In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.
After a sharp slow down in 2011, the FDI influx towards Koweït is on the increase since then and totalled USD 1.8 billion in 2013.
Kuwait has always been a country open to foreign investment and with the introduction of new laws in recent years, the country is even more open to foreign capital. In early 2003, a new law for FDI came into force. It allows 100% foreign ownership in a number of sectors. This law also makes available a number of tax breaks and other benefits which can attract new investors who in return must guarantee a set of quotas regarding the employment of Kuwaiti nationals.
A number of decisions has been taken since, allowing the opening of the stock market to non-Kuwaiti, the presence of foreign operators in the petrochemical industry and the entry of foreign banks in the country. A law on taxation of foreign companies (which decreased the maximum rate of tax on profits made by foreign companies, with the exception of investment earnings, from 55 to 15%), was adopted in January 2008. Although the opening of oil fields in the North to international oil companies seems blocked, broadening participation through "strengthened" technical agreements is being considered. Legislation on free zones and BOTs (January 2009) and on creating an independent stock market regulator (January 2010) also contributed to a more favorable environment for international investment, both financial and direct.
The current policy to promote FDI focuses on a number of sectors which can benefit most from foreign investment and expertise. In 2014, these include infrastructure investment such as water, waste-water treatment, power, and communications. Kuwait also tries to promote investment in the banking and financial sectors: investment aid, insurance, information technology and software development. Investment in hospitals and pharmaceuticals is also favored. Authorities are also keen to attract foreign capital into other sectors such as land and sea freight, tourism, real estate and urban development.
Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).
|Kuwait||Middle East & North Africa||United States||Germany|
|Index of Transaction Transparency*||7.0||6.0||7.0||5.0|
|Index of Manager’s Responsibility**||7.0||5.0||9.0||5.0|
|Index of Shareholders’ Power***||4.0||9.0||5.0|
|Index of Investor Protection****||6.3||5.0||8.3||5.0|
Source: Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2011||2012||2013|
|FDI Inward Flow (million USD)||3,260||3,931||2,329|
|FDI Stock (million USD)||15,212||18,913||21,242|
|Performance Index*, Ranking on 181 Economies||160||-||-|
|Potential Index**, Ranking on 177 Economies||60||-||-|
|Number of Greenfield Investments***||31||33||37|
|FDI Inwards (in % of GFCF****)||14.1||14.2||8.3|
|FDI Stock (in % of GDP)||9.5||10.3||11.5|
Source: UNCTAD - Last Available Data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
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Last Updates: January 2015