16-June-2013, The new FDI Law No. 116/2013 for promoting direct investment in the State of Kuwait is now published in the Official Gazette (Al Kuwait Al Youm ) issue No. 1136 of June 16, 2013; it will enter into force after a period of six months as of the date of issuance. This law builds on a base of compliance with a host of other economic and financial laws that were recently approved with the intention of modernizing legislation to become more accommodating and transparent in the face of emerging economic and investment challenges.
In enactment of the new law, a public authority will be established with the mandate to promote direct investment, streamline the business environment for both local and foreign investors, and serve as one of the economic implementing arms of the country by fulfilling this law’s stated developmental goals of transfer and settlement of modern technology, creation of quality jobs for local manpower, supporting the domestic private sector, and contributing to the diversification of the economic base to reduce dependence on oil. The Minister of Commerce & Industry will chair the new authority’s board of directors that is composed of representatives from both the public and private sectors.
The new law has reiterated the current incentives that allows foreign investors an equity share of up to 100% when establishing a Kuwaiti company in accordance with the law, and grants foreign companies a license to open and operate a branch in Kuwait, with more details provided in the new law; it also allows foreign companies, for the first time, to establish a representative office to exclusively conduct marketing studies but not commercial operations.
On the other hand the new law introduced novel articles that are more compatible with international standards, including the adoption of the “Negative List” approach by opening up all economic sectors to foreign investors except those exempted by the Council of Ministers’ decisions; and considering the partnership projects established under Kuwait BOT Law No. 7/2008, and Privatization Law No. 37/2010, to be eligible to benefit from the incentives granted under this law.
An equally important issue under the new law is to improve the procedures for issuing the “Investment License” by reducing the processing time needed to a maximum of 30 days from the date of receiving the completed application, and the establishment of “a one stop shop” in coordination with concerned government entities involved in granting approvals in the pre-licensing phase.
This will render the current FDI Law No. 8 for 2001 repealed, and thus Kuwait Foreign Investment Bureau (KFIB) and the Foreign Capital Investment Committee (FCIC) will cease to exist; and all KFIB assets, liabilities, obligations and decisions will transfer to the new authority. The transition phase will extend over the period of six months until the executive regulations of the new law are completed.
Please click here for a copy of Law No. 116/2013 (English