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Kuwait 2016 | ECONOMY | VIP INTERVIEW

TBY talks to Dr. Meshaal Jaber Al Ahmed Al Sabah, Director General of the Kuwait Direct Investment Promotion Authority (KDIPA), on the changing FDI landscape and attracting investors.

How has Kuwait's FDI landscape evolved in recent years and what have been some of the major changes in FDI law creating lucrative incentives for foreign investors in Kuwait?

Kuwait has recently witnessed several favorable developments in its regulatory and legal framework that contributed to enhance its attractiveness as an investment location. The issuance of new Law No. 116 of 2013 for promoting direct investment in the State of Kuwait, which had replaced the previous FDI Law No. 8 of 2001, had stipulated several welcomed additions accommodating to the international best practices pertaining to FDI. The main additional features included establishing a public authority, Kuwait Direct Investment Promotion Authority (KDIPA), which is mandated with the tasks of encouraging both local and foreign investors, promoting Kuwait as an attractive investment location, and streamlining business environment to enhance the country's competitiveness. It also brought forward the shift to adopt the negative list approach for sectors that are excluded from licensing, speeding up the licensing process to a maximum 30 days by establishing a one-stop shop; allowing 100% foreign ownership by selecting one of several forms of legal entities; introducing the licensing of representative offices solely to conduct marketing studies for interested investors; and extending incentives and exemptions to both privatization projects and Public Private Partnership (PPP) projects. On the other hand, the new investment law had maintained incentives like tax and customs duties exemptions, and guarantees against expropriation, transfer of capital and profits, and protecting project proprietary information.

What economic sectors are open to foreign investors in Kuwait?

The adoption of the negative list approach sent a positive signal to FDI investors that most economic sectors are open for investments, in accordance with Council of Ministers decision issued February 2015, whereby it excluded very few sectors for sovereignty purposes like upstream oil and gas, or other considerations. Furthermore, we did not place a threshold for the size of investments legible for licensing, neither focused on merely targeting FDI as source of capital per se, as our objective is effectively placed on the value added and quality investments that would serve as anchors to originate competitive advantage, enhance productivity, and foster national capabilities.

What role can FDI play in Kuwaitization and the government's ongoing efforts to create job and training opportunities for Kuwaitis, attracting know-how and innovation to add value to the domestic economy?

We are currently undertaking the necessary steps to develop our business strategy and formulate the ensuing promotional and communications strategies, with the relevant roadmap and action plan to assist us to achieve the tasks we are mandated with under our establishing law, and in view of the “national vision 2035," and the strategic objectives identified in the medium term economic development plans. In this regard, we intend to target efficiency seeking investors that would contribute to transferring know-how and modern technology into Kuwait, support the economic diversification efforts, build national R&D, as well as innovative capabilities, in addition to creating jobs for Kuwaiti youth, and providing quality training opportunities.

How will the new investment law serve foreign companies and investors looking to do business in Kuwait?

The new investment law has allowed for various legal entry points for foreign investors to establish a Kuwaiti company in accordance with the new commercial companies' law in Kuwait, allowing for 100% foreign ownership for Limited Liability Companies, Shareholding Companies, and One Person Companies. Furthermore, Law No. 116 of 2013 allows for opening foreign branches and representative offices as other available alternatives, based on the needs of foreign companies. However, foreign branches and representative offices should adhere to certain considerations and provide requested legal and financial information of their respective mother company, as specified in the related decisions to ensure proper procedures.

What are some upcoming government and infrastructure development projects in Kuwait that are expected to be of high impact to the local economy?

Kuwait offers a host of lucrative investment opportunities including strategic projects under the current development plan in sectors pertaining to oil and gas, North Zone development, electricity and water, urban development and housing, transport and communications, health, education, tourism and media, and environment. There are also other opportunities under the PPP projects and the privatization program. We are looking forward to attract FDI that will create needed linkages with our thriving SMEs sector and the start ups by local entrepreneurs. We have updated an investment guide that can also assist interested investors in considering various potential opportunities found on our website. We are developing three economic zones in the North, West and South of the country which will offer an attractive opportunity for various competitive industries to operate in Kuwait.

What will be KDIPA's priorities over the coming years and what role do you seek to play in servicing direct investment in Kuwait?

KDIPA's priorities will be formulated under its upcoming strategy, which is still under preparation. In this regard, and as KDIPA is one of the implementing arms of our country's national economic policy, its strategic plan will be linked to contribute to attaining the targeted objectives of the economic development plan, especially in terms of increasing the share of the private sector in GDP, raising the share of Kuwaitis employment in the total labour force, and increasing expenditure on R&D. On the other hand, KDIPA currently through its Investors Service Centre (ISC) is providing needed facilitation to interested investors, responding to incoming inquiries, suggestions or complaints, as well as supporting the potential and existing investors to make their experience a success in Kuwait. Through our commitment to offer all needed aftercare, we shall be encouraging investors to settle, grow, and consider expanding their business in the future. We are keen to attract and welcome establishing high value added investments that will buttress the country's economic development agenda.

What are your expectations for KDIPA in the year ahead (2016)?

We hope that 2016 will be a significant year for KDIPA, as by then we will complete the move to our new premises, hire needed staff who will be carrying out the designated tasks, put into action our strategic plan, and eventually embark on our ambitious promotional campaign that will brand Kuwait, target investors into priority sectors, and streamline business environment to enhance competitiveness in order to achieve the needed sustainable growth and economic diversification. We shall be also enhancing our cooperation with other relevant government entities, the national SMEs Fund, the Kuwait Chamber of Commerce & Industry, among various stakeholders.