Kuwait is roughly the size of Wales (the land area of Kuwait is about 17,818 square kilometres) and is located at the north-eastern edge of the Arabian Peninsula and tip of the Persian Gulf. Kuwait is a closely-knit society, the people are well educated and many speak English fluently. Kuwait is a constitutional emirate with a parliamentary system of government.
Kuwait's economy is heavily dependent on oil revenues. The Kuwaiti government is keen on reducing the dependence on crude oil revenue. It plans to increase investment in downstream industries of the oil sector and also through promoting the role of the private sector and privatisation.
The UK has a long-standing and good relationship with Kuwait. British ships first dropped anchor in Kuwait Bay in the eighteenth century and our long-shared history has seen UK forces going to the defence of Kuwait both before and after its independence in 1961.
Exports to Kuwait reached £577m in 2012, up 14% from 2011 when they were £506m. Imports were £1.4bn, approximately the same as in 2011. The UK seek to meet a target set just over two years ago of doubling bilateral trade to $4bn by 2015.
Main UK goods exports to Kuwait include:
- boilers, machinery and mechanical appliances
- electrical machinery
- pharmaceutical products
- optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus
- natural or cultured pearls, precious or semi-precious stones, precious metals
- books, newspapers, pictures
- plastics and plastic products
- cereals, flour, starch or milk; pastry cooks’ products
Kuwaitis are fine negotiators. Its merchants have a reputation for financial astuteness and business acumen. Today's Kuwaiti businessmen, many of whom have been educated in Europe or the US, have considerable experience of the business methods of both East and West, and their shrewdness should never be underestimated.
Foreign companies wishing to operate in Kuwait without setting up a Kuwaiti registered legal entity may only do so through a Kuwaiti agent. In May 2013 the Kuwait National Assembly approved a draft law encouraging foreign direct investment which will help attract foreign investment. Legal advice should be sought to understand how it may impact your business. Generally however, establishing a new business works best with a carefully chosen Kuwaiti partner or advisor, who is able to keep in contact with customers, seek business and provide information on the latest market trends. The success of the relationship with the agent depends upon face-to-face contact and regular communication. Companies providing promotional and marketing assistance to their agent will have an advantage.
Kuwait has a number of industrial areas, the largest being located in Shuwaikh, Sabhan and Shuaiba. Kuwait has its Free Trade Zone located at Shuwaikh port, under the supervision of Ministry of Commerce and Industry. The zone provides facilities for the storage and processing of goods, materials and other related activities, with companies operating there enjoying exemptions from all custom duties as well as streamlined visa procedures.
Opportunities are significant in Kuwait, with the government reported in April 2013 to be planning to spend approximately US$17.5b on its infrastructure-led state development plan. The US$110bn development plan was first approved by parliament in February 2010 but has suffered delays due to political deadlocks and wrangling.
- Oil and gas
- Financial services
- Education and training
- Defence and security
Strengths of the market
- Kuwait has approximately 8% of the world's oil reserves.
- Kuwait has the most advanced democracy in comparison to its gulf neighbours and Kuwaitis are proud of it. In 2009, four female MPs were elected for the first time.
- Kuwait is one of the single largest investors in the UK in terms of liquidity, investment portfolios and property, both by government institutions, private sector companies and private individuals.
- Kuwait is a major buyer of British military equipment and training. As well as security services.
Challenges of the market
- Political wrangling: Political wrangling in the country has left over US$235 billion programme of mega-projects hanging in the balance, projects like: US$15bn Al Zour refinery project, US$2.8bn Subiya power plant project, construction projects worth US$168bn, oil and gas projects US$55bn, US$18bn Clean Fuels Project
- Corruption and red tape: Highly bureaucratic application procedures hinder the Kuwait business climate. Foreign companies still report numerous delays in attaining approval to operate in Kuwait and the 2012-13 World Economic Forum report states that an ‘inefficient government bureaucracy’ is the most problematic factor when doing business in Kuwait.
Kuwait is a major oil exporter, ranking around tenth in global terms. Oil and gas support a range of associated industries including refining, petrochemicals, cement and fertiliser production. Government-controlled enterprises play a major role in Kuwait’s economic performance. Many organisations are state-owned and privatisation has not been as rapid as in other GCC countries. Subsidies apply to a range of goods and services, including electricity supply and a range of consumer goods and basic building materials. Relatively low levels of Foreign Direct Investment (FDI) limit efforts to diversify the economy away from the petroleum sector.
Kuwait earned approximately US$ 52.2 billion) from energy exports in the first seven months of the 2012/2013 fiscal year with GDP growth of 5.1% in 2012, down from 6.3% in 2011. In April 2013, the IMF revised downwards it GDP forecast for Kuwait from 1.8% to 1.1%. However, the IMF said that internal restructurings had played a part in the revision and they remained confident that the country’s national development plan will help stimulate growth. However Kuwait will need to overcome internal political disputes to realise its potential. Per capita GDP in 2010 was recorded at US$37,039.
Arabian Gulf Street
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Office hours: Sunday to Thursday, 7:30am to 2:30pm (GMT 4:30am to 11:30am)
The weekend in Kuwait is Friday and Saturday.