Kuwait on Track to Attract Investors to Invest in Kuwait
On December 27th 2008, after years of hearings and negotiations, the Kuwaiti parliament passed a law to slash taxes imposed on foreign corporations operating in Kuwait to 15 per cent, down from 55 per cent. “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” Mazen Madooh – General Manager of National Offset Company .
Actions taken
On December 27th 2008, after years of hearings and negotiations, the Kuwaiti parliament passed a law to slash taxes imposed on foreign corporations operating in Kuwait to 15 per cent, down from 55 per cent. In addition, the capital gains tax on the Kuwait Stock Exchange was abolished. The move was welcomed by the local and international investors communities.
For many decision makers, the long awaited move was just the beginning. Bader Al-Humaidhi , Former minister of finance and now Chairman at EEE Company warns of complacency: “What we need now is to change the laws and open the doors to foreign investment in Kuwait. Last year Kuwait attracted only 150 million dollars of foreign direct investment but the outflow was around 8 billion dollars. There needs to be more cooperation between government and parliament to implement new laws and help safely improve the current situation.”
The government hopes for more green lights by the Majlis, especially in relation to the outdated company’s law. “The existing Companies Law is an old law that was issued back in 1960; it has seen since then some amendment”, HE Ahmad Al-Haroun, Minister of Commerce and Industry explains. “However”, he adds”, “what is now under consideration by the National Assembly is new legislation that contains 250 articles that address all aspects that will bring our law up-to-date,. I believe that this will be mutually beneficial for both international investors as well as Kuwait.”
Latest developments in the Kuwaiti corporate world prove that things are moving forward. Kuwait’s third mobile operator VIVA, a subsidiary of Saudi Telecom Group, will commence operations on Wednesday with the competition in market soaring up.
“The penetration was higher than 100% when we started a year ago and we came in aggressively because we felt that initially there was a place for change and a spot for us to enter in the market”, Najeeb Al Awadi, CEO of VIVA recalls. VIVA gained a tenth of the market share during the first year. Dubai-based law firm Al Tamimi and Company, one of the leading barristers in the Middle East, set up its office in Kuwait in November 2009.
For the government these actions are encouraging, although the limit remains the sky.
Ahmad Al-Haroun: “There are lots of Mega Projects in the pipeline, such as: a new business hub (Silk City) with estimated cost US$77bn, a major container harbor, a 25km causeway, a railway and metro system, etc….” After Dubai launched the first Metro System on the Arab Peninsula on September 9th 2009, all other GCC states initiated similar projects. During its first six months of operation, the Dubai Metro has transported 10m people throughout Dubai.
“In turn, all of these Mega Projects will create Mega activities in products trade and services, which will all be overseen by the Ministry of Commerce and Industry.” The northern Gulf state does not want to hide behind its peers in the region. “There hasn’t been a better time to invest in Kuwait”, Minister of Commerce and Industry Ahmad Al-Haroun concludes.