Why Invest in Kuwait?

Kuwait is rich with strategic oil resources.

According to the Organization of Petroleum Exporting Countries (OPEC) database, Kuwait has approximately 101.5 billion barrels of proven oil reserves (including the Kuwaiti share of proven reserves in the Divided Zone). This makes it the fifth-largest oil reserves in the world after Venezuela, Saudi Arabia, Iran, and Iraq. Currently, Kuwait’s oil production capacity estimated at 3 million bpd.

Kuwait has one of the most vocal and vibrant democracies in the region, as enshrined in Article 6 of its 1962 Constitution which stipulates that “The System of Government in Kuwait shall be democratic under which Sovereignty resides in the people the source of all powers”. It has a single chamber “The National Assembly” which is composed of 50 elected members every 4 years, through a free and fair electoral process. Females 21 years and above were granted the right to vote in May 2005 and the right to nominate themselves in June 2006. In the election held in May 2009, 4 elected women have become first female MPs. In 2016 elected parliament, there is  one minister in the cabinet. There are no formal political parties in Kuwait. Kuwait is divided into 6 governorates.

Kuwait is a constitutional hereditary emirate, ruled by the Al Sabah family since 1752 with Sheikh Sabah the First. Throughout its history and after its independence in 1961, Kuwait has enjoyed a stable regime with strong and open relations between the ruling family and the citizens. Despite the August 1990 invasion and its concomitant turmoil the country’s stability remains sustained.

Kuwait has always enjoyed an open economy with a thriving merchant class and extensive trade relations even before the oil discovery era. It continues to practice a relatively liberal trade with open markets for foreign trade and flexible policies. It has no quantitative restrictions on its imports, but there are a few restrictions on importing goods relating to health, religious and security considerations. Kuwait is committed to trade facilitation with the aims to continuously improve efficiency while safeguarding legitimate regulatory objectives. Furthermore, Kuwait enjoys a free convertibility and total transferability in its currency exchange market; there are also no restrictions on capital or remittances transfers.

Kuwait has a strategic geographic location in the northern Gulf, with a total area of 17,819 sq. km. Its strategic location makes Kuwait a thriving trading center in the region adjacent to three major markets (Iraq, Saudi Arabia, and Iran) and beyond.

Kuwait follows civil legal system with Islamic law mainly significant in personal matters. Kuwait enjoys a transparent and a sound legal system with proper separation of legislative, executive, and judicial branches.

There is a host of economic laws, which are conducive to the investment climate, of which laws pertaining to new corporate taxes, commercial companies, commercial licenses, encouraging competition, protecting consumers, intellectual properties, copyrights and related rights, public tendering and e-transactions. Other laws approved for fostering the role of the private sector in the economy through the promotion of direct investments, privatization program and public private partnership (PPP), and opening new areas for private investment like electricity generation & water desalination projects.

Kuwait enjoys sound macroeconomic conditions, reflected in a moderate but sustainable economic growth, financial stability, curtailed inflationary pressures maintaining a balance in both its “internal” budgetary balance, and its “external” current account balance. Kuwait’s GDP per capita classifies it within the group of very high-income countries. Furthermore, according to UNDP classification, Kuwait belongs to the very High Human Development group,

Kuwait’s banking and financial system enjoys a sound monetary policy and prudent oversight, which enhances its resilience in mitigating financial crises, controlling inflation, and sustaining a strong currency and a fairly stable KD exchange rate.

The KD  was pegged to a basket of currencies, representing Kuwait’s main trading partners, during the period 1975 to the end of 2002. However, this was then changed in the period from January 2003 to May 2007, when the KD pegged to the dollar, given that the U.S. dollar had the most weight in its impact on the KD. However, since then the KD reverted to be pegged to an undisclosed basket of currencies to avoid imported inflation stemming from the weakened US dollar and until the current date.

The Kuwait Stock Exchange (KSE) is the first in the Gulf Cooperation Council (GCC) and reached a market value of more than KD 26.4 billion at the beginning of the first quarter in 2021 according to BOURSA KUWAIT.  Furthermore, its average daily trading volume reached 3.8 million shares worth KD 41 million  with a total number of 168 listed companies during the same period.

The Central Bank of Kuwait supervises a whole network of banking and financial institutions that are comprised of: 11 commercial banks, 12 Branches of non-Kuwaiti banks, 50 investment companies, 36 exchange companies, 62 investment funds and one financing companies.

In terms of sovereign rating, Kuwait enjoys a credit rating of “ Investor Grade” granted by the major credit rating agencies  including: AA- (S&P), A1 (Moody’s), and AA (Fitch).

Kuwait is classified as a low risk (A3) by the globally operating French credit insurer Coface, which generally means that the political and economic situation is relatively good, with stable and efficient commercial environment.

