An official website of the United States Government Here's how you know

Official websites use .gov

A .gov website belongs to an official government organization in the United States.

Secure .gov websites use HTTPS

A lock ( ) or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.

Executive Summary

Kuwait continued to encourage foreign direct investment (FDI) with the implementation of Law No.116 of 2013 Regarding the Promotion of Direct Investment in the State of Kuwait (hereafter referred to as the FDI Law). With the decline in oil revenue and the need to diversify its economy, the government seeks increased foreign investments. The FDI Law established the Kuwait Direct Investment Promotion Authority (KDIPA) to solicit investment proposals, evaluate their potential, and assist in the licensing processes. In reviewing licensing requests, KDIPA places emphasis on creating jobs and training/education opportunities for Kuwaitis, technology transfer, diversification of national income sources, increasing exports, support for local SMEs, and utilization of Kuwaiti products and services. While the FDI Law allows 100% foreign ownership in several industries, KDIPA excludes foreign firms from investment in national security and state-owned sectors. Opportunities may increase as KDIPA takes over the existing free-trade zone at Shuwaikh and creates two new zones at Al-Abdali and Al-Nuwaiseeb.

KDIPA has granted foreign ownership licenses to 14 foreign firms, including U.S. companies IBM, GE, Berkeley Research Group, Malka Communications, and Maltbie. The FDI law’s incentives include tax benefits, customs duties relief, land and real estate allocations, and permission to recruit required foreign labor.

The government has been working with the World Bank to improve different aspects of business registration and operations. Nevertheless, challenges to foreign businesses operating in the country remain. Kuwait ranked 102 out of 190 in “Ease of Doing Business,” and lowest in the Gulf Cooperation Council (GCC), in the World Bank’s Doing Business 2017 report.

Despite the challenges, several U.S. companies have won lucrative contracts and operate successfully in the country. American engineering firms such as Fluor figure largely in the execution of infrastructure development projects, including the USD 16 billion Al-Zour Refinery Project. General Electric is a major vendor to power generation and desalination facilities. Citibank has a branch in Kuwait City, and numerous franchises of U.S. retail chains operate successfully. Dow Chemical Company participates in several joint ventures.

During recent years, the government has taken several measures to address human trafficking and to improve protections for domestic workers. However, the labor law is not consistently enforced and disputes over the payment of salaries and contract switching are common, especially among unskilled workers.

The Intellectual Property Rights (IPR) enforcement regime has notably improved in the past year with raids and seizures and a specialized IPR unit to combat counterfeit goods. However, the lack of coordination among various authorities with responsibilities for combating the importation of counterfeit goods remains an issue.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2016 75 of 175 http://www.transparency.org/news/feature/
corruption_perceptions_index_2016
World Bank’s Doing Business Report “Ease of Doing Business” 2017 102 of 190 www.doingbusiness.org/rankings
Global Innovation Index 2016 67 of 128 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, stock positions) 2015 USD
293
http://www.bea.gov/international/factsheet/
World Bank GNI per capita 2015 USD
42,150
http://data.worldbank.org/indicator/NY.GNP.PCAP.CD ?locations=KW

Policies Towards Foreign Direct Investment

Kuwait continued to encourage foreign direct investment with the implementation of the FDI Law. With the decline in oil revenue and the need to diversify its economy, the government seeks increased foreign investments and has taken a number of steps towards achieving this goal. The FDI Law established KDIPA (http://kdipa.gov.kw/en ) to solicit investment proposals, evaluate their potential, and assist in the licensing process. The FDI Law allows 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.

Limits on Foreign Control and Right to Private Ownership and Establishment

The Council of Ministers Decision No. 75 of 2015 directed KDIPA to exclude foreign firms from investment in the following sectors: 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 (excluding privately operated building development projects), security and investigation activities, public administration and defense, compulsory social security, activities of membership organizations, and labor hiring activities including domestic labor.

The Companies Law No. 1 of 2016 simplified the process for registering new companies and reduced wait-times associated with starting a new business. This law maintained the requirement that a Kuwaiti national own at least 51 percent of all local companies, unless foreign investors apply through KDIPA.

KDIPA screens and licenses proposed branches and representative offices of foreign companies. The process requires the submission of legal and financial documents by the applying company’s head office, as well as a certification of its commitment to fulfill obligations by the branch or representative office in Kuwait. In reviewing requests for licensing, KDIPA places emphasis on creating jobs and training/education opportunities for Kuwaitis, technology transfer, diversification of national income sources, increasing Kuwaiti exports, support for local SMEs, and utilization of Kuwaiti products and services.

Other Investment Policy Reviews

In the past three years, there have been no third-party investment policy reviews.

Business Facilitation

The government has been working with the World Bank to improve different aspects of business registration and operations. The World Bank’s Doing Business project lists the steps required to start a business (http://www.doingbusiness.org/data/exploreeconomies/kuwait/starting-a-business ). Its “time-to-complete” estimates are optimistic, as starting a new business can take up to a year. Kuwait dropped to 173 from 149 in “Starting a Business.” A Kuwaiti government site provides information about starting a business: https://www.e.gov.kw/sites/kgoenglish/Pages/Business/InfoSubPages/Starting
ABusiness.aspx
 
.

