Kuwait has sent a clear pro-business message to investors with new regulations on FDI promotion, which were passed into law in December. The law supersedes the previous FDI law of 2001 and establishes a new public authority, the Kuwait Direct Investment Promotion Authority (KDIPA), to oversee all matters relating to both domestic and foreign investment in Kuwait.
KDIPA will include an administrative unit that will act as a one-stop shop to facilitate and expedite the entire investment process. It will set out guidelines and advise potential investors on the process, as well as issue and renew approvals, permits and licences.
“Having a dedicated investment entity in the manner of a one-stop shop should, in theory, minimise the time lags and costs associated with burdensome bureaucracy and lack of clarity. These are frequently cited as disincentives for investment in Kuwait by foreign entities in the World Bank’s Doing Business reports, for instance,” said Omar Al-Nakib, senior analyst at the National Bank of Kuwait.
KDIPA will now be obliged to respond to an FDI licence application within 30 days. Previously, the same process could take up to eight months. The law also permits applicants to appeal following a rejected application.
Alok Chugh, head of tax for EY in Kuwait, said the government is keen to improve Kuwait’s ranking for ease of doing business and attracting direct investment.
“Foreigners can own up to 100% in companies operating in the 14 sectors of the economy unless otherwise stipulated by KDIPA in a negative list,” said Mr Al-Nakib. He added that Kuwait’s Council of Ministers had previously issued a positive list that left some room for uncertainty regarding possibilities in other sectors.
Greenfield investment monitor fDi Markets shows that a total of 147 FDI projects were recorded in Kuwait between January 2003 and December 2014. These projects represent a total capital investment of $1.97bn.
“Kuwait is not seeking FDI for the sake of capital per se, as Kuwait belongs to the high income per capita group of countries, but rather to maximise the objectives of the transfer and the settlement of modern technology, know-how, as well as the adoption of advanced administrative and marketing schemes,” said KDIPA director general Sheikh Dr Meshaal Jaber Al Ahmad Al Sabah.