Policies Towards Foreign Direct Investment

The Government of Bahrain (GOB) has a liberal approach to foreign investment and actively seeks to attract foreign investors and businesses.  Increasing foreign direct investment (FDI) is one of the government’s top priorities. The GOB permits 100 percent foreign ownership of a business or branch office, without the need for a local partner.  The GOB does not tax corporate income, personal income, wealth, capital gains, withholding, or death/inheritance. There are no restrictions on repatriation of capital, profits or dividends, aside from income generated by companies in the oil and gas sector, where profits are taxable at the rate of 46 percent.  The Bahrain Economic Development Board (EDB), charged with promoting FDI in Bahrain, places particular emphasis on attracting FDI to the manufacturing, logistics, information and communications technology (ICT), financial services and tourism and leisure sectors. As a reflection of the Kingdom’s openness to FDI, the EDB won the 2018 United Nations Investment Promotion Award for its role in attracting large-scale investments.

To date, U.S. investors have not alleged any legal or practical discrimination against them based on nationality.

Limits on Foreign Control and Right to Private Ownership and Establishment

The GOB permits foreign and domestic private entities to establish and own business enterprises and engage in all forms of remunerative activity.  The GOB imposes only minimal limits on foreign control, and the right of ownership and establishment of a business. The Ministry of Industry, Commerce and Tourism (MoICT) maintains a small list of business activities that are restricted to Bahraini ownership, including press and publications, Islamic pilgrimage, clearance offices, and workforce agencies.  The U.S.-Bahrain Free Trade Agreement outlines all activities in which the two countries restrict foreign ownership.

U.S. citizens may own and operate companies in Bahrain, though many choose to integrate influential local partners into the ownership structure to facilitate quicker resolution of bureaucratic issues such as labor permits, issuance of foreign visas, and access to industrial zones.  The most common challenges faced by U.S firms are related to bureaucratic government processes, lack of market information, and customs clearance.

Other Investment Policy Reviews

The World Trade Organization (WTO) has conducted a formal Trade Policy Review of Bahrain every seven years.  Its last formal review was in 2014 (see link below).

https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S006.aspx?Query=(@Symbol= percent20wt/tpr/g/*) percent20and percent20(( percent20@Title= percent20bahrain percent20) percent20or percent20(@CountryConcerned= percent20bahrain))&Language=ENGLISH&Context=FomerScriptedSearch&languageUIChanged=true#  

Business Facilitation

The Central Bank of Bahrain’s regulatory sandbox allows local and international FinTech firms and digitally focused financial institutions to test innovative solutions in a regulated environment, allowing successful firms to obtain licensing upon successful product application.

The Ministry of Industry, Commerce and Tourism (MoICT) operates an online commercial registration portal, “Sijilat” (www.sijilat.bh  ) to facilitate the commercial registration process.  Through Sijilat, investors can obtain a business license and requisite approvals from relevant ministries.  The registration process normally takes two to three weeks, but can take longer if a business requires specialized approvals.  In practice, some business people retain an attorney or clearing agent to assist them through the commercial registration process.

In addition to obtaining primary approval to register a company, most business owners must also obtain licenses from the following entities to operate their businesses:

• MoICT
• Ministry of Electricity and Water
• The Municipality in which their business will be located
• Labour Market Regulatory Authority
• General Organization for Social Insurance

The GOB provides industrial lands at reduced rental rates for short periods of time to incentivize foreign investment in Bahrain’s targeted investment zones.

Outward Investment

The Government of Bahrain (GOB) neither promotes nor incentivizes outward investment.  The GOB does not restrict domestic investors from investing abroad.

