KUWAIT: Kuwait needs to streamline procedures and reduce bureaucracy to become a more attractive destination for foreign investors, according to Abdullah Al-Terkait, Chairman of the Union of Investment Companies. In an interview with KUNA, he emphasized that improving transparency and corporate governance is essential for building investor trust, making the investment environment more stable and appealing.
Terkait highlighted the union’s commitment to enhancing the legislative and regulatory framework for the sector to ensure flexibility and sustainability, which will strengthen the role of investment companies in the economy. He also stressed the importance of developing infrastructure, noting that modern facilities, efficient transportation, and strong digital connectivity are crucial for facilitating business operations. To boost Kuwait’s competitiveness, Terkait advocated for offering attractive investment incentives, such as tax exemptions and credit facilities, to encourage foreign companies to invest in the Kuwaiti market long-term.
Terkait believes that the private sector, with its expertise and flexibility, should play a larger role in decision-making through collaboration
with the government. He underscored that effective partnership between the public and private sectors is vital for the success of development projects. "While there has been fruitful cooperation in some areas, we need to strengthen this partnership to achieve national development goals,” he said. He called for creating an environment that fosters innovation and entrepreneurship through supportive policies, enabling entrepreneurs and companies to grow and thrive.
He identified innovation and entrepreneurship as essential pillars for a sustainable and diverse economy, advocating for a legislative and regulatory framework that allows the private sector to transform ideas into successful projects that bolster the national economy. Terkait linked economic development to support for small and medium-sized enterprises (SMEs), which are crucial for job creation and diversifying income sources. He emphasized the importance of providing necessary support, whether through financing or favorable legislation, to enable these enterprises to grow and contribute sustainably to the Kuwaiti economy.
Difficulty recruiting Kuwaitis
Efforts to attract Kuwaitis to the public sector face various obstacles, said Terkait, starting with the lack of suitable job opportunities that meet the aspirations of young job seekers. "Many graduates find that the available opportunities in the private sector do not align with their specializations or aspirations, requiring significant effort, causing them to hesitate to join the sector.” Many Kuwaiti graduates also don’t have the skills and competencies required for the private sector, citing "a gap between academic education and the requirements of the work environment.” The attractive salaries and social benefits offered by the government, such as retirement pensions, make government jobs more enticing compared to the private sector, which often struggles to offer competitive compensation packages. "These factors collectively pose a significant challenge to enhancing the presence of national labor in the private sector.”
Investment sector struggling
Terkait outlined several key issues facing the investment sector, including ongoing challenges and fluctuations in global and regional financial markets. He noted that changing economic and political conditions create an unstable environment, complicating companies’ efforts to establish stable investment strategies. Local firms also face stiff competition from foreign companies with greater resources and expertise, putting pressure on them to maintain market share. He highlighted a pressing challenge: the shortage of qualified Kuwaitis in the investment field, which limits companies’ ability to keep pace with global developments. Bureaucracy, characterized by lengthy and complicated procedures, further hampers companies, causing delays in decision-making and project execution.
Corporate Taxes
As Kuwait considers imposing taxes on private companies, Terkait stressed the union’s advisory role in this matter due to its potential impact on the investment environment. He said that taxes could have varied effects on attracting foreign capital, emphasizing the need for careful analysis to ensure that Kuwait remains an attractive investment hub. The union aims to provide recommendations based on detailed studies that balance enhancing state revenue through taxes while maintaining a favorable investment climate for both local and foreign companies.
"Any tax decision must consider its impact on Kuwait’s competitiveness,” he said, highlighting the importance of a clear and transparent tax framework to build confidence in the local market. Terkait asserted that while taxes can enhance local revenues, they should not impose undue burdens on investors. Striking a balance between revenue generation and foreign investment is crucial for sustainable economic development in Kuwait.
SME Fund
The union has also submitted recommendations to the National Fund for Small and Medium Enterprises Development to enhance its operations and competitive environment. These include creating venture capital funds and enabling the fund to invest in them, addressing the financing needs of startups and SMEs. Terkait suggested that the fund’s investments in these venture capital funds be limited to 25 percent, alongside providing appropriate legislation to make such investments more appealing to investors.
This initiative aims to direct capital toward SMEs through equal contributions from private and state investors. He reiterated that the initiative seeks to support national economic growth and prepare SMEs for potential listings in financial markets or mergers, ultimately contributing to a competitive ecosystem. While the proposal has garnered interest from relevant authorities, further research and analysis are needed to ensure its practical viability. — KUNA