In September 2016, the Ministry of Commerce and Industry (MOCI) inaugurated the Kuwait Business Center (KBC): http://www.kbc.gov.kw  to facilitate the issuance of commercial licenses needed to start limited liability and single owner companies (entrepreneur) within 3-5 working days. However, the new center has faced challenges attributed to the lack of coordination between the competent authorities.

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

Unlike definitions of small and medium enterprises (SME) based on the number of people, the Kuwait Small Projects Development Company (KSPDC), a state-financed fund established in 1997 to promote SME development, considers projects with capital up to KD 150,000 (USD 492,000) as small, and less than KD 500,000 (USD 1.64 million) as medium-sized. (NOTE: the exchange rate applied throughout this report is KD 1.00=USD 3.28, as of March 2017.) The April 2013 Law No. 98 established the National Fund for the Support and Development of SMEs (enterprises that employ up to 50 Kuwaitis and require less than KD 500,000 in financing). The financing is limited to enterprises set up by Kuwaiti citizens. In December 2016, the National Fund announced the financing of 115 projects that generated KD 11.81 million (USD 38.7 million) in revenue and created 280 job opportunities for Kuwaitis.

Despite the challenges, several U.S. companies have won lucrative contracts and operate successfully in the country. American engineering firms such as Fluor figure largely in the execution of infrastructure development projects, including the USD 16 billion Al-Zour Refinery Project. General Electric is a major vendor to power generation and desalination facilities. Citibank has a branch, and numerous franchises of U.S. retail chains operate successfully. Dow Chemical Company participates in several joint ventures. In 2016, Hill International won a USD 13 million contract to supervise construction of two new hospitals and Kuwait Petroleum Corporation awarded a USD 36 million five-year contract to GP Strategies.

Outward Investment

The government neither promotes nor restricts private outward investment. The government participates in outward investment primarily through the Kuwait Investment Authority (KIA). Construction continues on Equate MEGlobal’s new world-scale monoethylene glycol manufacturing facility in Texas worth over USD one billion.

Kuwait has signed bilateral investment treaties with 77 partners (51 in force) and 13 treaties with investment provisions (seven in force). Details of these investment treaties can be found on the UNCTAD website .

Kuwait signed a Trade and Investment Framework Agreement (TIFA) with the United States in 2004 that has not entered into force. The last bilateral TIFA Council meeting took place in 2008.

In October 2012, the United States signed a TIFA with the GCC; the Kuwait National Assembly ratified it in April 2014.

Kuwait and the United States signed a bilateral agreement on investment guarantees in
April 1989 that entered into force in October 1989.

Kuwait does not have a bilateral taxation treaty with the United States. In April 2015, Kuwait and the United States signed an intergovernmental Foreign Account Tax Compliance Act (FATCA) agreement.

Transparency of the Regulatory System

While Kuwait’s open economy has generally promoted a competitive market, Kuwait has not developed effective antitrust laws to foster competition. When government intervention occurs, it is most frequently to the benefit of Kuwaiti citizens and Kuwaiti-owned firms. Nonetheless, U.S. investors have not alleged discrimination. The State Audit Bureau reviews government contracts and accounting, but does not share the results transparently. Kuwait does not have a centralized online location where key regulatory actions are published similar to the Federal Register in the United States.

Kuwait does not participate in the Extractive Industries Transparency Initiative (EITI); neither does it have any domestic transparency measures requiring the disclosure of payments made to governments for projects related to the commercial development of oil, natural gas, or minerals.

International Regulatory Considerations

Kuwait has been part of the GCC since its formation in 1981. The GCC common market began in January 2008. The customs union became operational in 2015. National norms still predominate. American standards and internationally recognized standards are typically used.

Legal System and Judicial Independence

Kuwait has a developed civil legal system, based in Egyptian and French law, that is influenced by Islamic law. As a traditional trading nation, the judiciary is familiar with international commercial laws. Kuwait has been a member of the General Agreement on Tariffs and Trade (GATT) since 1963 and joined the WTO in January 1995; it is not a signatory to the WTO Government Procurement Code. There are specialized courts, including a commercial court to adjudicate commercial law.

Kuwaitis and non-Kuwaitis, including U.S. citizens, who have been charged with criminal offenses, placed under investigation, or are involved in unresolved financial disputes with local business partners, can be subject to travel bans. These bans are rigidly enforced and prevent the individual from leaving Kuwait until the matter is resolved. Travel bans can be initiated by requests for legal action and may remain in place for a substantial period while the case is being investigated.

To protect their interests, U.S. firms are advised to consult with a Kuwaiti or locally based foreign law firm when executing contracts with local parties. Contracts between local and foreign parties serve as the basis for resolving any future commercial disputes. The process of resolving disputes in the Kuwaiti legal system can take years depending on complexity and the parties involved.

Laws and Regulations on Foreign Direct Investment

The 2013 FDI Law replaced the 2001 Direct Investment Promotion Law, as part of the Kuwait Development Plan (KDP). Spanning 2009 to 2035, the KDP aims to reduce oil dependence by transforming the economy into a diversified commercial and financial hub. The KDP comprises five separate five-year plans; the current plan provides USD 116 billion for a broad range of projects, including 45,000 new housing units, metro and railway systems, and a new refinery. In the KDP, Kuwait is seeking to propel the private sector’s share of the economy to 41.9 percent, from its current level of 26.4 percent.

