Kuwait Economy, Economic growth in Kuwait
Interview Bader Al Humaidhi. Kuwait’s government and parliament in 2008 issued a law that was organized by the Central Bank of Kuwait to boost economic growth in Kuwait. It had three objectives: to extend financial assistance through banks to financial institutions who were effected by the crisis, to help economic growth in Kuwait.
Some experts argue that the financial stability law is not enough and they are urging the government to implement a fiscal stimulus plan, hence the February plan to spend 104 billion dollars on major infrastructure projects. What specific measures can be taken to help buffer Kuwait’s financial sector from a future shock resulting from the global economic crisis? Do you believe the measures taken by the government are enough?
How do you see the situation in the near future? Will the laws be passed?
Kuwait Economy, Kuwait former minister of finance, Chairman of Triple E company and board member of Mena Holding, Bader Al Humaidhi: The political arena in Kuwait has humbled over the last four or five years and the conflicts of interest have cooled down between the government and parliament. The last couple of months have also seen some political conflict but the government has been able to get some laws through safely. I am optimistic but cautious at the same time because there are still some members of the parliament who can create problems and halt progress both economically and socially.
What are the main challenges and where do you see the weak spots in Kuwait’s economy?
Kuwait Economy, Kuwait former minister of finance, Chairman of Triple E company and board member of Mena Holding, Bader Al Humaidhi: In Kuwait the major problem since the discovery of oil in the 1950s and 60s has been dependence on revenue coming from a single source (oil). Everybody has been talking about diversifying the sources of income in Kuwait but nothing has happened. Oil represented 94% of our financial resources and it is a major part of our GDP and this all depends on the price of oil which is out of our control. Another issue is unemployment in Kuwait, which now accounts for 4%. I am not worried about the financial institutions in Kuwait because fortunately, we have one of the best central banks here in Kuwait. None of our banks collapsed during the crisis because of the central bank’s great supervision.
What are the strengths of the Kuwaiti economy?
Kuwait Economy, Kuwait former minister of finance, Chairman of Triple E company and board member of Mena Holding, Bader Al Humaidhi: The manpower. If you look at the GCC area I think Kuwait has the best and most qualified professional management. Most of the people have been educated and experienced in the west and this is a major strength. We also have over 250 billion dollars of general reserves for the government. The private sector is also among the most active in the GCC area and when the private sector is more involved in GDP the economy is much more powerful. The private sector accounts for 34% of GDP but only employs 4% of Kuwaitis.
What is your vision for Kuwait? Do you think the private sector will eventually assume a larger role in Kuwait’s economy and employ Kuwaitis?
Kuwait Economy, Kuwait former minister of finance, Chairman of Triple E company and board member of Mena Holding, Bader Al Humaidhi: I have great confidence in our private sector. The government and parliament have to change the way they interact with the private sector, however. Most of the successful companies in Kuwait started out as private until the government came in and took over and with this kind of move usually productivity decreases.
What is your message to our audience about investing in Kuwait and about Kuwait in general?
Kuwait Economy, Kuwait former minister of finance, Chairman of Triple E company and board member of Mena Holding, Bader Al Humaidhi: Kuwait has great potential due to finances, management, and having the best infrastructure and resources in the area. Foreign Direct Investors need to help come push the government to change some of the laws to allow them to participate further in our development. The handling of foreigners coming into the country currently is unfortunate and these laws need to be removed to attract foreign investment.
What is the role of Kuwait now and what do you see potential for this role to be in the future?
Kuwait Economy, Kuwait former minister of finance, Chairman of Triple E company and board member of Mena Holding, Bader Al Humaidhi: Kuwait in the 1960s,70s, and 80s was a major financial center. We still are but perhaps the degree of our importance has decreased as Dubai, Qatar, and Bahrain moved ahead of us. This was our fault because we mishandled our affairs. There is healthy competition because it gives us incentive to improve and do more. If you look at the region I think Kuwait has the best financial and managerial equipment to become number one in the region. What is important is mentality and we need a mentality that will allow the private sector to increase its involvement in the growth of the economy.
Kuwait Economy, Kuwait former minister of finance, Chairman of Triple E company and board member of Mena Holding, Bader Al Humaidhi: It is a newly established company that was established as a holding company to invest in both upstream and downstream of the oil sector. The first part of our activities is trying to diversify and we have looked at Ukraine and Malta. The second part surrounds drilling and we have a joint venture agreement with a Chinese company. In the past year we have been awarded contracts worth over a billion dollars in Kuwait. Another part of our company is consultancy and we have entered another major joint venture with an American company that specializes not just in oil but project management in the power sector. We have established company offices in Kuwait and we submitted a proposal for another project in Kuwait, Qatar, and Oman. Another part of our company is construction and with the five year plan this construction company has a lot of potential to be awarded some contracts in Kuwait as well as other GCC countries in the region. I am pleased and proud to be the Chairman of EEE company and I think we are very hopeful to be involved in upcoming and important projects in Kuwait.
What is EEE company’s major challenge?
Kuwait Economy, Kuwait former minister of finance, Chairman of Triple E company and board member of Mena Holding, Bader Al Humaidhi: Over the last year and a half our major challenge has been financial resources. Banks and financial institutions are not very willing to extend loans and/or credit like they used to be. Most of the financial institutions in Kuwait are very cautious. One area this hurts us is in our exploration side of business because it needs a lot of financial resources, for example.
What are you looking for in terms of future associations?
Kuwait Economy, Kuwait former minister of finance, Chairman of Triple E company and board member of Mena Holding, Bader Al Humaidhi: My colleagues have been in contact with more American, Korean, and Chinese companies who want to get involved in the region. The infrastructure project will bring a lot of projects and we are looking for companies to join hands with in submitted a proposal for these. We are looking both toward infrastructure based projects and oil for these joint ventures.
As a newly established company how are you going to put your name on the world’s map?
Kuwait Economy, Kuwait former minister of finance, Chairman of Triple E company and board member of Mena Holding, Bader Al Humaidhi: We are going to progress stage by stage. First we need to introduce ourselves to the Kuwaiti market and Gulf and we have started to do this already in a short time. We are well known in the energy and oil sector in Kuwait and also in Qatar, the Emirates, and Oman. We would like to spread globally but it is better to go slowly given the current situation. In Kuwait we have enough sources of funding for now.