Health:

• Kuwait provides comprehensive, modern, and free health service to its citizens through an extensive number of infirmaries, specialized clinics, and hospitals. The latter include: Sheikh Jaber Al Ahmad Hospital, Sabah hospital, Amiri hospital, Adan hospital, Farwaniya hospital, Mubarak Al-Kabeer hospital and Jahra hospital.
• As of 2013, there are 94 primary health care centers across the country. The number  is expected to rise to 125 centers by 2020.
• There is a host of private clinics and medical centers in various specializations catering to the expatriates in Kuwait, as well as private hospitals such as, Muwasat hospital. Al Hadi Hospital, Dar Al Shifaa Hospital, Assalam Hospital, and Al Seif Hospital.
• As part of the development plan, Health Assurance Hospitals Company (Dhaman) was s launched to offer healthcare services for expatriates in Kuwait. This company was established as a PPP project aiming to enhance the role of the private investment in developing healthcare sector in Kuwait.

Education:

• Education is free of charge for citizens in government schools.
• For expatriates, there are a variety of private educational systems available such as American, English, French, Indian, Pakistani and Filipino schools.
• The total number of students enrolled in schools reached 647,238 with 81,404 teachers and faculty members.

Culture and Shopping

• The Sheikh Jaber Al Ahmad Cultural Centre showcases performing arts and creates a world class theatre quarter in a spacious parkland setting. Together with Sheikh Abdullah Al Salem Cultural Centre, will form Kuwait’s new national cultural district.
• Additional cultural landmarks in Kuwait include: The Scientific Centre, the National Council for Culture, Arts and Letters, who runs a multi-cultural festivals; Abdul Hussain Abdul Rida theater, a host of museums, and Abdulaziz Saud Al-Babtain Cultural Foundation.
• Kuwait is distinguished by its vast range of shopping districts that vary from its traditional market place Mubarkiya located in the country’s heritage area to luxury shopping centers such as Salhiya Complex, 360, Avenues and Grand Avenues, KOUT Mall, Gate Mall and others.

• Electricity is stable and available constantly in terms of outages .
• Electricity prices in Kuwait are amongst the lowest in the world.
• The cost of electricity consumption ranges as follows, till this date:
• 2 fils/Kilowatt for all state facilities
• 1 fils/Kilowatt for subsidized industrial companies
• 12 fils/Kilowatt for Chevron Co. in the Neutral Zone.
• 10 fils/Kilowatt for chalets .

For more information on electricity rates click here.

Fuel:

Fuel costs in Kuwait is one of the cheapest in the world.

Fuel price, till to date, are as follows:

• Octane-91 (Premium): 85 fils per liter
• Octane-95 (Super): 105 fpl
• Octane-98 (Ultra): 165 fpl

Kuwait is a founding member of WTO. It is a member of the GCC and its  Customs Union; a member of  the Arab League and its Greater Arab Free Trade Area (GAFTA).

Kuwait enters with 80 other countries in  bilateral treaties for protecting & encouraging investments and avoidance of double taxation (see: Kuwait BITs).

The U.S. and Kuwaiti governments signed a Trade and Investment Framework Agreement (TIFA) in 2004. Kuwait as a member of the  GCC signed a regional free trade agreement with Singapore in 2008 and signed  the European Free Trade Association (EFTA) in 2009 with the European Union.

High degree of deepening integration into the Global Market

Kuwait is considered highly integrated in the global economy because of the following :

• Kuwait trade (exports + imports) represents 102% of its GDP.
• Kuwait Sovereign Wealth Fund manages a US$ 592 billion investments portfolio in world financial markets.
• Migrant laborers in Kuwait are approximately 2.4 million, with an estimated of Kuwait outward workers’ remittances range of more than US $ 15 billion in 2019 annually transferred to various countries designated as pools of human resources in the far East and Arab countries. In 2014, the amount was $ 18.1 billion the highest level since the availability of the data in 1975.
• Kuwait is an active member of almost all international organizations and is part of several regional and sub-regional groups with a network of 100 + bilateral agreements and other trade arrangements.
• Kuwait participated actively in the process of creating global partnerships for development.
• Kuwait is classified as a world center for humanity and His Late Highness Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah was given the title the ‘Humanitarian Leader’ in 2014 by the United Nation because of his remarkable acts of human kindness and generosity and exemplary humanitarian leadership.
• Kuwait enjoys one of the highest rates of official assistance to GDP (1.3%) which is more than the United Nations target of 0.7 %.
• Through Kuwait Fund for Arab Economic Development (KFAED) the State of Kuwait provides grants and soft term loans to 107 countries in the world with a total estimated value of $ 22.7 billion.

Foreign companies engaged in commercial activities in Kuwait, directly or indirectly, are liable to pay corporate tax on their earnings at a  low flat rate of 15% in accordance to Law no. 2 of 2008 that replaced Kuwait Income Tax Decree no. 3 of 1955 whereby the corporate tax rate followed a progressive system reaching up to 55%.

There is no individual income tax nor any other taxes in Kuwait. However it is been widely considered to introduce such taxes under the current Financial & Economic reform Program for the medium term in the State of Kuwait.