In April 2015, IBM received KDIPA’s first investment license, 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 IBM, KDIPA has granted foreign ownership licenses to 13 additional foreign firms, including U.S. companies GE, Berkeley Research Group, Malka Communications, and Maltbie.

Other recent legal measures to facilitate FDI and economic growth include Law No. 116 of 2014 regarding public-private partnerships (PPP), and a new Companies Law No. 1 of 2016. The PPP law changed the Partnerships Technical Bureau to the Kuwait Authority for Partnership Projects (KAPP) [http://www.ptb.gov.kw/en/Home ]. KAPP expects to award many of the upcoming large infrastructure projects using the PPP framework. The Commercial Agency Law (CAL), Law No. 13 of 2016 removes exclusivity, enabling foreign firms to have multiple agents to promote their products.

The court system does not appear to be subject to executive or other interference against foreign investors or companies. Nonetheless, the business climate favors Kuwaiti- and GCC-owned enterprises.

Competition and Anti-Trust Laws

Kuwait lacks comprehensive competition protection mechanisms. The government passed Protection of Competition Law No. 10 in 2007. It enacted by-laws in 2012 through the establishment of a Competition Protection Bureau (CPB) intended to safeguard free commerce, bar monopolies, investigate complaints, and refer to prosecution acts determined to undermine competition, supervise mergers and acquisitions, and fix commodity prices. As of April 2017, however, the CPB was not yet fully functional. The World Bank is working with Kuwait to amend the law and redefine the CPB’s mission.

The National Assembly passed a new Public Tenders Law No. 49 of 2016. All bids for government-funded infrastructure projects (excluding military and security programs) in excess of KD 75,000 (USD 246,000) must be submitted to the Central Tenders Committee (CTC). A major change allows foreign companies to bid on some projects provided at least 30 percent of the products used are of national origin and 30 percent of the work is awarded to local subcontractors.

Expropriation and Compensation

Kuwait has had no recent cases of expropriation or nationalization involving foreign investments. As a safeguard, the FDI law guarantees against expropriation or nationalization, except for the public benefit, in accordance with existing laws. In such cases, Kuwait would compensate for the real economic value of the project at the time of expropriation. The last case of nationalization occurred in 1974.

Dispute Settlement

ICSID Convention and New York Convention

Kuwait is a signatory to the International Center for the Settlement of Investment Disputes (ICSID Convention) and to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Investor-State Dispute Settlement

The FDI law stipulates that Kuwaiti courts alone are responsible for adjudicating any disputes involving a foreign investor and other parties, although arbitration is permitted. Few contracts contain clauses specifying recourse to traditional commercial arbitration. The Kuwaiti judicial system recognizes and enforces foreign judgments only when reciprocal arrangements are in place.

International Commercial Arbitration and Foreign Courts

The recognition and enforcement of foreign arbitral awards occurs more expeditiously than the enforcement of foreign judgments. Enforcement of the former, however, must meet with the same reciprocity and procedural criteria of enforcing foreign judgments under Articles 199 and 200 of the Civil and Commercial Procedure Code No. 38 of 1980. Accordingly, an award passed by a foreign arbitral panel or tribunal may be enforced in Kuwait provided that: A) the country where the award has been rendered is a member of the New York Convention; B) the foreign award is rendered by a competent arbitrator in accordance with the laws if the country in which it was awarded; C) the parties have been promptly summoned to appear and duly represented before the arbitral tribunal; D) the award must become a res judicata according to the laws of the country in which it was awarded; and E) the award must not be in conflict with an order judgment that has been rendered by a local court in Kuwait and additionally does not contradict mandatory provisions or constitutes a criminal conduct, or violations to morality or public policy, under Kuwaiti Laws.

Alternative Dispute Resolution (ADR) mechanisms include conciliation, negotiation, and mediation. These mechanisms depend on the parties’ goodwill to settle their disputes with or without the help of a third party.

Law No. 11 of 1995 on Judicial Arbitration for Civil and Commercial Articles, the relevant organizing and explanatory Ministerial Resolutions thereof, and Civil and Commercial Procedure Code No. 38 of 1980 outline the formation, operation, jurisdiction, and procedures of the arbitral panel, and the issuance of arbitral awards, through the Kuwait Arbitration Center. They also define regulations for international conventions, free trade agreements, and the due application of the reciprocal clause between parties.

Bankruptcy Regulations

Bankruptcy is still governed under Law No. 68 of 1980, which does not meet international standards in covering the full range of companies, or in restructuring debt. The 1980 law does not criminalize bankrupt individuals, but their political rights become limited upon a proclamation of bankruptcy. A bankrupt individual may not serve as a candidate or elector in any political position, be appointed to a public post or assignment, or serve as director or chairman in any company until the individual’s rights are reinstated in accordance with law. Kuwait is working with the World Bank to draft bankruptcy legislation designed to assist businesses in recovering from financial difficulties rather than being liquidated. As of April 2017, the Ministry of Finance had referred this draft law to the Council of Ministers for its review. Recently, the KIA had 22 remarks to enhance the pending law.

