Finance minister admits scheme needs to be revised after criticism from many international firms
Kuwait is suspending a programme under which foreign winners of big government contracts are required to invest in the local economy, its finance minister said on Tuesday, as it tries to attract more overseas companies to the Gulf state.
"We need to revise it," Anas Al Saleh told Reuters, adding many international firms had been critical of the scheme.
"This is why we've frozen it to make sure it is not an obstacle for those firms to come in."
He said new rules could be ready in about six months.
The so-called offset programme was introduced in 1992 as a way of weaning Kuwait off its reliance on oil and gaining access to new technologies and training.
According to a 2012 US State Department Investment Climate statement for Kuwait, offset obligations were applied to military contracts of a value equal to or above KD3 million ($10.5 million), civil/government contracts of a value equal to or above KD10 million, and downstream oil/gas contracts.
Critics of the scheme said it favoured multinational companies able to absorb offset costs by using economies of scale, and required smaller exporters to divert precious management resources.
"We need to revise it and then, later on, implement it with a more moderate way which we believe will help inviting those international firms," the minister said.
"I wouldn't see more than 6 months," Saleh said, when asked when the new rules would be ready.
Foreign investors are very savvy when it comes to Kuwait, they understand that only after this is implemented and guidelines are evaluated will they determine whether Kuwait is worth the venture. In addition, to this visa restructuring would be advantageous and similar policies that Qatar just implemented would be beneficial to foreign investors. 100% foreign ownership would be very beneficial for the Kuwait economy at this time, since it has an economy that has been stagnated for decades due to key projects being on hold and foreign companies pulling out of bids due to government policies on investment.