Policies Towards Foreign Direct Investment

Kuwait reintroduced its national development plan in 2018 as NewKuwait.  Key economic objectives in the plan include creating a business environment that will stimulate private sector growth and attract foreign investors.  The Foreign Direct Investment Law of 2013 allows up to 100 percent foreign ownership in certain industries, including: infrastructure (water, power, wastewater treatment, and communications); insurance; information technology and software development; hospitals and pharmaceuticals; air, land, and sea freight; tourism, hotels, and entertainment; housing projects and urban development; and investment management.  The law also established KDIPA (http://kdipa.gov.kw/en  ) to solicit investment proposals, evaluate their potential, and assist foreign investors in the licensing process.  The government believes that providing greater access to the Kuwaiti market will encourage foreign companies to invest in the private sector elements of the Northern Gateway/Five Islands and other projects that constitute the NewKuwait development plan.

In 2015, KDIPA delivered its first investment license to IBM, allowing the company to establish a 100 percent foreign-owned company in Kuwait and to benefit from the incentives and exemptions granted under the new law.  Since then, KDIPA has granted foreign ownership licenses to 28 additional foreign firms, including U.S. companies GE, Berkeley Research Group, Malka Communications, Maltbie, and McKinsey & Company.

U.S. companies operate successfully in the country.  American engineering firms such as Fluor have participated in large infrastructure development projects, including the USD 16 billion Al-Zour Refinery and Clean Fuels Project.  Dow Chemical Company participates in several joint ventures in the petrochemical industry. General Electric is a major vendor to power generation and desalination facilities. Citibank operates a branch in Kuwait City.  Numerous franchises of U.S. restaurants and retail chains operate successfully.

Limits on Foreign Control and Right to Private Ownership and Establishment

The Companies Law No. 1 of 2016 simplified the process for registering new companies and has helped to reduce wait-times associated with starting a new business.  This law maintained the requirement that a Kuwaiti or GCC national own at least 51 percent of a local company. If non-GCC investors qualify to invest through the Kuwait Direct Investment Promotion Authority , this requirement may be waived.  In 2017, the law was amended to eliminate prohibitive requirements placed on limited liability companies.

Council of Ministers Decision No. 75 of 2015 directs KDIPA to exclude foreign firms from sensitive sectors.  Sensitive sectors include: extraction of crude petroleum, extraction of natural gas, manufacture of coke oven products, manufacture of fertilizers and nitrogen compounds, manufacture of gas, distribution of gaseous fuels through mains, real estate, security and investigation activities, public administration, defense, compulsory social security, membership organizations, and recruitment of labor.

Other Investment Policy Reviews

In the past three years, no investment policy reviews on Kuwait were conducted by the Organization of Economically Developed Countries, the World Trade Organization (WTO), or the United Nations Conference on Trade and Development.

Business Facilitation

Kuwait’s ranking in the World Bank’s Doing Business Index improved to 133 (from 149) out of 190 for Starting a Business in 2019.  The World Bank’s Doing Business project lists the steps required to start a business in Kuwait in the following link: (http://www.doingbusiness.org/data/exploreeconomies/kuwait/starting-a-business  ).

Its time-to-complete estimates may be optimistic, as anecdotal reports indicate that starting a new business in Kuwait can take up to a year.  The government has been working with the World Bank to resolve doing business issues in Kuwait.

In 2016, the Ministry of Commerce and Industry (MOCI) inaugurated the Kuwait Business Center (KBC) (visit website: http://www.kbc.gov.kw  ) to facilitate the issuance of commercial licenses and to start limited liability and single owner companies within 3-5 working days.  However, the business center has encountered challenges in coordinating interagency cooperation. The government outlines steps for starting a business in the following website: https://www.e.gov.kw/sites/kgoenglish/Pages/Business/InfoSubPages/StartingABusiness.aspx  .

KDIPA also established a unit to streamline registration and licensing procedures for qualifying foreign investors.  Its goal is to approve licenses within 30 days of the completed application.

The April 2013 Law No. 98 established the National Fund for the Support and Development of small- and medium-sized enterprises, which it defines as enterprises that employ up to 50 Kuwaitis and require less than Kuwaiti Dinars (KD) 500,000 in financing.  Financing is limited to enterprises established by Kuwaiti citizens. During FY 2017/18, the National Fund approved 350 project applications, including applications for 137 industrial projects.