Investment Incentives

The FDI law’s incentives include tax benefits (15 percent corporate tax on foreign firms can be waived for up to 10 years), customs duties relief, land and real estate allocations, and permissions to recruit required foreign labor.

Other exemptions exist. For example, entities incorporated in the GCC that are 100 percent owned by GCC nationals pay no corporate tax. Capital gains arising from trading in securities listed on Kuwait’s stock market are exempt from tax. Foreign principals selling goods through Kuwaiti distributors are not subject to tax. Kuwait does not have personal income, property, inheritance, or sales taxes; however, the government is preparing for the GCC-agreed value-added-tax (VAT) and excise taxes.

Foreign Trade Zones/Free Ports/Trade Facilitation

Since 1999, the Kuwait Free Trade Zone (KFTZ) has existed at Shuwaikh port. Many restrictions normally faced by foreign firms, such as corporate taxes, do not apply to offices or plants within the KFTZ. Frequent management and operational disputes have plagued the KFTZ and limited its effectiveness. In 2016, the Kuwait Council of Ministers resolved to transfer free-trade zone management from the Ministry of Commerce and Industry to KDIPA. Opportunities may increase as KDIPA takes over the existing free-trade zone at Shuwaikh and creates two new zones at Al-Abdali and Al-Nuwaiseeb.

Performance and Data Localization Requirements

The government requires foreign firms to hire a mandated percentage of Kuwaitis in their work force. The percentage varies by industry: banking–66 percent, communications–62 percent, investment and finance–40 percent, and petrochemicals and refining industries–30 percent. The manufacturing and agriculture sectors have the lowest minimum quotas at three percent.

Foreign employees require work visas prior to arriving in the country. The Ministry of Social Affairs and Labor (MOSAL) controls the issuance of work permits and in recent years has been more inclined to limit perceived non-essential employment of expatriates.

In 2015, the Cabinet rescinded the Counter-Trade Offset Program and transferred legacy responsibilities to KDIPA.

Kuwait does not force local data storage nor require foreign investors to use Kuwaiti domestic content in locally manufactured goods and technologies. Only banks and other financial institutions are required by the Anti-Money Laundering/Combatting the Financing of Terrorism (AML/CFT) Law 106 of 2013 to maintain their data for five years. Otherwise, each private or public entity may choose if and how to store data. Most governmental agencies follow International Organization for Standardization (ISO) certificate standards, which mandate the storage of data for five years.

Real Property

Non-GCC citizens may own properties under special conditions and require the Cabinet Council’s approval. Kuwait ranked 67 out of 190 in “Ease of Registering a Property” in the World Bank’s Doing Business 2017 report.

Intellectual Property Rights

Kuwait is a member of the World Intellectual Property Organization (WIPO) and of the WTO; thus, it is a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). However, intellectual property rights (IPR) in Kuwait are protected nominally by a series of copyright and trademark laws adopted in 1999 and 2016.

Largely due to its non-WTO-compliant copyright law at the time, and its cessation of most copyright and trademark enforcement actions in recent years, an out-of-cycle USTR review in November 2014 resulted in moving Kuwait from the Special 301 Watch List to the Priority Watch List. Kuwait remained on the Priority Watch List in 2015 and 2016. In the 2017 Special 301 report, the U.S. government announced it will launch an Out of Cycle review for Kuwait to promote engagement and progress on specific IPR opportunities and challenges identified in this year’s review.

To register IPR in Kuwait, please note the below:

Type of IPR Protection Legal structure
Trademarks Trademark applications can be filed at the Kuwaiti Trademark Office, organized under the Ministry of Commerce and Industry. Strong
Patents The Kuwait Patent Office stopped accepting application in April 2016, and instructed interested parties to seek protection through the GCC Patent Office in Riyadh, Saudi Arabia. Strong
Copyright Can be protected by the Ministry of Information Weak as the new law does not appear to comply fully with WTO and TRIPS standards.

The IPR enforcement regime has notably improved in the past year:

  • The Ministry of Information (MOI) conducted raids and seized pirated goods, such as DVDs. In addition, it continued blocking Internet domains that allow downloads of pirated copyrighted materials and websites that sell counterfeit goods. In 2016, MOI reported seizing more than 143,000 units of DVDs and other A/V materials (down from 146,000), and referred 291 cases for prosecution (up from 276 cases).
  • The Criminal Investigations Department (CID) established a specialized IPR unit to combat counterfeit goods. Brand owners are able to bring complaints directly to this unit for action, usually resulting in seizures of counterfeit goods.
  • Ministry of Commerce and Industry (MOCI) resumed raids and seizures under the direction of the Assistant Undersecretary of Trade Control. However, MOCI still failed to target suppliers and sources of counterfeit goods, focusing its efforts on small retail shops instead.
  • General Administration of Customs (KGAC) officials improved enforcement in part due to their close collaboration with U.S. Customs and Border Protection (CBP). KGAC leadership, however, only reluctantly supported IPR enforcement, while contending it should not be a Customs responsibility.

Overall, IPR enforcement has improved but the lack of cooperation amongst the relevant authorities in combating the counterfeit goods remains an issue.

