Kuwait Seeking Foreign Investment to Diversify Economy

Kuwait is more typically known as a source of investment rather than a destination, due to the size of its sovereign wealth fund. But the government is hoping to reverse this and sees the attracting of foreign direct investment as key to economic diversification plans outlined in its Kuwait Vision 2035 roadmap.

Kuwait is trying to diversify its economy beyond oil, but the transition to a knowledge economy is being held back by a lack of skilled local workers. The government wants to scale back the number of expats but Kuwaitis are reluctant to quit the shrinking but comfortable state sector, MENAFN reported.

“FDI is playing a major role in providing other forms of income to diversify the economy. This is why FDI is very crucial for the vision,” says Sheikh Meshaal Jaber Al-Ahmed Al-Sabah, director general of the Kuwait Direct Investment Promotion Authority (KDIPA).

To attract more FDI, the government has carried out reforms in recent years, including the 2013 creation of KDIPA, which facilitates investment and assists investors. Among significant legislative changes, foreign investors are now allowed up to 100% full ownership, anywhere in Kuwait, not just in special economic zones. Incentives such as tax holidays of up to 10 years and customs exemptions were also introduced.

Kuwait now ranks 96th in the World Bank’s report on ease of doing business, higher than the Middle East average.

Investors are being invited to join projects in sectors such as information and communications technology, oil and gas, renewable energy, electricity and water, urban development and housing, healthcare, education, transport and tourism.

For Kuwait, the FDI focus is on high-quality direct investments. As the country is not desperate for capital, the emphasis is more on adding value and assisting the transition to a knowledge economy. “We’re focusing on investment that helps us to attract new technologies and innovations, and that brings added value to the Kuwait economy. It’s more quality than quantity,” says Sabah.

The investment promotion authority says it has attracted a mere $2 billion in foreign investment since its inception in 2013.

With 65% of the population under the age of 30, Kuwait enjoys an attractive consumer base and workforce for a growing private sector—but skills need to be enhanced.