KUWAIT

by Ala Abdullah

Country Background

• Fifth largest oil reserves in the World, 8% of world’s total.
• wide fiscal and external current account surpluses.
• Substantial net foreign asset Position.
• Domestic political stability and Strong international relations.
• Strategic location in the Gulf and a gateway to the significant underdeveloped markets of Iraq and Iran.
• Modern infrastructure.
• Low country risk.
• Favorable tax regime.
• A sizable foreign direct investment potential.
• A growing banking sector although foreign entities can own only up to 49%.
• Excellent opportunities in oil upstream production and petrochemicals.
• A benign real estate industry with immense opportunities.

Main Challenges

The main challenge facing Kuwait now is producing heavy oil and the gas reserves needed for the energy sector in Kuwait. 

Major Opportunities

• Banking sector
• Oil production
• Oil refining capacities
• Vocational and educational training
• Health

Doing Business in Kuwait

• Establishing a company 
• Concluding a joint venture agreement 
• Appointing a Kuwaiti commercial agent 
• Appointing a commercial representative

using an agent/distributor

According to Kuwait’s Commercial Agencies Law of 1964, only Kuwaiti nationals and corporations may act as agents and distributors for foreign companies and exporters.

Establishing an office

As per the Kuwaiti Law, foreign individuals or entities may establish permanent presence in Kuwait through forming and investing in the following Kuwaiti companies:

• Limited Liability Company (WLL)
• Closed Joint Stock Company (KSC Closed)
• Joint Stock Company

Joint ventures/licensing

• Registration of Commercial agencies is required to be enforceable. 
• Kuwaiti law is the governing law in all public policy matters. 
• The principal may not terminate the agreement without proving violation of the contract by the agent. If contract violation is not proved, the principal should compensate the agent. 
• The principal may not decline to renew the agency agreement upon its expiration without paying the agent equitable compensation for the non-renewal, provided that the agent provides evidence that he is not at fault and that his activities successfully promoted the principal’s products. 
• The agent may file a suit against both the principal and the new agent appointed in Kuwait, if the principal colludes with another agent, and, for this reason, the agency contract is terminated.

Selling to the government

Foreign companies cannot sell directly to the Government nor participate in public tenders except through a local agent. In the oil sector, for instance, supplying companies should be approved by an internal committee and placed on a list of ‘pre-approved’ companies. For major projects, international companies are usually invited to pre-qualify.

Distribution & sales channels

Electronic commerce

• To continue leading the business- to -business online marketplace in the emerging world.
• To transform regional economies into internet-based trading environments.
• To create outstanding value for customers and increased returns for investors.
• To help customers get the most out of e-commerce.
• To empower our customers to do business with undreamed- of numbers of new clients.
• To become the leading e-commerce provider in emerging markets the world over.
• To introduce solutions spirit into emerging markets, enabling and encouraging trade within this new world.
• To lead the way as the focus in modern trade shifts towards the emerging world.
• To make borders a thing of the past by increasing transparency and fluidity between nations and companies.

Openness to foreign investment

Right to private ownership & establishment

Business customs

• Since Kuwaitis prefer to do business with those with whom they have a personal relationship, they spend a great deal of time on the getting-to-know-you process. 
• You must be patient since impatience is viewed as criticism of the culture. 
• Kuwaitis judge on appearances so dress and present you well.
• They respect education, so carefully mention if you have an advanced degree, especially if it is from a prestigious university.
• Try to schedule meetings in the morning when meeting with government officials, since they are restricted to a 6-hour day. 
• Many businessmen prefer to meet in the early evening. 
• Do not try to schedule meetings in July and August as many Kuwaitis leave the country during the worst of the summer heat. 
• Meetings may be interrupted if they interfere with prayer time’s.
• Meetings are generally not private unless there is a need to discuss matters confidentially.
• Expect frequent interruptions. Others may wander into the room and start a different discussion. You may join in, but do not try to bring the topic back to the original discussion until the new person leaves.
• Titles are important. Use the honorific "Mister" and any academic or political title and the first name. 
• Do not use only the first name until expressly invited to drop the titles. 
• The title "Sheikh" denotes that someone is a member of the royal family. It is also used for old men.

Local time, business hours, & holidays

• Muslim festivals are timed according to local sightings of various phases of the moon and the dates given above are approximations.
• During the lunar month of Ramadan that precedes Eid al-Fitr, Muslims fast during the day and feast at night and normal business patterns may be interrupted.
• Many restaurants are closed during the day and there may be restrictions on smoking and drinking.
• Some disruption may continue into Eid al-Fitr itself. Eid al-Fitr and Eid al-Adha may last anything from two to 10 days, depending on the region. (b) If a holiday falls on a Friday, a day is given in lieu.

Fact Facts

Population	3,566,437
Capital	Kuwait city
Area	17,820 km2
Ethnic Groups	33.9% Kuwaiti Arabs 45.9% Other Arabs 13.5% South and East Asian 1.9% Iranian 4.8% Europeans and Americans
Religions	Muslim (official) 85% Christian 6% Hindus 5% Sikhs 2% Buddhist 2%
Major Language	Arabic (official), English (widely spoken)
Monetary Unit	1 Kuwaiti dinar = 3.60815 U.S. dollars
Major Industries	Oil refineries, small manufacturers, large water desalination, ammonia, desulphurization, fertilizer, brick, block, and cement plants.
Major Export	oil, natural gas, Petrochemicals
Major Imports	most products, including most food and manufactured goods.
GDP	US$136.495 billion
GDP per capita	US$ 37,848

References:

• http://www.kwintessential.co.uk/resources/global-etiquette/kuwait-country-profile.html
• Kuwait Investment and Business Guide, Ibp Usa, USA International Business Publications
• Kuwait Land Ownership and Agriculture Laws Handbook, Ibp Usa, USA Int'l Business Publications
• Kuwait Starting Business (Incorporating) In....Guide, Ibp Usa, USA International Business Publications