Kuwait has the worlds fourth largest reserves of oil behind only Saudi Arabia, Iran, and Iraq.  How do you foresee the role of oil in Kuwait’s economy and how do you assess Kuwait’s diversification strategy?

Investment Partner, National Offset Company, General Manager of National Offset Company, Mazen Madooh: I believe oil will remain a strategic commodity for the economy of Kuwait in the foreseeable future, as a source of energy and feedstock for petrochemical industries and pharmaceuticals. More than three decades ago Kuwait has launched a national strategy of diversification of its productive economic base. Kuwait has built on the increased cross border flow of goods and services, and FDI, to overcome limited domestic absorptive capacity versus the abundance of capital. Kuwait is moving in the right direction and taking the right steps.  Hopefully we at the National Offset Company can assist the foreign contractors once in Kuwait to develop stronger commercial relationships with their local counterpart to contribute in the diversification efforts through the establishment of viable sustainable offset projects serving its national objective of technology transfer, creation of jobs, and training opportunities for Kuwaitis.  We would also like to encourage direct offset through the National Offset Company program.  

Your mandate is to promote the transfer of technology to Kuwait and create jobs and training opportunities for Kuwaitis.  To what degree have you been able to accomplish this mission and can you give some examples of your efforts?

Investment Partner, National Offset Company, General Manager of National Offset Company, Mazen Madooh: The National Offset Company is considered a unique experience worldwide and incomparable to any other program or state owned enterprise in Kuwait.  NOC, since September 2006,  has been entrusted with the management of Kuwait Offset Program, previously run by the Ministry of Finance since 1992. For this purpose new flexible, transparent and comprehensive Offset Guidelines were introduced, and the strategic First Business Plan was developed.

How do you assess your communication strategy?

Investment Partner, National Offset Company, General Manager of National Offset Company, Mazen Madooh: NOC marketing strategy is based on consolidating its current market position and service offering. In doing so it is pursuing four elements of its policy mix namely: branding, networking & PR, matchmaking, and fast track. In this regard, NOC has launched four consecutive communications campaigns, one to introduce Kuwait Offset Program new Guidelines No. 9- 2007, followed by networking campaign, building relations campaign, and currently enhancing building relations. Over the last three years NOC has been gradually positioning itself in the local and international arena, through participation in various industry specific conferences and exhibitions, advertising in prominent media, conducting interviews, and contributing to renowned promotional publications.

The communications strategy focused on strengthening direct interaction with various stakeholders being government, private sector, civil society, foreign business councils among others, to ensure the program is successful.  We try to be very proactive and attend meetings with government agencies to spread awareness about the offset program.  In the future we aspire to become more recognized amongst other offset programs and make our program very clear to all contractors internationally.  So far, we have received positive feedback from specialized non-profit bodies like Global Offset & Countertrade Association (GOCA), among others, that commends our efforts with offset obligors, and clarity of our presentations in international forum.

What is your message to our audience about your services and the benefit that can be derived from it?

Investment Partner, National Offset Company, General Manager of National Offset Company, Mazen Madooh: NOC sends a clear message to potential and existing clients, namely the international contracting firms, that we are here to provide all the needed support to assist them in discharging their offset obligation in Kuwait in a mutually beneficial manner to all parties concerned. Amongst those services, is an initiative we launched last year to establish a fast track for streamlining procedures and issuance of licenses in Kuwait.  We are in the final stage of making necessary agreements with the various government entities to establish a mechanism whereby establishing a business in Kuwait can be implemented in a smooth manner compared to the conventional route of licensing.  Other  services will be introduced, like matchmaking, market intelligence, third party outsourcing. NOC website will provide in the near future these services online as well.  

Ideally what kind of investors are you looking for?

Investment Partner, National Offset Company, General Manager of National Offset Company, Mazen Madooh: We are looking for serious investors that will be forthcoming with ideas or concept papers to establish successful offset ventures benefiting the contracted government body (like Ministry of Defence or Ministry of Electricity & Water), which we classify as direct offset, or partnering with a local counterpart be it private sector or civil entities in an indirect offset project. Both must ultimately achieve the Kuwait offset Program Goals, stated earlier (transfer of technology, job creation, and training opportunities for Kuwaitis).  

