Kuwait is witnessing unprecedented acceleration in implementing large-scale projects that would, when complete, constitute a qualitative leap for an economy that is the least diversified in the GCC. The projects are expected to create more than 200,000 jobs in the non-oil sector and contribute $35 billion (Dh128 billion) to the wider economy by attracting between $150 billion to $200 billion in investments.
This was announced last week by Shaikh Nasser Sabah Al Ahmad Al Sabah, First Deputy Prime Minister and Minister of Defence of the State of Kuwait, who leads the economic development and diversification efforts. At the Kuwait Investment Forum 2018, he focused on the mega islands project, pointing out that “the northern region will be global and of great importance due to linking the economy to the security and protection of the country”.
Many of these vital projects are already into implementation, such as the Mubarak Al Kabeer port and other petrochemical projects related to Al Zour refinery, the Shaikh Jaber Al Ahmad Bridge, the Shagaya Renewable Energy Complex ad the new Kuwait Airport. They cover sectors such as industry, tourism, entertainment, infrastructure and technology.
In fact, there are development opportunities available that will contribute effectively to diversifying national income sources and reduce dependence on oil. There are also some serious challenges that need to be addressed and overcome to ensure nothing can hamper such a sincere development approach so vital for the future. Interestingly, Kuwait has all the necessary capabilities to succeed in its new direction.
Funds are available in abundance, and Kuwait’s dynamic economy serves as a magnet for foreign capital, especially from emerging and fast-growing countries, including China and India. In addition, Kuwaiti is equipped with state-of-the-art infrastructure and enjoys market liquidity for non-government driven investments. Plus, the Kuwaiti workforce has considerable experience, especially in the areas of investment and asset management.
Of the challenges that must be surmounted to ensure this approach works out well, the first is the development of an investment-specific legislation, as capital will need to have an incubator environment, and laws and courts that guarantee rights as well as provide transparent and flexible legislation.
Furthermore, a separation of duties has to be made in the National Assembly, which sometimes exceeds its authority to intervene in the daily affairs of the business sector and contributing to the instability for investors.
It is important to segregate the duties of various authorities while giving all parties concerned with development greater powers to protect investors through legislation and special regulations.
The Chairman of the Kuwait Chamber of Commerce and Industry, Ali Al Ghanim, pointed out at the forum that “economic reform is timid and far from ambitious”, referring to the need for consensus between the authorities and that this consensus has not been achieved so far.
This indicates that the private sector, which has enormous financial capabilities, is still reluctant to contribute and is still seeking regulatory guarantees. It has to be highlighted that Kuwait’s development approaches are meant to achieve far-reaching objectives and prepare the economy for the post-oil era.
It is thus necessary to coordinate and consult with the private sector and involve it in all stages of the new development process. Government investments alone will not be able to realise the development programme that would lead to building a more diversified economy.
There has to be a global platform for the new projects so as to attract foreign capital with the right technology and marketing expertise. It is also necessary to put an end to all efforts and interventions by religious organisations who have thrown up roadblocks in the way of economic construction by spreading fabrications, which are not based on the tolerance values upheld by the true Islamic religion. Especially as these organisations have nothing to do with economic development.
As Kuwait’s success is for all, we hope to see a more diversified and prosperous economy a few years from now to cope with the post-oil period that is no longer far away.
Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.