Oil still king but other opportunities abound

 

With 10 per cent of world oil reserves, Kuwait is one of the UK’s key trading partners in the Middle East. Small (about the size of Wales), rich and with a reasonably open economy, oil has helped Kuwait build up huge trade surpluses in recent years. Oil plays a pivotal role in the economy accounting for about half of GDP, 90 per cent of export earnings and 80 per cent of state revenues.

Kuwait's business community has a reputation for being astute and shrewd. Many business people have been educated in the US or Europe and have a keen understanding of both business cultures. It is one of the most democratic societies in the Gulf and even has a small number of women MPs (since 2009).

Although a tightly-knit society, Kuwaitis are generally well educated and many speak English fluently. For the past four decades the country has been heavily reliant on overseas workers, who still outnumber native residents. Around 70 per cent of its 4 million population are from abroad.

Kuwait is a constitutional emirate with the Amir as head of state. Succession is hereditary and restricted solely to the ruling Al Sabah family, who make up the bulk of the Council of Ministers. Power is shared between the Amir and a National Assembly of 50 elected members.

The country is a member of the Organisation of Petroleum Exporting Countries and the six-strong Gulf Co-operation Council (GCC) – effectively a regional common market. Since 2008, residents of Saudi Arabia, Bahrain, Qatar, Oman and the United Arab Emirates have residency rights in Kuwait as well as freedom to carry out business, work in government and receive benefits (e.g. healthcare).

One of the Kuwaiti government’s top priorities is to reduce dependence on crude oil by developing “down-stream” opportunities in that sector via privatisation. Kuwait is one of the biggest investors in UK property and investment portfolios for companies, government bodies and private individuals. It is also a major buyer of British military equipment, training and security services.

Almost 99 per cent of the population is urban.

There are downsides to Kuwait's situation. The harsh climate severely hampers agricultural production and, apart from fish, over 90 per cent of food is imported. Three-quarters of all drinking water has to be either imported or distilled.

There are opportunities for UK companies in the oil and gas sector as the state continues to invest heavily in related projects and infrastructure, including improved export facilities, new refineries and new petrochemical plants. They also plan to upgrade and expand existing facilities.

UK businesses can look out for opportunities relating to major projects including:

  • major island developments at Failaka and Bubiyan
  • airport expansion
  • road upgrades and the addition of an eighth ring-road for Kuwait city
  • sewerage system upgrade
  • power plant
  • metro rail system
  • new £4 billion campus for Kuwait University
  • Silk City financial and commercial hub in Subiya (£55 billion project)

Shuwaikh port has a 'free trade zone' providing storage and processing facilities. Foreign companies with operations there enjoy exemption from all customs duties and streamlined visa procedures.

Kuwait has a mature financial system with commercial and specialist banks at its core, although the setting up of new banks carefully restricted. It is home to a growing number of businesses in the finance, insurance, investment and fintech sectors, as well as a buoyant stock exchange.

Like some of its neighbours Kuwait is anxious to make its young people more employable, so the modernisation of education and training are a high national priority.  Dozens of projects are underway and the private sector is increasingly active in building new schools and universities, and providing educational technology.

Billions of pounds are being invested in the power sector, with new power plant being built to satisfy the country’s growing energy requirements.

Aware of its poor record in solid waste disposal and inefficient land use, Kuwait is increasingly keen on municipal re-cycling projects with both public and private sector companies involved.

Activity in the health sector is on the rise.  There is strong potential for partnerships with British specialised treatment centres, training providers, private hospitals and medical equipment suppliers.

High levels of disposable income have continued to boost consumer spending in the retail sector, which is worth around £35 billion a year. Many British brands and retailers are active and well placed in this market - Boots, Next, M&S, Debenhams and Mothercare are all household names there. Nevertheless, there are still great opportunities for other UK retailers to get involved.

Telephone David Attia on 0845 034 7200 or email for advice.

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