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Kuwaiti parliament members have their job cut out
Kuwait's newly-elected parliament should address the economic issues facing the nation. These challenges include allowing foreign investments in the oil sector, strengthening of economic reforms and ensuring employment of Kuwaiti nationals in the private sector.
- By Dr Jasim Ali, Special to Gulf News
- Published: 00:07 May 18, 2008
Kuwait's newly-elected parliament should address the economic issues facing the nation. These challenges include allowing foreign investments in the oil sector, strengthening of economic reforms and ensuring employment of Kuwaiti nationals in the private sector.
Successive parliaments had failed to endorse Project Kuwait. The scheme aims at generating an additional 450,000 bpd from four fields located in the north and west of the country. The development requires an investment of $8 billion over a 20-year period.
The last parliament, dissolved in March, failed to approve the ambitious project. Conservative members managed to block the project citing a clause within the Kuwaiti constitution that bars foreign ownership of the country's hydrocarbon resources.
Undoubtedly, Kuwait deserves to enhance its oil production capacity by bringing it in line with the country's claimed reserves. By one account, Kuwait is estimated to have 10 per cent of proven oil reserves in the world.
However, Kuwait's sustainable production capacity is 2.7 million barrels per day, accounting for merely 3.4 per cent of global oil production.
The members of parliament cannot overlook the need for employing advanced technologies in lifting output and improving efficiency of the oil sector. Any failure in that will amount to loss of opportunities, especially with oil prices at historically high levels.
The second challenge is the speeding up of the privatisation programme. The plan includes selling of shares in banks, insurance companies and light industries that the government had purchased through the Kuwait Investment Authority following the collapse of the unofficial stock market in 1982 and the Iraqi invasion in 1990.
The authorities are also keen to privatise certain activities of Kuwait Petroleum Corp besides the buses operated by the Kuwait Public Transport Company.
Other sectors include postal services and ground communications stations as well as X-ray laboratories and security at public hospitals. The authorities had succeeded in privatising petrol stations, in turn described as the first real movement on the long path of privatisation.
The privatisation drive will also broaden sources of revenue, and subsequently reduce the reliance on oil. The petroleum sector contributed 92 per cent of total treasury income in fiscal 2007-08.
The members should help the authorities in finding ways to implement the ambitious privatisation programme. Eventually, reforms should help in bringing about efficiency in the Kuwaiti economy.
Yet another economic challenge facing Kuwait has to do with finding jobs for Kuwaitis outside the public sector.
Currently, a majority of Kuwaiti nationals work for the government, which places a burden on the budget. Wages and salaries comprise one-third of total state expenditures.
About 92 per cent of Kuwaiti nationals work in government departments and state-owned establishments. By the same token, migrant workers comprise more than 90 per cent of jobs in the private sector.
To be sure, there is a dilemma when it comes to changing the status quo. On one hand, more Kuwaiti nationals have to be convinced to seek employment in the private sector, where working conditions are not necessarily friendly compared to government departments.
On the other hand, enterprises are not necessarily enthusiastic about employing Kuwaitis. Many private sector firms prefer employing expatriates to have superior productivity.
On their part, the MPs would most likely press the authorities to help nationals in dealing with the consequences of inflationary pressures.
The writer is a Member of Parliament in Bahrain.
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