New IP laws and treaties enacted during 2015 – 2016:

  • GCC Trademark Law in 2015
  • Copyright and Related Rights Law in 2016
  • Kuwait became a member of the Patent Cooperation Treaty (PCT) in 2016. Now that all GCC countries are members of the PCT, the GCC Patent Office has the opportunity to join and thereafter to oversee the PCT.

The only pending IPR bill is the implementing regulations of the amended copyright law that are expected to be issued by May 2017.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en .

Resources for Rights Holders

Intellectual Property Attaché for the Middle East & North Africa
U.S. Embassy Kuwait
Tel: +965 2259 1455
Embassy point of contact: KuwaitDirectLine@state.gov
American Business Council Kuwait – www.abckw.org 
Embassy list of local lawyers: http://2016.export.gov/kuwait/businessserviceproviders/index.asp 

Capital Markets and Portfolio Investment

Foreign financial investment firms operating in Kuwait characterize the government’s attitude toward foreign portfolio investment as welcoming. An effective regulatory system exists to encourage and facilitate portfolio investment. Currently the new privatized bourse includes 179 companies. Existing policies and infrastructure facilitate the free flow of financial resources into the capital market. Government bodies comply with guidelines outlined by IMF Article VIII and refrain from restrictions on payments and transfers for current international transactions. The debt market is not developed in Kuwait; however, banks have the capacity to fulfill this function.

Financial investment firms characterize government authorities as slow, particularly in comparison to regional players perceived to be more active in encouraging foreign portfolio investment. The CMA in November 2015 issued a regulation on portfolio management, but it does not cover foreign investments.

Credit is allocated on market terms. Foreign investors are able to obtain credit on the local market on terms determined by the foreign investor’s collateral level and the intended use of the financing. The private sector has access to a variety of credit instruments.

Money and Banking System

In December 2016, the Central Bank of Kuwait (CBK) reported the total assets for the banking sector equaled KD 60.4 billion (USD 198 billion). Twenty-three banks operate in Kuwait: five conventional local banks, five Islamic banks, 12 foreign banks, and one specialized bank. Conventional banks include: market-leader National Bank of Kuwait, Commercial Bank of Kuwait, Gulf Bank, Al-Ahli Bank of Kuwait, and Burgan Bank. Sharia-compliant banks include Kuwait Finance House, Boubyan Bank, Kuwait International Bank, Al-Ahli United Bank, and Warba Bank. The foreign banks are BNP Paribas, HSBC, Citibank, National Bank of Abu Dhabi, Qatar National Bank, Doha Bank, Dubai-based Mashreq Bank, the Bank of Muscat, Riyadh-based Al Rajhi Bank (the largest Sharia-compliant bank in the world), the Bank of Bahrain and Kuwait (BBK), the Industrial and Commercial Bank of China (ICBC), and Union National Bank. The government-owned Industrial Bank of Kuwait provides medium- and long-term financing to industrial companies and Kuwaiti citizens through customized financing packages.

Following the global financial crisis in 2008 when large losses affected confidence in the local banking sector, the Council of Ministers and the National Assembly legislated to guarantee deposits at local banks to rebuild confidence.

In March 2013, the CBK announced that foreign banks would be able to open multiple branches on a case-by-case basis. The CBK approved and Al-Rajhi Bank opened its second branch in 2017. Qatar National Bank received CBK’s approval in 2014 but has not opened a second branch. Existing rules also allow foreign lenders to open representative offices. Kuwaiti law restricts foreign banks from offering investment banking services. Foreign banks can offer retail services. Foreign banks are also subject to a maximum credit concentration equivalent to less than half the limit of the largest local bank, and are prohibited from directing clients to borrow from external branches of their bank.

In April 2013, the National Assembly passed a law requiring banks to write off interest on personal and consumer loans for Kuwaiti citizens, and to reschedule the principal debt over a minimum of 10 years, in exchange for government deposits. Under the law, both government and parliament reached a settlement to refer borrowers to the Family Support Fund, a public debt-relief program that allowed the government to purchase outstanding loans acquired by Kuwaiti citizens prior to June 2013. Media reported that by January 2017, the program had helped to relieve more than 18,134 borrowers resulting in KD 394 million (USD 1.29 billion) in restructured loans.

Foreign Exchange and Remittances

Foreign Exchange

The Kuwaiti dinar has been linked to an undisclosed basket of major world currencies since
May 2007. The only restriction on current or capital account transactions is all foreign exchange purchases must process through a bank or licensed foreign exchange dealer. Equity, loan capital, interest, dividends, profits, royalties, fees, and personal savings can be transferred in or out of Kuwait without hindrance. The FDI law permits investors to transfer all or part of their investment to another foreign or domestic investor, including cash transfers.

Remittance Policies

Kuwait imposes no foreign exchange restrictions on remittances for investments. Nevertheless, each investee must ensure compliance with the AML policies of the CBK if making direct investments or dealing with counterparties. Time limitations or wait periods do not apply to remittances. No restrictions exist on the inflow or outflow of funds for remittances of profits or revenue, and foreign investors may remit through a legal parallel market, including one utilizing convertible, negotiable instruments. Kuwait is not known to engage in currency manipulation tactics. The CBK advises buy, sell, and middle rates on a daily basis. In February 2015, Financial Action Task Force removed Kuwait from FATF’s list of jurisdictions that require monitoring for AML/CFT compliance.

