Kuwait is set to undergo another transformation, with preparations underway for a post-oil future as it becomes clear that the country cannot rely on the petrodollar forever.

The importance of Kuwait's sovereign wealth fund, the Kuwait Investment Authority (KIA), has become even more apparent over the last year as oil prices remain in the doldrums and investment in a diversified future becomes more urgent than ever. Kuwait is by no means running low on cash, however. Investors are cognizant of its strong fiscal position and sizable assets, and in October 2015, Moody's reiterated its AA rating and stable outlook. The country's debt level stood at 6.5% of GDP at end-2014, and this is expected to rise to 8.5% in 2015-16, according to Moody's, with the IMF also highlighting how much the Gulf nation has come to depend on hydrocarbons; IMF estimates suggest that the black stuff accounts for 95% of export revenues and government income. While the situation may at first appear disconcerting, nothing breeds innovation better than a challenge, and with the non-oil economy waiting in the wings, even the hydrocarbon sector is getting ready to benefit from improved corporate governance and better efficiency that the government is calling for.

That government is also keen to attract foreign investors, who have been notably absent from big-bill deals in the Gulf region over the last year. Convinced the tap hasn't run dry, however, authorities are offering up incentives including 100% ownership in local firms, up from 49%, and the option to operate through a 100% foreign-owned branch, not to mention income tax and customs duty exemptions. Kuwait's ascending role in the region, as well as its democratic credentials, will also serve to convince investors that its economy is the best bet in an otherwise volatile region. On the international stage, Kuwait, under the leadership of His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, has fostered a tradition of regional and international cooperation, and is now regarded as a key diplomatic player. It maintains solid ties with its fellow GCC members, and holds a permanent seat at the OPEC table. Kuwait has also played host to a number of significant international events, including the Third International Humanitarian Pledging Conference for Syria and the Kuwait Oil and Gas Show and Conference (KOGS), the latter reflecting the nation's influence in the global energy industry.

Sitting atop the sixth largest proven oil reserves in the world—a cool 104 billion barrels—Kuwait has grown rich from the world's thirst for hydrocarbons. Despite the devastation that was wrought on Kuwait and its oil fields by the invading Iraqi army during the 1990-91 Gulf War, Kuwait is today the world's 11th largest producer, accounting for 7% of global production, and the seventh largest exporter. Oil represents 43% of GDP, with the industry firmly in public hands. The Kuwait Petroleum Corporation (KPC) is the parent of the so-called K-Companies, responsible for international marketing. The Kuwait Oil Company (KOC) covers crude oil exploration and development, and the Kuwait National Petroleum Company (KNPC) is responsible for refining. In 2014, oil production slipped to 2.88 million bpd, continuing a trend that began in 2012. But it isn't all oil; Kuwait also sits on 63 trillion cubic feet of proven natural gas reserves.

Despite significant attention, however, vast discoveries in the north remain untapped due to legislative indecisiveness over whether foreign partners should be involved. In August 2015, the government did sign off on a deal that will see the construction of several new power plants that will help to solve chronic summer blackouts. Cranking up the air con in Kuwait is somewhat of a must during the summer months, and the new plants will take some pressure off the country's current five power stations, which struggle to accommodate increasing demand. The plants are set to run on gas and oil. Currently a net importer of gas, Kuwait is also keen to break the deadlock and ramp up natural gas production to 2 bcf per day by 2030 in order to reduce dependence on foreign exports.

Moving forward, though, diversification is the name of the game. To achieve that, the government must boost the role of the private sector, currently representing just 24.6% of GDP and 5% of the workforce. And this isn't a new idea, with a 2035 plan to turn Kuwait into a regional trade center launched in 2010. Targeting mainly the industrial and manufacturing sectors, the scheme is a $108 billion venture that will go a long way to putting the country on the map for more than just oil. And while progress is slow, the results are clear in the details. In 2014, the manufacturing sector grew 0.9%, while overall industrial production, including refining, was higher.
In 2016, while the government will rightly be hoping to see an increase in oil prices, Kuwait could benefit from the added impetus a long-term lull could bring. With the private sector ready to bounce into action, Kuwait need only make up its mind to what extent it is willing to let go of the reins as its economy transforms in a way it hasn't since oil was first struck decades ago.