By Karen Leigh
Political instability in Arab state stymies potential investors, says analyst
Political instability is deterring investors from putting as
much money into Kuwait as they do into its GCC neighbours, an economist has
“It has a long way to go,” Dr John Sfakianakis, chief
economist at Banque Saudi Fransi, said in an interview with Arabian Business.
“It will take a lot of political stability for Kuwait to attract the same
amount of money that the UAE and Saudi have been attracting for the past five
years. It [will take] consistency and political resolve to make Kuwait a more
A long-running feud between Kuwait’s elected parliament and
royal-family led government has taken its toll on the state’s economic growth,
leaving foreign investors wary.
As of 2009, foreign direct investment made up 13.9 percent
of its GDP – giving it a dismal rank of 141 in the world.
Last year, Kuwait pledged to spend $140bn over five years in
a bid to attract investment, diversify its economy beyond oil, and boost
participation from the private sector.
Its current GDP is $148bn per year.
What’s necessary “is for the government to be effective on
the economic development projections of Kuwait – which has not been case over
past decade,” Sfakianakis said. “It has to have the vision and the political
will to push ahead, and there’s a tendency not to see that.”
What works in oil-rich Kuwait, he said, are the traditional
“Oil and gas, traditional areas of hydrocarbon production
and upstream and downstream industries,” and – in the homeland of Gulf retail
giant M.H. Alshaya Co – “a little bit of retail helps the country expand. It
has a growing consumer base – not as big as Saudi but it is growing.”
That said, Sfakianakis said the country has a ways to go.
He said its steps towards growth “were very gradual compared
to countries like Saudi Arabia, which has improved dramatically in last five
years. Kuwait it is a laggard and not a leader.”
He added that in order to bridge the gap between it and the
attraction of investment hotspots the UAE and Saudi, “they really have to do a