Oil still king but other opportunities abound
The size of Wales and with 10 per cent of world oil reserves, Kuwait is one of the UK’s key trading partners in the Middle East. Small and rich and with a reasonably open economy, oil has helped it build up huge trade surpluses in recent years. Oil plays a pivotal role in the economy accounting for half of GDP, 95 per cent of export earnings and 80 per cent of government income.
Its business community has a reputation for being astute and shrewd. Many business people have been educated in the United States or Europe and have a keen understanding of both business cultures. It is one of the most democratic societies in the Gulf with four women MPs voted into office for the first time in 2009. It has witnessed bouts of civil unrest over recent months.
Although a tightly-knit society, its people are 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. Two-thirds of its 3 million people are from abroad.
Kuwait is a constitutional emirate with the Amir, Sheikh Sabah Al Ahmed Al Jaber Al Sabah its head of state since 2006. 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, to work in government and to receive benefits such as healthcare.
One of the Kuwaiti government’s top priorities is to reduce dependence on crude oil by developing “down-stream” opportunities in the sector via privatisation. But its influence spreads abroad and it is one of the biggest investors in UK property and investment portfolios for companies, government bodies and private individuals. Kuwait is also a major buyer of British military equipment and training as well as security services.
Urbanisation is changing the country’s profile. By 2015 around 99 per cent of its population will be living in built up areas.
There are downsides to the Kuwait economy. The harsh climate severely hampers agricultural production and apart from fish the country imports 95 per cent of its food. 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 where the government is investing £50 billion in new projects aimed at ramping up oil production to four million barrels a day by 2020. These include improved export facilities, a fourth refinery and two new petrochemical plants. There are also plans to upgrade and expand existing facilities.
Kuwait has a mature financial system with commercial and specialist banks at its core, although the setting up of new banks is restricted in the country. There is a growing number of financial businesses, insurance companies, investment funds and a buoyant stock exchange.
The construction sector will benefit from a raft of major projects worth upwards of £130 billion including the development of island projects at Failaka and Bubiyan, the expansion of the airport, upgrading roads and adding and eighth ring-road. Extensive work is also planned for upgrading the sewerage system, building more utility plants and a metro rail system. UK companies are also likely to find opportunities in the development of new developments in cities such as Subiya, Khairan, Jaber Al Ahmed city, Arifjan and other smaller developments such as Al Mutlaa, Saad Al Abdullah and Sabah Al Ahmad.
On top of that the construction of a financial and commercial hub called Silk City in Subiya on the northern bay alone is worth £55 billion. Road, rail, port and housing projects have also been unveiled in the area. A new £4 billion campus is to be built for Kuwait University over the next decade.
Kuwait has set up a Free Trade Zone at Shuwaikh port providing storage and processing facilities. Companies operating here enjoy exemption from all customs duties and streamlined visa procedures.
Like some of its neighbours Kuwait is anxious to make its young people more employable. The modernisation of education and training are being given high priority using technology such as personal computers, whiteboards and a dedicated TV station. Dozens of projects are underway and the private sector is increasingly active in building new schools and universities.
Billions of pounds are being invested in the power sector where four new power plants are being built to meet 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.
The £1.4 billion upgrade of Kuwait International Airport offer opportunities in training, air traffic control and security.
Activity in the health sector is on the rise with the construction of eight new hospitals by 2017. There is strong potential here for partnerships with British specialised treatment centres, private hospitals and firms supplying medical equipment.
High levels of disposable income have continued to boost consumer spending in the retail sector worth around £35 billion a year. The market is dominated by British goods. Boots, Next, M&S, Debenhams and Mothercare all have a strong and respected presence. Nevertheless, there are opportunities for other UK retailers to get involved.