Business | Property
Al Argan to stop investing in Kuwait
Al Argan International Real Estate, the Kuwaiti developer whose shares rose 70 per cent this year, said it will stop investing in its home country because political paralysis and soaring land prices make it unprofitable.
- Bloomberg
- Published: 00:43 May 9, 2008
Kuwait City: Al Argan International Real Estate, the Kuwaiti developer whose shares rose 70 per cent this year, said it will stop investing in its home country because political paralysis and soaring land prices make it unprofitable.
"We are reducing our exposure in Kuwait to zero,'' Chairman Khalid Al Mashaan said. The inflated price of state-controlled land and government unwillingness to support private enterprise mean "it's not a place where one can make a feasible development,'' he said.
Al Argan, whose shares started trading on Kuwait's bourse last year, in February said full-year profit jumped 65 per cent to $34 million on its residential and hotel projects in Kuwait. It won't start any more ventures at home as it has "more profitable'' developments under way in countries including Bahrain, Oman, Egypt and Saudi Arabia.
Kuwait, the fourth-largest producer in the Organisation of Petroleum Exporting Countries, will hold parliamentary elections this month after the cabinet resigned en masse in March.
Parliament has been dissolved twice in the past two years, and four cabinets have resigned since February 2006, delaying projects vital to Kuwait's goal of almost doubling oil output by 2020 and attracting investment to diversify the economy.
Restrictive labour regulations, limited access to land and excessive bureaucracy are inhibiting investment, National Bank of Kuwait said in a February report. Kuwait in December cut taxes on foreign companies to 15 per cent from as high as 55 per cent, revising a law virtually unchanged since 1953.
Inflation accelerated to a record 9.5 per cent in January as housing costs rose by an annual 16 per cent, even after Kuwait broke its currency peg to the dollar. The state owns more than 90 per cent of land, and has said about 85 per cent of its citizens have government jobs.
"Most of the governments in the Gulf look at the private sector as a partner,'' Al Mashaan said. "Here in Kuwait they look at it as a competitor.''
Zain, Kuwait's biggest mobile phone company, in September said it will set up an international headquarters in neighbouring Bahrain during 2008 as it seeks a tax-efficient and convenient place from which to expand overseas. Kuwait has "not evolved its modus operandi'' CEO Sa'ad Al Barrak said.
Agility, the Middle East's biggest storage and logistics company, may move its headquarters out of Kuwait because of "turtle-speed'' bureaucracy, the state-run Kuwait News Agency reported in August.
Last month, the Al Watan newspaper said Al Tamdeen Real Estate may join the exodus, citing chairman Mohammad Al Marzouk.
Al Argan rose 1.6 per cent to 0.620 dinar ($2.32) at 10.57am in Kuwait City yesterday, giving the company a market value of 164 million dinars.
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