Diversification gains momentum

Dubai: Kuwait may have been slower than its Gulf neighbours in initiating and implementing policies and plans to diversify its economy away from oil, but this process is now gathering momentum as surpluses increase.

The government has announced a four-year investment plan that envisages the spending of 30 billion dinars ($107 billion) on the oil as well as non-oil sectors.

According to the Economist Intelligence Unit (EIU), Kuwait's business environment is expected to improve in the four financial years to March 2014 compared with the four years previous to it.

"There will be a more concerted drive to encourage foreign investment through the implementation of the new privatisation law and moves to initiate independent water and power projects [IWPPs]," EIU analysts said.

"The ambitious 2010-14 development plan involves upgrading the infrastructure and, although there are likely to be the usual bureaucratic delays, we expect greater progress on these projects in the forecast period than in the recent past."

A statement by Shaikh Ahmad Al Fahad Al Ahmad Al Sabah, Deputy Prime Minister for Economic Affairs, and Minister of State for Development Affairs and Minister of State for Housing Affairs, said government contracts worth more than 2 billion dinars were issued last year to develop various economic sectors.

The government also gave Kuwaiti banks the green light to finance the 30 billion dinar four-year development plan, backing them up with guarantees.

"These projects are part of the country's quest for transformation into a leading international financial, commercial and services hub," Shaikh Ahmad said.

"The development projects focus on improving the infrastructure and the public utilities nationwide, particularly the land, sea and airports this year and the coming year," the minister said.

Contracts already signed include the first stage of Kuwait Cargo City at Kuwait International Airport and an upgrade of Boubyan Harbour. A third 4.6 km runway at the airport able to accommodate giant aircraft is on the cards, and a project to develop the Al Abdali border crossing will be put up for tender before March.

By the end of April, more than 11 new hospitals will be built and 105 schools upgraded.