Outward Investment

The government neither promotes nor restricts outward private investment.  The largest, single outward investor is the country’s Future Generations sovereign wealth fund, managed by the Kuwait Investment Authority (KIA).  By law, however, KIA may not disclose the total amount of its investments. In 2018, the Sovereign Wealth Fund Institute estimated that KIA managed USD 592 billion in assets, which would make it the fourth largest sovereign wealth fund in the world.  Kuwaiti officials have indicated that KIA has invested more than USD 300 billion in the United States across a wide portfolio. The press has reported that KIA holds a significant interest in the New York City Hudson Yards project, one of the largest private redevelopment projects in U.S. history.  Another large Kuwaiti investment involves MEGlobal, a subsidiary of Equate, which is a partnership between Kuwait’s Petrochemicals Industries Company and Dow Chemical Company. MEGlobal is building a billion-dollar monoethylene glycol production facility in Texas, which is scheduled to be completed by the end of 2019.  Individual Kuwaitis have found investments in U.S. securities and real estate attractive.

Policies Towards Foreign Direct Investment

In pursuit of its National Vision 2030, the government of Qatar has enacted reforms to incentivize foreign investment in the economy.  As Qatar finalizes major infrastructure developments in preparation for hosting the 2022 FIFA World Cup, the government has allocated USD 13.2 billion for new, non-oil sector projects in its FY2019 budget.  The government also plans to increase LNG production by 43 percent by 2024. Significant investment in the upstream and downstream sectors is expected. In February 2019, national oil company Qatar Petroleum announced a localization initiative, Tawteen, which will provide incentives to local and foreign investors willing to establish domestic manufacturing facilities for approximately 100 oil and gas sector inputs.  These economic spending plans create significant opportunities for foreign investors.

In 2019, the government enacted a new foreign investment law (Law 1/2019) to ease restrictions on foreign investment.  The law permits full foreign ownership of businesses in most sectors with full repatriation of profits, protection from expropriation, and several other benefits.  Excepted sectors include banking, insurance, and commercial agencies, where foreign capital investment remains limited at 49 percent, barring special dispensation from the Cabinet.  Qatar’s primary foreign investment promotion and evaluation body is the Invest in Qatar Center within the Ministry of Commerce and Industry. The government is currently in the process of publishing regulations for the implementation of the new law; pending these new regulations, the old law still applies (Law 13/2000).  Qatar is also home to the Qatar Financial Centre, Qatar Science and Technology Park, and the Qatar Free Zones, all of which offer full foreign ownership and repatriation of profits, tax incentives, and investment funds for small- and medium-sized enterprises.

In accordance with Law 24/2015, which was enacted to increase transparency of available investment opportunities, the Qatari government streamlined its procurement processes and the Ministry of Finance launched an online procurement portal to consolidate information on government tenders.  The procurement portal can be accessed via this link: https://monaqasat.mof.gov.qa  

When competing for government contracts, preferential treatment is given to suppliers who use local content in their bids.  To further boost local production amid an economic and political rift with neighboring Gulf countries, the government announced in October 2017 that it will favor bids that use Qatari products that meet necessary specifications and obey tender rules.  Participation in tenders with a value of Qatari riyal (QAR) 5 million or less (USD 1.37 million) is confined to local contractors, suppliers, and merchants registered by the Qatar Chamber of Commerce and Industry. Higher-value tenders sometimes do not require any local commercial registration to participate, but in practice certain exceptions exist. 

Qatar maintains ongoing dialogue with the United States through both official and private sector tracks, including through the annual U.S.-Qatar Strategic Dialogue and official trade missions undertaken in cooperation with both nations’ chambers of commerce.  Qatari officials have repeatedly emphasized their desire to increase both American investments in Qatar and Qatari investments in the United States. 

