Telecommunications Investment Companies Insurance

Introduction
 Kuwait has always been a country open to foreign investment and is further
opening to foreign capital, however, FDI is still underdeveloped in the country.
According to UNCTAD's World Investment Report 2020, FDI inflows reached
USD 104 million in 2019, decreasing compared to 2018's USD 204 million. The
lack of diversity in the economy and the fall in oil prices caused the decrease of
inflows. The FDI stock was estimated at USD 15 billion. The majority of foreign
investments come from the United States and China.
FDI inflows 2015-2019
Year FDI in Million USD

2015 285
2016 292
2017 348
2018 204
2019 104
 The numbers shows increasing FDI from 2015-2017 ,then decreasing sharply in
2018 and 2019
FDI by sectors
 In terms of percentages, in 2019, the telecommunication sector welcomed around

61% of the FDI inflow, followed by investment companies at 20.1% and
insurance companies at 9.5%.
Sector FDI %
Telecommunications 61
Investment companies 20.1
Insurance 9.5
Banks 7.7
Investment funds 1
Top Multinational companies in Kuwait
Sector FDI %
Oil and gas Schlumberger
SNC-Lavalin
Halliburton
China Oilfield Services Lim
Telecommunication ZTE
Huawei
Ooredoo Group
Advantages of FDI in Kuwait
Kuwait has several advantages for attracting FDI:
1. Abundant oil reserves (the country has the 7th largest oil reserve in the world)
which provide the country with considerable and stable revenues
2. A strategic role in the political sphere of the region (the country is considered a
very good ally of the United States)
3. A young local population with a high average income and high domestic
consumption
4. A well-managed financial market and a strong banking sector
5. Good quality infrastructure
6. A globally positive business environment: the Kuwaiti government, through its
desire to diversify its economy, has embarked on a policy of economic openness
to foreign investment.
7. Under the FDI Law, foreign investors are incentivized to invest in Kuwait
including property incentives in the form of a land grant and a tax holiday for up
to 10 years. These incentives are linked to the proportion of Kuwaiti nationals
that are employed.
8. A law on foreign investment, enacted in 2013, was implemented in 2015 and a
series of other laws related to businesses and public-private partnerships were
introduced as well. The law allowed 100% foreign ownership in a number of
sectors and also made available a number of tax breaks and other benefits to
attract new investors, who in return must guarantee a set of quotas regarding the
employment of Kuwaiti nationals.
9. Allowing the opening of the stock market to non-Kuwaitis, the presence of
foreign operators in the petrochemical industry and the entry of foreign banks in
the country. The industries covered by the FDI Law that allows 100% foreign
ownership, include: infrastructure (water, power, wastewater treatment, and
communications); insurance; information technology and software development;
hospitals and pharmaceuticals; air, land, and sea freight; tourism, hotels, and
entertainment; housing projects and urban development; and investment
management.
 Kuwait ranks relatively low in the 2020 Doing Business report established by the

World Bank compared to other Gulf countries. But , the country rose to the 83rd
position out of 190 economies this year, up by 14 spots from 2019. This was
mainly due to significant improvement with regards to starting a business as well
as obtaining credit and construction permits.
FDI barriers
1. Necessary structural reforms that are hard to take hold because of a tormented
political life and strong tensions between the parties
2. Extreme dependence of the economy on the performance of the oil sector and in
particular on the price of a barrel of oil
3. A high degree of state intervention in the national economy (the civil service
provides 90% of the jobs of nationals and the budget is 60% punctured by these
current expenditures) which weakens the emancipation of a strong private sector
4. The geographical location makes the country particularly vulnerable to political

tensions in the region
5. A business environment with legislation that restricts the freedom of

establishment of non-nationals and that does not sufficiently protect intellectual
property
6. The country continues to depend heavily on the oil & gas sector and such is
sensitive to commodities prices fluctuation, and the degree of state intervention in
the economy is considered too high. Furthermore, the local market is limited in
size and the political situation is fragmented, with tensions between the parties.
7. The current FDI Law was seen as ineffective due to the difficulty foreign
investors have faced in obtaining a license from the Kuwait Foreign Investment
Bureau (KFIB), the entity established to implement the FDI Law, where a license
was granted by the KFIB it can often take many months to process and there have
also been delays in obtaining land grants.
Recommendations
1. Regulatory improvement enacting a law that allows foreign principals carrying

out business in Kuwait to resolve disputes with local agents via foreign arbitration
under foreign governing law; this gives foreign investors the legal certainty they
require in order to enter into transactions with more confidence.
2. The establishment of an authority as an independent and specialized public

authority tasked with attracting and promoting FDI in the country
3. A New FDI Law that provides a “One-Stop Shop” whereby one unit will deal
with the issuance of commercial, employment and all other licenses required for
operations and avoid or reduce bureaucratic delays. Additionally, this specialized
unit is expected to deal with the grant of land required for many projects
4. Another likely improvement is the reduction of time required to receive a license

which could take up to 8 months to issue a license. A New FDI Law establishes
should respond within 30 days of receipt of the license application.
References
1. https://data.worldbank.org/indicator/BX.KLT.DINV.WD.GD.ZS?locations=KW
2. https://www.statista.com/statistics/1084033/kuwait-value-fdi-flows-by-direction/
3. file:///D:/My
%20Data/Downloads/NBKEconomicsInFocusKuwaitFDI202034%20(2).pdf
https://www.state.gov/reports/2019-investment-climate-statements/kuwait/
4. https://knoema.com/UNCTADFDI2014Sep/inward-and-outward-foreign-direct-
investment-flows-and-stock-annual-1970-2013?location=1001130-kuwait
5. https://public-preview-server.prod.cstreetsandbox.com/reports/2019-investment-
climate-statements/kuwait/

Telecommunications Investment Companies Insurance

Uploaded by

Copyright:

Available Formats

Telecommunications Investment Companies Insurance

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Telecommunications Investment Companies Insurance

Uploaded by

Copyright:

Available Formats

Introduction

FDI inflows 2015-2019

Year FDI in Million USD

 In terms of percentages, in 2019, the telecommunication sector welcomed around

Top Multinational companies in Kuwait

Advantages of FDI in Kuwait

Kuwait has several advantages for attracting FDI:

 Kuwait ranks relatively low in the 2020 Doing Business report established by the

4. The geographical location makes the country particularly vulnerable to political

5. A business environment with legislation that restricts the freedom of

1. Regulatory improvement enacting a law that allows foreign principals carrying

2. The establishment of an authority as an independent and specialized public

4. Another likely improvement is the reduction of time required to receive a license

You might also like