By Nawara Fattahova
KUWAIT: The Union of Investment Companies (UIC) held the fifth Kuwait Investment Forum titled 'Investing in Kuwait, missed and available opportunities' at the Chamber of Commerce yesterday. The private sector's participation is essential for sustainable economic development. "This is part of Kuwait's economic vision. We aim to make Kuwait a financial center to attract investment. The ministry of commerce and its sub-institutions work hard to reach these goals through clear plans," Minister of Commerce and Industry Fahad Al-Shuraian said during the opening session.
"The ministry is systematically developing commercial laws and regulations to keep up with global changes such as electronic trading, restructuring, digitalizing and developing the corporate licensing system and automatic linkage with relevant third parties in issuing commercial licenses," he added.
Building industrial cities is important. "This will open the door for investing in Kuwait. This consists of different projects including industrial Shadadiya infrastructure, waste recycling in Shagaya and establishing the building of information and decision support centers for protection from disasters," Shuraian said.
The Capital Markets Authority (CMA) should update its laws. "CMA is currently working on completing the second part of the third phase of the development program of the capital markets system to provide new products and services. In addition, CMA is also developing its manpower through the capital markets academy," he said.
Regarding small enterprises, there are many future projects. "The investment platform is the most important one, and it will serve small enterprises to benefit from public utilities. Furthermore, we are planning to establish free trade zones and develop ports including the Shuwaikh Port and new locations in Mina Abdullah," concluded Shuraian.
Ease of doing business
UIC Vice Chairman Abdullah Al-Terkait spoke about the government's vision on small enterprises and project requirements. "The government announced it will support small enterprises as part of the New Kuwait 2035 vision to relieve the public budget and participate in financing the national budget. Around 85 to 90 percent of employees work in the public sector. This is due to the unattractive environment in the private sector," he said.
According to the latest statistics on small enterprises in Kuwait, their output is only three percent of the GDP, ie KD 1.2 billion out of KD 40 billion. Compared to the rate in the GCC region, it's very low. The contribution of small and medium enterprises to the country's GDP is above 50 percent in the UAE and around 22 percent in Saudi Arabia.
There are two institutions in Kuwait dealing with these businesses - Industrial Bank of Kuwait and the National Fund for Small and Medium Enterprise Development. "Local banks receive financial support from the Central Bank through deposits to these banks. The percentage of banks' financing to small and medium enterprises does not exceed five percent, while it ranks between 15 and 20 percent in developed countries. Banks should finance these businesses. The national fund is also not financing projects for two years due to a lack of liquidity. If the entrepreneur doesn't receive financial support from the fund, they will go to the banks, which will only finance up to five percent," Terkait said.
"Kuwait ranks 102 out of 190 countries in ease of doing business. In fact, Kuwait ranks last among GCC countries. UAE for instance ranks 26th, Oman 60th and so on. To solve this problem, the government should meet with these global organizations to figure out how we can improve this ranking. This is the problem behind the migration of Kuwaiti investments abroad. Eleven thousand Kuwaitis have businesses in the UAE. They left due to the difficulty of financing and the difficulty in dealing with public institutions," he said.
"Kuwait ranked the 173 out of 190 countries in launching a business. If the percentage of Kuwaiti employees is 85 in the public sector today, I expect it to reach above 90 if the situation remains the same and if we don't provide realistic solutions and facilitate cooperation between the private and public sectors. Working in the public sector is secured for Kuwaitis, so they don't want to take a risk to work in the private sector. We need to solve this problem," Terkait said.
Other problems. "Kuwait is late in the fintech. We need new legislation to support this sector. Also, the distribution of lands is another serious problem. There should be a special institution dealing with small and medium enterprises, instead of having entrepreneurs deal directly with the ministry of commerce and industry and other public institutions. All the plots that were distributed are still not fenced yet. The entrepreneurs are the main elements or pillars of any successful economy around the world, so we should support them," concluded Terkait.
Private sector
UIC Chairman Saleh Al-Selmi spoke about the vision of the private sector for economic reforms and stimulating the economy, explaining the national budget and spending in various sectors. He also mentioned the budgets for electricity and water, education, health, communications, public utilities and others.
Two sessions were held yesterday. The first was titled 'Solid Investment with Strong Vision'. This session included presentations on Kuwait's vision for the investment sector, rules and regulations for investing, private sector's vision for economic reforms and stimulating the economy. The second session was titled 'Small Enterprises Between the State's Vision and Reality'. This session included solutions and alternatives to overcome obstacles, laws regulating these businesses, government's vision for the demands of entrepreneurs and competition protection.