Limits on Foreign Control and Right to Private Ownership and Establishment

The government has recently reformed its foreign investment legal framework.  As noted above, full foreign ownership is now permitted in all sectors with the exception of banking, insurance and commercial agencies.  Law 1/2019 on Regulating the Investment of Non-Qatari Capital in Economic Activity (replacing Law 13/2000) stipulates that foreigners can invest in Qatar either through partnership with a Qatari investor owning 51 percent or more of the enterprise, or by applying to the Ministry of Commerce and Industry for up to 100 percent foreign ownership.  The Invest in Qatar Center within the Ministry of Commerce and Industry is the entity responsible for vetting full foreign ownership applications. The law includes provisions on the protection of foreign investment from expropriation, the exemption of some foreign investment projects from income tax and customs duties, and the right to transfer profits and ownership without delay.

Another recent foreign investment reform is Law 16/2018 on Regulating Non-Qatari Ownership and Use of Properties, which allows foreign individuals, companies, and real estate developers freehold ownership of real estate in 10 designated zones and ‎usufructuary rights up to 99 years in 16 other zones.  Foreigners may also own villas within residential complexes, as well as retail outlets in certain commercial complexes. Foreign real estate investors and owners will be granted residency in Qatar for as long as they own their property. The Committee on Non-Qatari Ownership and Use of Real Estate, formed in December 2018 under the Ministry of Justice, is the regulator of non-Qatari real estate ownership and use. 

There are also other FDI incentives in the country provided by the Qatar Financial Centre, the Qatar Free Zones, and the Qatar Science and Technology Park.  A draft Public-Private Partnership law to facilitate direct foreign investment in national infrastructure development (currently focused on schools, hospitals, and drainage networks) was approved by the Cabinet on April 4, 2019, and is currently pending the Amir’s final review. 

U.S. investors and companies are not any more disadvantaged by ownership or control mechanisms, sector restrictions, or investment screening mechanisms relative to other foreign investors. 

For more information on FDI in Qatar, visit:

• Ministry of Commerce and Industry’s Invest in Qatar Center:  https://invest.gov.qa    
• Qatar Financial Centre:  http://www.qfc.qa/  
• Qatar Free Zones Authority:  https://fza.gov.qa/   
• Qatar Science and Technology Park:  https://qstp.org.qa/  
• Qatar Petroleum Tawteen Program:  https://www.tawteen.com.qa/  

Other Investment Policy Reviews

Qatar underwent a World Trade Organization (WTO) policy review in April 2014.  The review may be viewed on the WTO website: https://www.wto.org/english/tratop_e/tpr_e/tp396_e.htm  

Business Facilitation

Recent reforms have further streamlined the commercial registration process.  Local and foreign investors may apply for a commercial license through the Ministry of Commerce and Industry’s physical “one-stop-shop” or online through the Invest in Qatar Center’s portal.  Per Law 1/2019, upon submission of a complete application, the Ministry will issue its decision within 15 days. Rejected application can be resubmitted or appealed. For more information on the application and required documentation, visit:  https://invest.gov.qa    

The World Bank’s 2019 Doing Business Report estimates that registering a small-size limited liability company in Qatar takes seven to eight days. For detailed information on business registration procedures, as evaluated by the World Bank, visit:   http://www.doingbusiness.org/data/exploreeconomies/qatar/  

Outward Investment

Qatar does not restrict domestic investors from investing abroad.  According to the latest foreign investment survey from the Planning and Statistics Authority, Qatar’s outward foreign investment stock reached USD 105.8 billion in the third quarter of 2018.  In 2017, sectors that accounted for most of Qatar’s outward FDI were finance and insurance (40 percent of total), transportation, storage, information and communication (33 percent), and mining and quarrying (18 percent).  As of 2017, Qatari investment firms held investments in about 80 countries; the top destinations were the European Union (34 percent of total), the Gulf Cooperation Council (GCC, 24 percent), and other Arab countries (14 percent).