Sovereign Wealth Funds

The Kuwait Investment Authority (KIA) manages the Kuwait General Reserve Fund and the Kuwait Fund for Future Generations. In March 2012, the Amir enacted a budgetary decree to increase the portion of state oil revenues allocated to the Future Generations Fund from 10 percent to 25 percent. Given the sharp decline in oil prices since 2014, however, this figure was cut back to 10 percent since the state’s FY 2015/2016 budget. KIA’s management reports to a Board of Directors appointed by the Council of Ministers. The Minister of Finance chairs the Board; other members includes the Minister of Oil, the Central Bank Governor, the Undersecretary of the Ministry of Finance, and five representatives from Kuwait’s private sector (three of whom are not allowed to hold any other public office).

An internal audit office reports directly to the Board of Directors and an external audit auditor, the State Audit Bureau audits continuously and reports annually to the National Assembly.

The 1982 law establishing the KIA prohibits it from publicly disclosing the size of its holdings and its asset allocations. KIA holds closed-door presentations on the full details of all funds under its management, including its strategic asset allocation, benchmarks, and rates of return, for the Council of Ministers and the National Assembly. The Sovereign Wealth Fund Institute estimated that KIA manages the world’s fourth largest sovereign fund with over USD 592 billion in assets (June 2016).

Kuwait has few fully state-owned enterprises (SOEs) outside the oil sector, with the exception of Kuwait Airways. No published list of SOEs exists. The government owns shares in Kuwaiti shareholding companies across the spectrum of the economy, through either KIA or Kuwait’s Public Institution for Social Security. Its stake in such companies varies from 24 percent to 100 percent.

SOEs benefit from tax exemptions and a 10 percent preference on national products in tendered projects. SOEs, furthermore, have independent budgets and are not subject to the same market constraints facing private companies. However, the State Audit Bureau and National Assembly oversee the SOEs’ application of strict government tendering rules.

Privatization Program

The National Assembly has passed several privatization laws in the past eight years. The laws stipulated that privatizing any public service would begin with a transition to a public shareholding company. Under the law, 40 percent of any such company’s shares will be sold to citizens in an initial public offering, while 20 percent of the shares will be held by the government, and five percent will be distributed to current and former Kuwaiti employees. The remaining 35 percent will be sold at an auction to a local or foreign investor. Kuwaiti employees will have the right to retain their jobs in the privatized service for at least five years with the same salary and benefits.

Kuwait privatized its stock exchange in April 2016. The Kuwait Stock Exchange (KSE) is the fourth largest in the GCC (after Saudi Arabia, UAE’s combined stock markets, and Qatar), with a market capitalization of KD 28 billion (USD 92 billion) as of February 2017, up by 15.6 percent in the past year.

Kuwait has proposed privatizing the management and operations of their air and sea ports.

The last reported privatization plan of Kuwait Airways (KAC) was to retain 75 percent state ownership, sell 20 percent to Kuwaiti citizens, and transfer 5 percent to current and retired employees, excluding potential investors. The Ministry of Planning and Development is to submit revised privatization plan in 2017.

Kuwait’s telecom sector is the largest source of revenue after the oil sector. Three private mobile telephone companies provide services with the government maintaining significant minority interests in all, and foreign companies own the majority stakes in two. In April 2014, the National Assembly passed legislation creating the independent Communication and Information Technology Regulatory Authority (CITRA) to liberalize markets in the mobile communications and Internet industries, and privatize some elements of the telecom market now handled by the Ministry of Communication (MOC), such as fixed telephone lines. CITRA officially commenced its duties in February 2016, by taking on some responsibilities of the MOC and receiving applications to hire specialized staff.

Kuwait has a general awareness of expectations for responsible business conduct (RBC), including environmental, social, and governance issues. No specific government program is in place to require or encourage compliance.

The FDI law obligates the investor “not to violate the laws and regulations applicable in the country, especially the duty to protect the environment and regulations relating to security, public health, public order and not to expose others to risk.”

One aspect of responsible business conduct (RBC) in Kuwait is largely manifested through contributions to local charities and causes. For example, Zain, the leading telecommunication company in Kuwait, was awarded the Gold Award for Excellence in Corporate Social Responsibility from the Arab Organization for Social Responsibility in Dubai for the third year.

The Kuwait Environment Protection Authority has been active in enforcing compliance and actively addressing environmental violations.

The often-lengthy procurement process in Kuwait occasionally results in accusations of attempted bribery or the offering of other inducements by bidders. Corruption is criminalized, and several investigations and trials involving current or former government officials accused of malfeasance are underway. In 1996, the government passed Law No. 25, which requires all companies securing contracts with the government valued at KD 100,000 (USD 328,000) or more to report all payments made to Kuwaiti agents or advisors while securing the contract. The law similarly requires entities and individuals to report any payments they received as compensation for securing government contracts.

In January 2016, the National Assembly passed legislation to establish the Anti-Corruption Authority (ACA). The ACA recently sent several individuals’ cases to the Public Prosecution Office for their failure to comply with financial disclosure requirements.

