Sheikh Dr Meshaal Jaber Al Ahmad Al Sabah, Director General of the Kuwait Direct Investment Promotion Authority (KDIPA), explains his confidence in HH the Amir’s vision of Kuwait becoming a financial and commercial center for the region, a bridge between two continents, and a profitable investment destination through a series of well thought-out initiatives that count on youth, innovation and opportunity as its main drivers.
When we talk about the separation of Kuwait, the Gulf countries are bound together by beliefs, by a strong sense of brotherhood. But still, each country has developed a “personality.” What would you say are the set of values that differentiate Kuwait and form the Kuwaiti identity?
Kuwait, as you rightly indicated, shares deep-rooted relations with its brotherly GCC countries, including a common history, rich culture, vivid heritage, and intertwining social and commercial relations. However, Kuwait as a country is differentiated by its uniquely characterized attributes. To sum it up, Kuwait’s unique proposition is largely based on its geographic location at the upper part of the Gulf, with access to vast neighboring markets; its wealth of oil as a source and as a feedstock to a multitude of competitive industries; a democratic system that supports citizen engagement and accountability; the predominance of well educated youth with multiple skills and talents; strong macroeconomic conditions; a stable economy with transparent legal and regulatory framework; low political risk rating by credit agencies like Coface; an investor grade classification by major rating agencies like S&Ps; a multitude of lucrative investment opportunities under the current development plan, the PPP and privatization projects; and a thriving SME and start-up entrepreneurial sector. All this with the friendliness of its people, Kuwait has always been a welcoming place of choice.
Something that has the international community excited is that among all the turmoil the region has been suffering, Kuwait has actually established itself as a humanitarian beacon. What would be your opinion on the reason behind choosing that humanitarian role and how do you think that supports the economic feature of Kuwait?
Kuwait from its early days, and particularly after the discovery of rich oil resources, has adopted a neutral stance, extending its friendship and solidarity to sustain stability in the region. In this regard, Kuwait has foreseen itself as serving a humanitarian role in the region, then fostering that role within the developing countries and throughout the world.
Kuwait was the very first developing country to create a development fund, the Kuwait Fund, whereby it played an active role in the international development efforts through extending soft loans, grants and technical assistance to more than 100 developing countries and for a total value of around $20 billion, and subscribing in the capital of other international and regional development institutions.
HH the Emir of Kuwait has been announced by UN Secretary General Ban Ki-moon HH as a “global humanitarian leader,” and in parallel Kuwait was declared a “global humanitarian center”. This attribution comes in appreciation of this long history of supporting humanitarian work all over the world for combating poverty and hunger. Kuwait has exceeded the targeted share within the millennium development goals of the share of Official Development Assistance (ODA) to GDP set at 0.7%.
Kuwait has always been driven by an entrepreneurial spirit and HH the Amir has this vision in which he tries to diversify and promote private sector growth. How would you describe the results so far and the challenges for the government’s initiatives to diversify the economy?
Inspired by the vision of HH the Emir, the current efforts exerted by our government over the past few years represented a big step forward to support the diversification of the domestic economy, while maintaining close cooperation with the private sector and civil society at large. This was clearly enhanced by the passage of several economic laws that either amended decades-old laws, or created new ones that accommodate recent developments.
Our authority, KDIPA, was established under the new direct investment law No. 116 of 2013 and the national fund for SMEs under law No. 98 for 2013, as well as the newly established public authority for PPP projects under law 116 of 2014. Furthermore, the new commercial companies law No. 97 of 2013, the e-transaction law No 20 of 2014, among others, are all a manifestation of positive steps forward.
In addition, the second development plan (2015/2016-2019/2020) set targets to abide by for increasing the contribution of non-oil sectors from the current 41.5% to 64.0% by the end of plan.
The main challenge facing us is to address issues that adversely impact doing business in the country and better collaborate with various stakeholders, enhancing engagement, transparency, and shifting to smart government with optimal utilization of e-links and e-services.
How do you see the current initiatives contributing to the vision 2035 goal of establishing Kuwait as a financial center in the region? Do you see it as possible?
There are several initiatives taking place by various government-related entities to ensure that Kuwait will adequately assume its position as a leading financial center. The Kuwait Stock Exchange, which is the oldest in the region, will be privatized, and will witness an overhaul as well as deepening in the financial services offered to make it soon part of the emerging market status of MSCI.
The Capital Market Authority (CAM), after it amended its law, is embarking on taking the necessary steps to adopt international best practices in building a robust regulatory framework.
The Central Bank of Kuwait (CBK) has maintained a strong hold on our country’s monetary policy, supporting growth, curtailing inflation and maintaining a stable currency, which contributes to sustaining our financial stability even in the aftermath of the global financial crisis.
