Kuwait 'repellent' to investment, says report

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Kuwait’s economic and legal framework is “repellent” to investment, including from within the country, a damning independent report has found.

Kuwaitis invested about $37bn internationally in 2012 compared to only $398m domestically, according to the report by Leaders Group, a Kuwaiti consultancy and event management company.

“[The figures are] a clear indication that Kuwait’s environment remains repellent to investment,” the report says, according to Kuwait Times.

Kuwait receives only 1 percent of all foreign direct investment into Arab states, while it accounts for 35 percent of Arab FDI within the region, the report says.

The lack of local investment was particularly harming the Gulf state’s virtually non-existent tourism sector, driving Kuwaitis to holiday outside the country while it spent $7bn on touristic ventures in other countries.

The government was failing to create initiatives to attract investment or promote touristic projects that would entice Kuwaitis to holiday at home as well as draw in international tourists and the country did not market itself as a touristic destination or have organised tours, the report says.

Little land is allocated for tourism activities while vacant land is expensive, encouraging investors to look elsewhere.

Complications in project licensing, compared to in the UAE, Saudi Arabia and Qatar, also is a hindrance, according to the report. Investors can only participate in Kuwait under a buy-operate-transfer arrangement.

The report highlights Kuwait’s lack of development, particularly along its coast, while neighbouring states build artificial islands that attract billions in investment and tourist receipts.

The International Monetary Fund warned earlier this year Kuwait was failing to make the most of its oil wealth, with little to no investment for the future.

It said the country’s oil revenues would no longer out-weigh its spending, causing the first deficit since 1998, by as early as 2017. The IMF forecasts that in 2017-2018 Kuwait’s oil revenues will be about KD25bn ($87.9bn) compared to KD29bn in spending.

“Kuwait is at a crossroads for conserving wealth [for] the future,” IMF deputy division chief of the Middle East and Central Asia Department, Ananthakrishnan Prasad said.

“Our estimates show that government expenditure will exhaust all oil revenues by 2017, which means no portion of these oil revenues would be available for future generations.

“There has to be a shift in policy in Kuwait and Kuwait will have to start saving more and have to start reducing their spending.

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Posted by: mumeen

The problems are innumerous. Kuwait does everything for its citizens (big jobs/posts, big salary, big house, big housing and jogging streets for citizens only, big loans, big trading businesses, etc) but nothing for the two-thirds expats who toil to make their comforts available. That's why they don't build better and additional roads , no metro, no newer & bigger airport, no parks, public recreational facilities, schools, colleges, universities, etc., all because expats "may" also benefit from it! That's why some areas of this little country are still like slum for past several decades, only because expats live in it. Expats' apartments are made smaller and smaller every day with higher and higher rents and the story can go on. We don't know what's the end.

Posted by: Ahmed

Qatar is a perfect example of a country with an impressive investment portfolio, yet they simultaneously are buildng metros, airports and various development projects to diversify their income in the future. Kuwait needs to start addressing developing their country (their own backyard) instead of sending their investments abroad. They gave the most money 4B to Egypt compared to any other GCC nation. They are in no position to do this, because they are so behind in their development path in comparison to neighboring GCC nations.It appears this government needs to address their investment laws and how they effect foreign business interest in the country.

Posted by: Sarah

?Our estimates show that government expenditure will exhaust all oil revenues by 2017, which means no portion of these oil revenues would be available for future generations." Are you listening Kuwait? Even the government sends billions abroad to invest in the development plans of other nations. They've financed a metro system in Japan, when Kuwait sorely needs a metro system. They have built oil refineries in Vietnam, when the oil refineries need upgrading in Kuwait, they have built airports in other countries, when they sorely need a new airport. When is it going to stop? I think the youth of this nation need to utilize their voting power to elect effective leaders to move this country forward. The country has potentional, but without the vision and the determination to mold a great nation will eventually land this oil-rich (at the moment) GCC nation to return to the desert. One wonders if anyone cares, after visiting this country.

Posted by: RAH

Well-said. Totally agree. Unfortunately the youth and voters here are all running behind frivolous promises by prospective MPs (laws to forgive debts, increase wages, etc.) and this is what is causing Kuwait's decline.

If people would have the foresight to look 10-15 years ahead, and vote for the correct MPs accordingly, we would have been at a much better place today where we would fund our own refineries and metro, rather than those of other countries as you have correctly pointed out.

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