Transparency International’s 2016 Corruption Perceptions Index (CPI) ranked Kuwait 75 out of 176 countries, making it last within the Gulf Cooperation Council after UAE, Qatar, Saudi Arabia, Oman, and Bahrain. Kuwait’s CPI score of 41 (out of 100) indicates it has a “serious corruption problem,” according to Transparency International.

Kuwait signed the UN Anticorruption Convention in 2003 and ratified it in 2007.

Resources to Report Corruption

Contact at government agency responsible for combating corruption:

Mr. Abdulrahman Al-Namash
President, Kuwait Anti-Corruption Authority
Shamia, Block 2, Opposite Wahran Park, Kuwait City, Kuwait
Tel: +965 2464-0200

Isolated acts of terrorism have, during the past three years, targeted religious shrines, security forces, and American service members. None of the attacks specifically targeted businesses or infrastructure. Since late 2013, Kuwait has seen no large-scale, politically motivated demonstrations. American citizens are encouraged to remain in contact with the Embassy for up-to-date information. The Department of State shares credible threat information through its Consular Information Program documents, including Travel Warnings, Travel Alerts, Country Specific Information, and Emergency and Security Messages. Kuwait specific information is available at https://travel.state.gov/content/passports/en/country/kuwait.html.

Kuwait has a diverse labor force. According to the Public Authority for Civil Information (PACI), 2.24 million expatriate laborers account for approximately 51 percent of the total population (4.4 million) and approximately 84 percent of the total workforce (2.67 million) (as of December 2016: http://kuwaitstat.paci.gov.kw/webapi/jsf/dataCatalogueExplorer.xhtml). Kuwaiti nationals occupy most of the top management positions in the private and public sectors. Unemployment among Kuwaitis is about 3.3 percent, but is rising because of a growing influx of young Kuwaitis into the labor force. The new entrants are reluctant to enter the private sector and cannot easily be absorbed by the government, where underemployment remains a serious problem. Of approximately 432,500 Kuwaiti nationals in the workforce, 79 percent (~343,340) work in the public sector.

A number of white-collar workers from OECD countries occupy primarily high-skilled positions and many middle management positions are occupied by Egyptian, Lebanese, and South Asian nationals. The vast majority of expatriate workers are low-paid laborers from other Middle Eastern countries, South Asia, and the Philippines. Abuse of the sponsorship system is widespread, especially in the area of visa trafficking.

Since 1991, the government has adopted inconsistent policies intended to limit growth of the resident expatriate population. Lower-paid, unskilled workers often suffer unfavorable working conditions. The government has a labor tracking system to allow companies only enough work permits to be issued for pre-verified positions. The tracking system is designed to protect workers, following years of visa fraud whereby a Kuwaiti could create “ghost” positions and sell the visa for personal profit. The consequence of the fraud was the importation of workers who then found themselves unemployed. These workers often remained in country illegally, working “under the table.” Unskilled foreign workers are restricted from transferring from one sponsor to another within the private sector for a minimum of two years, but college graduates may transfer after one year. The government also levies fees on expatriate workers and their families to raise the cost of employing foreign workers.

Kuwaiti workers have the right to organize and bargain collectively, but Kuwaiti law restricts the right of freedom of association to only one union per occupational trade. The law permits only one federation, the Kuwait Trade Union Federation, which comprises 15 of the 47 licensed unions. Foreign workers are permitted by law to join unions only as non-voting members after five years of work in the particular sector the union represents. Private sector workers have the right to strike; however, negotiation and arbitration are compulsory in the case of disputes. Although public sector workers do not have the legal right to strike, several such strikes have occurred in the past four years. Kuwaiti labor law prohibits anti-union discrimination.

Separate Kuwaiti labor laws establish work conditions in the public and private sectors, with the exception of the oil sector. Law prohibits forced labor. Workers in industrial and dangerous jobs must be at least 18 years old; youth under the age of 18 can work part-time in some non-industrial positions. A two-tiered labor market ensures higher wages for Kuwaiti employees. In the private sector, the minimum wage is KD 60 (USD 197) per month. In the public sector, the minimum wage is KD 250 (USD 820) per month for Kuwaiti bachelors and KD 325 (USD 1,066) per month for married Kuwaitis, plus KD 50 (USD 164) for each child, compared to a standard monthly minimum wage of KD 90 (USD 295) for non-Kuwaitis in the public sector. Kuwaitis employed in both the private and public sectors receive substantial government subsidies on top of their base salaries. The amended labor law of February 2010 did not change the previous workweek limitation from 48 hours, but extended annual leave to 30 days after six months of employment. However, the law is not consistently enforced and disputes over the payment of salaries and contract switching are common, especially among unskilled workers. The labor laws do not apply to domestic (household) workers.

The International Labor Organization’s (ILO) Committee of Experts has reiterated its longstanding criticisms of the discrepancies between the Kuwaiti Labor Code and ILO Conventions 1, 30, and 87 regarding work hours and freedom of association. Areas criticized by the ILO include the prohibition of more than one trade union for a given field; the requirement that a new union have at least 100 workers; the regulation that workers must reside in Kuwait for five years before joining a trade union; the denial of the right to vote and to be elected for foreign trade unions; the prohibition against trade unions engaging in any political or religious activity; and the reversion of trade union assets to MOSAL in the event of dissolution.