I would like to add that capital gains on trading in securities listed on the Kuwait Stock Exchange are exempt from taxes.
You have mentioned that it is important to make the youth part of this entire process. What do you think are the specific initiatives and the importance that the country gives to let the youth drive the future of Kuwait?
There are several initiatives across the country to support the youth, who comprise more than 60% of the population. We have established a state ministry to focus on supporting youth issues and initiatives. The Kuwait National Fund for SMEs Development, with a financial base of around $7 billion, is responsible for supporting the talented youth to launch their entrepreneurial initiatives. Several government entities including us at KDIPA, are resorting to attracting well-educated youth to hold positions of management and leadership to ensure we are advancing our country forward to a brighter future.
The short-lived Kuwait Foreign Investment Bureau was created a little over a decade ago and it was already upgraded to what we know today as KDIPA, showing a serious commitment to the promotion of investment and the strengthening of foreign business relations. What would you say are the main changes and initiatives that separate KDIPA from the KFIB?
To confirm what you have asked, yes several notable changes were brought forward by the issuance of the new investment Law No. 116 of 2013, which established KDIPA as a public authority mandated with the task of attracting both local and foreign direct investments, promoting Kuwait as an investment location, and streamlining business environment to enhance Kuwait competitiveness. KDIPA thus replaced KFIB, which was a division under the Ministry of Commerce & Industry established under previous FDI Law No. 8 of 2001.
Other welcomed changes were the shift from a positive list to a negative list approach identifying certain sectors to be excluded for investment; introducing a one-stop shop to facilitate licensing procedures and shorten their duration to a maximum 30 days; allowing for 100% foreign ownership for various legal forms, branches and representatives offices; utilizing a transparent system for granting various incentives; and extending the incentives coverage to PPP and privatization projects.
Kuwait went from a positive to a negative in the only context this can sound good: from “these are the only things you can invest in” to “these are the only things you cannot.” What is the reasoning behind the selective nature of those lists and how wide would you say Kuwait’s door is opening?
The reasoning behind this shift from a positive list approach under previous FDI Law, which included 14 sectors, to the negative list approach under the new law, which is limited to 10 activities, was intended to follow the international best practice in this regard. We also hoped to project a more friendly and welcoming investment environment, as well as to send an encouraging message to the international investors community.
How do you see the contributions of KDIPA for turning Kuwait not only into a financial center but actually into a bridge-builder between continents?
It is an expected outcome as KDIPA plays a promotional role that will be focusing on branding Kuwait as a financial and commercial center, drawing on our country’s traditional commercial strength, and benefiting from extensive relations networks in the global economy. Our strategic geographic position will largely facilitate this positioning and support creating the linkages with all the surrounding markets. We can have access to an extended market of more than 300 million people from the north, where Iraq and Turkey are, and go beyond, to the south, where Saudi Arabia and other GCC are, and across the Gulf to Iran and beyond.
Excitement is evident about the commitment Kuwait has shown by the international regulation changes such as the bilateral investment treaties, FTAs and IIAs. What is your opinion on establishing these partnerships and what role do they play on the economic planning of Kuwait?
To start with, Kuwait is a founding member of the WTO, and is a signatory of all the relevant multilateral agreements, under the WTO. We have also entered into more than 70 bilateral agreements with various countries, as well as several regional, and free trade agreements in our capacity as members of the GCC’s signing with the United States the Trade Investment Framework Agreement (TIFA) in 2012, and, signing with Singapore a free trade agreement in 2008.
Kuwait honors all these obligations and optimally utilizes these arrangements to strengthen its growth, and support its economic planning and development, while ensuring it is adopting the necessary legal and regulatory measures to be an active player in the world arena.
How important it is for KDIPA to attract business from the United States and what is KDIPA doing after the road show to keep Kuwait and its economy of opportunities fresh in their minds?
We consider the United States a very close partner and ally to Kuwait. Our countries have enjoyed strong bilateral relations in commerce, business, tourism, education, health and defense. This was further strengthened after the US support of the liberation of Kuwait.
What would be your advice for the chairperson who is reading your interview today about how to do successful business in Kuwait?
I will simply tell that chairperson or CEO that Kuwait welcomes you to take advantage of several lucrative opportunities for investing and doing business with 100% foreign ownership or by forging partnerships with Kuwaiti counterparts. We expect to attract efficiency, seeking FDI flowing into Kuwait to benefit from the technology transfer to our country, and support the job creation and training for our youth.
We at KDIPA are there to receive interested investors and extend needed services to facilitate licensing procedures to help them establish their businesses successfully in our country, with the hope of future growth and expansion.
I will conclude by asking them to join others who have successfully licensed their projects and obtained incentives and exemptions through KDIPA, reaching more than $1.2 billion since we launched our operation early in 2015.