Although under the new Guidelines No. 9 -2007 there is no sector priority; however Education sector has comprised more than 40% of total offset ventures completed in the period form 1992 – 2009. The recently approved 4-year economic development plan will serve as an umbrella for sector focus for Kuwait Offset program especially towards building the pillars of Kuwait knowledge economy.

What has been some of the response from companies you have helped establish?

Investment Partner, National Offset Company, General Manager of National Offset Company, Mazen Madooh: Over the last three years we have overall received a positive response from various clients, foreign and local, acknowledging our genuine and relentless effort to assist them, and at the same time explain to them the new Offset Guidelines, which took almost a year to complete to become more transparent and detailed, which is important for foreign investors in Kuwait so they know their exact obligation, and assess the risk involved.  Currently we are conducting a client care survey to verify their responses.

You are also working to setup/certify investment funds to support your goals.  How can multinational and local companies benefit from these funds?

Investment Partner, National Offset Company, General Manager of National Offset Company, Mazen Madooh: Offset Funds have been used as one of several options for foreign contractors to discharge their offset obligations. NOC facilitated establishment of four offset funds with prominent local investment firms specialized in sectors of education, energy, food security, and venture capital. Local investors can also benefit from subscribing into these funds that are authorized by the Ministry of Commerce & Industry and the Central Bank of Kuwait. We can help people meet their objectives in a professional way here in Kuwait.

You mentioned that investments in Kuwait are not very favorable but what are some of the advantages foreign investors can derive while being in Kuwait compared to other Gulf states?

Investment Partner, National Offset Company, General Manager of National Offset Company, Mazen Madooh: The main advantage in Kuwait is the very well respected institutional base that is appreciated by international companies.  Kuwait’s location is strategic for market expansion as the country can serve as a regional hub for different activities.  Kuwait also enjoys a pool of young well-educated population, with gender equality.  Foreign companies should take advantage of the opportunities unleashed in translating H.H. the Emir direction to make the country an international commercial & financial hub into a reality, and in line with Kuwait new 4-year Plan, and long term vision.

What have been some of the major challenges in your operations?

Investment Partner, National Offset Company, General Manager of National Offset Company, Mazen Madooh: It is important to clarify that Kuwait enjoys sound investment climate in terms of basics, as seen in this Unique Selling Proposition (country offer). However there is some artificial “intangible” problems that create an adverse image on ease of doing business in the country. On our part, we have established a very good relationship with the Ministry of Commerce & Industry, particularly with Kuwait Foreign Investment Bureau (KFIB), such that NOC foreign obligors “clients” can benefit from FDI Law no 8 for 2001 that provides several incentives, allows for foreign ownership up to 100%, and provides a “positive list” of 11 open sectors for FDI, including recently logistic & transport, and environment.

Do you see yourself as the best point of entrance to Kuwait?

Investment Partner, National Offset Company, General Manager of National Offset Company, Mazen Madooh: For foreign contractors, yes NOC is the natural point of entrance. NOC has specific mandate that governs its activities and operations, and that necessitates hefty and continued coordination with several other government entities. For this purpose, we have a very solid, transparent set of plans and procedures for people to work with and we are flexible compared to other entities similar to us.

What is the incentive?

Investment Partner, National Offset Company, General Manager of National Offset Company, Mazen Madooh: There are several incentives that the new Guidelines provide to foreign contractors, these include consideration by NOC of deductions of local content (goods, services, sub-contractors)from the supply contract; deductions from the offset obligation for expenses for issuance of bank guarantee or assessment of technology transferred or off contract purchases of local goods & services. The Kuwait Offset Program incentives also include a system of multipliers (for direct or indirect offset and offset funds, ranging between 1.0 to 5.5) by which expenses incurred by offset obligors in fulfilling their obligations are assessed taking into account multiplier values. Our incentives also include allowing for banking of offset credit ,future offset and pre-emptive offset, that can be transferred or sold.

What are the particular geographical areas you are looking for companies?

Investment Partner, National Offset Company, General Manager of National Offset Company, Mazen Madooh: The American companies have comprised 32% of all foreign contractors, while British firms took a share of 10%. There are other 13 nationalities that we deal with.

What is your final message about Kuwait and your role in attracting companies?

Investment Partner, National Offset Company, General Manager of National Offset Company, Mazen Madooh: I would like to send an encouraging message to all potential foreign firms that might be considering investing, selling, or doing business in Kuwait to take advantage of recent developments, politically and economically, and become a partner in the coming success.