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

YEMEN

by Ala Abdullah

Country Background

• Yemen lies at the southern end of the Arabian Peninsula and has frontiers with Saudi Arabia and Oman and controls the strategic straits at the Southern entrance to the Red Sea (Bab al Mendab).
• The north of the country has three well-defined areas: a coastal strip along the Red Sea, the highlands inland and a desert area to the east.
• The south consists largely of mountains and desert.
• The population is poor and largely rural, but there has been large-scale urbanization in the last decade and almost half of the population now lives in towns.

Main Challenges

• Major Trends and Outlook.
• Balance of Payments.
• Yemen’s infrastructure is inadequate for a country of more than 20.7 million people.

Major Opportunities

• Power Generation and Transmission – Yemen plans to add 2000 MW of power immediately and 10,000 MW in the distant future.
• Oil and gas machinery - opportunities through the Yemen LNG project
• EPC Contracts
• Pharmaceuticals - Yemen has over 2,000 pharmacies.
• Agricultural equipment - demand for irrigation and bee-keeping equipment
• Food processing and equipment - especially fish
• General Trading.

Doing Business in Yemen

• You have to make personal relationships with local representatives and customers whether by:
• Regular visits
• Establishing resident representation

Using an agent/distributor

• Rather than opening an office or subsidiary in Yemen, Indian companies may wish to appoint an agent or distributor to look after their interests.
• However, there is no requirement that a foreign seller
• Appoints a commercial agent, and they can sell direct.
• The appointment of a local partner/representative will only be the first step. Yemen is a market in
• Which family structures predominate in the business environment, and where personal relationships therefore are important.
• Regular visits to the market, especially during the early phase, are an important part of a successful
• Interaction with the agent / distributor.

Selling to the government

• Large government contracts may present opportunities
• Government purchases are made through a tendering system managed by the Supreme Tender Committee.
• Local agents can be a critically important factor in shepherding bids through the tender process.
• Tenders are announced in the local and foreign press.
• Tender conditions are based on standard international regulations used to evaluate tender offers.
• Price is usually the determining factor, although quality and nationality of the product also play a role.
• Efforts to reform and streamline the tendering system are ongoing.

Electronic commerce

• While Internet cafés are sprouting rapidly in most major cities in Yemen, the general population does not utilize the banking system needed to facilitate financial transactions over the Internet, such as checking account, credit card or debit card purchases.
• Only three percent of the population owns a checking account. Even fewer have a credit card.
• In February 2005, the International Bank of Yemen introduced Yemen’s first credit card.
• Cash transactions dominate most of the consumer market even for most durable goods purchases.
• In fact, the lack of a viable credit system stymies the durable
• Goods market so that any anticipated e-commerce growth must await technological and financial infrastructure advancements and acceptance.

Openness to foreign investment

• Yemen is an open economy that welcomes foreign direct investment in all sectors.
• Its stable political and economic environment, well-qualified workforce and strategic position in the south of the Arabian Peninsula make it an attractive place for investment.
• There are a number of investment opportunities that exist in Yemen, but one cannot begin to talk about them without highlighting first the role that Yemen has played in the ancient global economy.

Right to private ownership & establishment

Business customs

• Customs Duties are charged according to the value of the goods that are being imported.
• Import duties are generally levied at rates varying from 5% on essential goods to 25% on luxury items.
•  Medical and agricultural items are duty-free.
•  Tobacco is dutiable at 145%.
• The law offers the exemption from profit tax for 7 years.

Local time, business hours, & holidays

• Government Offices : 
• Saturday to Wednesday 
• Thursday and Friday is the weekly holiday

Public Holidays

• 10th January approx Eid Ul Adha (Feast of the Sacrifice) four days
• 31st January approx Islamic New Year (1st of Muharram)
• 10th April approx Moulid An Nabi (The Prophet’s Birthday)
• 1st May Labour Day
• 22nd May Unity Day
• 24th September approx Start of Ramadhan not a holiday
• 26th September Revolution Day
• 14th October National Day
• 23rd October approx Eid Ul Fitr (end of Ramadhan) five days
• 30th November Independence Day
• 31st December approx Eid Ul Adha (Feast of the Sacrifice) four days
• Banks are closed on Fridays

Fact Facts

Population	23,580,000
Capital	Sana’a city
Area	555,000 km2
Ethnic Groups	Arab 92.8% Somali 3.7% Black 1.1% Indo-Pakistani 1% Other 1.4%
Religions	Muslim 98.9% Hindu 0.7% Christian 0.2% Other 0.2%
Major Language	Arabic (official), English
Monetary Unit	1 U.S. dollars= 221.25 Yemeni riyal
Major Industries	Petroleum industry, natural gas, fishing,  agriculture, manufacturing
Major Export	Petroleum, textiles, hides and skins, and coffee
Major Imports	food, manufactured consumer goods, machinery, transportation equipment, and chemicals
GDP	US$ 25.131 billion
GDP per capita	US$ 1,061

References:

• http://www.abcc.org.uk/business_services/country_profiles.cfm?cit_id=1452&countryProfile=yes&FaArea1=customWidgets.countryprofile_show_2
• Arab Fund for Economic and Social Development Handbook, Ibp Usa, USA International Business Publications
• http://www.yemenembassy.org/economic/Investment.htm