The State Department’s annual Trafficking in Persons Report highlighted the vulnerability of domestic workers to exploitation. During recent years, the Government of Kuwait has taken several measures to address human trafficking and to improve protections for domestic workers. In June 2016, the government passed several new amendments to the 2010 law that increased penalties for those involved in visa trading and illegally employing workers. In July 2016, the government implemented a new labor law for household domestic workers that provided several new protections to include a minimum wage of KD 60 (USD 197); implementation of a formal grievance process; a workday limited to twelve hours with required rest periods; and increased regulations applied to domestic labor recruiting agencies.

Since 2007, labor laws have banned women from working between 8:00 p.m. and 7:00 a.m., except for sectors approved by MOSAL. The law also banned women from working in jobs that are judged to be hazardous, rough, and damaging to health, as well as in “immoral jobs that abuse women’s femininity,” and in places that exclusively serve men.

Kuwait and the United States concluded an investment guarantee agreement in 1989, which facilitated the extension of programs from the Overseas Private Investment Corporation (OPIC). In 2015, there were no active OPIC programs in Kuwait. Kuwait is also a member of the Multilateral Investment Guarantee Agency (MIGA).

According to the 2016 World Investment Report published by the United Nations Conference on Trade and Development (UNCTAD), Kuwait attracted USD 293 million in FDI in 2015, compared with FDI outflows of USD 5.4 billion.

According to the U.S. Department of Commerce Bureau of Economic Analysis (BEA), 2015 U.S. direct investment in Kuwait was USD 293 million, down from USD 391 million in 2014. Kuwait’s FDI position in the United States totaled USD 1.1 billion in 2015, up 3.7 percent from the previous year. (NOTE: The Commerce Department’s technical definition of “foreign direct investment” may account for the modesty of its cited figure. Embassy Kuwait City estimates Kuwaiti parastatals and individuals invest $500 billion to $1 trillion in U.S. assets ranging from securities to small-and-medium enterprise special placements to “green field” real estate development.) Kuwaiti direct investment in the United States is primarily in real estate and rental and leasing. Three announcements made late in 2016 are indicative: Rasameel Investment House acquired a USD 41 million multi-family residential property, KFH Capital Investment Company paid USD 165 million for a Newark tower that houses Panasonic Corp. of North America’s headquarters, and KAMCO successfully acquired GE’s Global Operation Center building in Ohio.

Table 2: Key Macroeconomic Data, U.S. FDI in Kuwait

Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2015 KD
34,315USD
112,553
2015 USD
114,041
http://www.cbk.gov.kw/en/statistics-and-publication/publications/economic-reports.jsp http://data.worldbank.org/
indicator/NY.GDP.MKTP.CD
 
Foreign Direct Investment Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2015 N/A 2015 USD 293 https://bea.gov/international/
factsheet/factsheet.cfm?Area=506
 
Host country’s FDI in the United States ($M USD, stock positions) 2015 N/A 2015 USD
1,112
https://bea.gov/international/
factsheet/factsheet.cfm?Area=506
 
Total inbound stock of FDI as % host GDP 2015 N/A 2015 0.0026 N/A

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 14,604 100% Total Outward 31,577 100%
Qatar 4,432 30% Saudi Arabia 4,673 15%
Bahrain 1,016 7% Cayman Islands 3,987 13%
United Arab Emirates 617 4% Iraq 3,559 11%
Saudi Arabia 615 4% Bahrain 3,491 11%
Oman 480 3% Turkey 1,947 6%
“0” reflects amounts rounded to +/- USD 500,000.

Source: IMF Coordinated Direct Investment Survey: http://data.imf.org/?sk=40313609-F037-48C1-84B1-E1F1CE54D6D5&sid=1482331048410&ss=1482186404325 

Host country data are not publicly available.

Table 4: Sources of Portfolio Investment

Portfolio Investment Assets
Top Five Partners (Millions, US Dollars)
Total Equity Securities Total Debt Securities
All Countries 16,103 100% All Countries 10,801 100% All Countries 5,302 100%
Bahrain 3,999 25% Bahrain 3,625 34% United Arab Emirates 1,384 26%
United Arab Emirates 2,770 17% United Arab Emirates 1,386 13% United States 839 16%
United States 2,064 13% Saudi Arabia 1,278 12% Qatar 754 14%
Saudi Arabia 1,278 8% United States 1,225 11% Malaysia 399 8%
Cayman Islands 642 4% Cayman Islands 642 6% Bahrain 374 5%

Source: IMF Coordinated Portfolio Investment Survey: http://data.imf.org/regular.aspx?key=60587804 

Host country data are not publicly available.

Economic Section
U.S. Embassy Kuwait
P.O. Box 77
Safat 13001
Kuwait
+965 2259 1001
KuwaitDirectLine@state.gov

2017 Investment Climate Statements: Kuwait
Build a Custom Report

01 / Select a Year

02 / Select Sections

03 / Select Countries You can add more than one country or area.

U.S. Department of State

The Lessons of 1989: Freedom and Our Future