, Amiri hospital, Adan hospital, Farwaniya hospital, Mubarak Al-Kabeer hospital and Jahra hospital.
- As of 2013, there are 94 primary health care centers across the country. The number is expected to rise to 125 centers by 2020.
- There is a host of private clinics and medical centers in various specializations catering to the expatriates in Kuwait, as well as private hospitals such as, Muwasat hospital. Al Hadi Hospital, Dar Al Shifaa Hospital, Assalam Hospital, and Al Seif Hospital.
- As part of the development plan, Health Assurance Hospitals Company (Dhaman) was s launched to offer healthcare services for expatriates in Kuwait. This company was established as a PPP project aiming to enhance the role of the private investment in developing healthcare sector in Kuwait.
- Education is free of charge for citizens in government schools.
- For expatriates, there are a variety of private educational systems available such as American, English, French, Indian, Pakistani and Filipino schools.
- According to the school educational statistics published in 2016, the total number of schools in Kuwait reached 1,450, This includes government, private, special needs , religious education, adult education, and illiteracy program.
- The total number of students enrolled in schools reached 647,238 with 81,404 teachers and faculty members.
Culture and Shopping
- The Sheikh Jaber Al Ahmad Cultural Centre showcases performing arts and creates a world class theatre quarter in a spacious parkland setting. Together with Sheikh Abdullah Al Salem Cultural Centre, will form Kuwait’s new national cultural district.
- Additional cultural landmarks in Kuwait include: The Scientific Centre, the National Council for Culture, Arts and Letters, who runs a multi-cultural festivals; Abdul Hussain Abdul Rida theater, a host of museums, and Abdulaziz Saud Al-Babtain Cultural Foundation.
- Dar Al-Athar Al-islamiya (DAI) is a cultural organisation based around the private art collection owned by Sheikh Nasser Sabah al Ahmed al Sabah, founder of The al Sabah Collection and his wife, DAI Director General and co-founder Sheikha Hussah Sabah al Salem al Sabah. Since its inception in 1983, DAI has grown from a single focus organisation created to manage the loan of the prestigious al Sabah Collection of art from the Islamic world to the State of Kuwait to become an internationally recognised cultural organisation. It manages a rare library, annual cultural seasons that are highly acclaimed, as well as music concerts.
- Kuwait is distinguished by its vast range of shopping districts that vary from its traditional market place Mubarkiya located in the country’s heritage area to luxury shopping centers such as Salhiya Complex, 360, Avenues, KOUT Mall, Gate Mall and others.
- Electricity is stable and available constantly in terms of outages .
- Electricity prices in Kuwait are amongst the lowest in the world.
- The cost of electricity consumption ranges as follows, till this date:
- 2 fils/Kilowatt for all state facilities
- 1 fils/Kilowatt for subsidized industrial companies
- 12 fils/Kilowatt for Chevron Co. in the Neutral Zone.
- 10 fils/Kilowatt for chalets .
For more information on electricity rates click here.
Fuel costs in Kuwait is one of the cheapest in the world.
Fuel price, till to date, are as follows:
- Octane-91 (Premium): 85 fils per liter
- Octane-95 (Super): 105 fpl
- Octane-98 (Ultra): 165 fpl
Kuwait is a founding member of WTO. It is a member of the GCC and its Customs Union; a member of the Arab League and its Greater Arab Free Trade Area (GAFTA).
Kuwait enters with 80 other countries in bilateral treaties for protecting & encouraging investments and avoidance of double taxation (see: Kuwait BITs).
The U.S. and Kuwaiti governments signed a Trade and Investment Framework Agreement (TIFA) in 2004. Kuwait as a member of the GCC signed a regional free trade agreement with Singapore in 2008 and signed the European Free Trade Association (EFTA) in 2009 with the European Union.
High degree of deepening integration into the Global Market
Kuwait is considered highly integrated in the global economy because of the following :
- Kuwait trade (exports + imports) represents 95% of its GDP.
- Kuwait Sovereign Wealth Fund manages a US$ 592 billion investments portfolio in world financial markets.
- Migrant laborers in Kuwait are approximately 2.4 million, with an estimated of Kuwait outward workers’ remittances range of more than US $ 15 billion in 2015 annually transferred to various countries designated as pools of human resources in the far East and Arab countries. In 2014, the amount was $ 18.1 billion the highest level since the availability of the data in 1975.
- Kuwait is an active member of almost all international organizations and is part of several regional and sub-regional groups with a network of 100 + bilateral agreements and other trade arrangements.
- Kuwait participated actively in the process of creating global partnerships for development.
- Kuwait is classified as a world center for humanity and His Highness Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah was given the title the ‘Humanitarian Leader’ in 2014 by the United Nation because of his remarkable acts of human kindness and generosity and exemplary humanitarian leadership.
- Kuwait enjoys one of the highest rates of official assistance to GDP (1.3%) which is more than the United Nations target of 0.7 %.
- Through Kuwait Fund for Arab Economic Development (KFAED) the State of Kuwait provides grants and soft term loans to 105 countries in the world with a total estimated value of $ 19.3 billion.
Foreign companies engaged in commercial activities in Kuwait, directly or indirectly, are liable to pay corporate tax on their earnings at a low flat rate of 15% in accordance to Law no. 2 of 2008 that replaced Kuwait Income Tax Decree no. 3 of 1955 whereby the corporate tax rate followed a progressive system reaching up to 55%.
There is no individual income tax nor any other taxes in Kuwait. However it is been widely considered to introduce such taxes under the current Financial & Economic reform Program for the medium term in the State of Kuwait.