2022 Investment Climate Statements: Kuwait

Policies Towards Foreign Direct Investment

The Government of Kuwait (GOK) recognizes the need to attract foreign direct investment into its economy. Kuwait reintroduced its national development plan in 2018 as the Vision 2035 plan.  Key plan objectives include creating a business environment that promotes private sector growth and foreign investment.  The Foreign Direct Investment Law of 2013 permits the Kuwait Direct Investment Promotion Authority (KDIPA) to authorize, on a case-by-case basis, up to 100 percent foreign ownership in the following industries: 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 with licensing.

In 2015, KDIPA approved IBM’s proposal to establish the first 100 percent foreign-owned company in Kuwait, and to benefit from the incentives and exemptions granted under the 2013 investment law.  Since then, KDIPA has granted foreign ownership licenses to 37 additional foreign firms, including U.S. companies GE, Malka Communications, Maltbie, and McKinsey & Company. In July 2019, KDIPA announced that the workforce of its approved companies would have to employ at least 30 percent Kuwaiti citizens to qualify for 100 percent ownership.

U.S. companies operate successfully in the country.  American engineering firms such as Fluor have participated in large infrastructure development projects, including the USD 30 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.  In March 2022, Abbott Laboratories began operating Kuwait’s first pharmaceutical plant. Also in 2022, Boeing announced that it was opening an office in Kuwait. Numerous franchises of U.S. restaurants and retail chains operate successfully.

Limits on Foreign Control and Right to Private Ownership and Establishment

By law, a Kuwaiti or GCC national must own at least 51 percent of any local company. This requirement may be waived if non-GCC investors qualify to invest through KDIPA.  A 2017 amendment to the 2016 Companies Law eliminated prohibitive requirements on limited liability companies.

Council of Ministers Decision No. 75 of 2015 directs KDIPA to exclude foreign firms from sensitive sectors.  Sensitive sectors include the 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

During 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

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 three to five working days.  However, the business center has encountered challenges in coordinating interagency cooperation.

KDIPA 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.

Outward Investment

The government neither promotes nor restricts outward private investment.  The largest, single outward investor is the country’s Fund for Future Generations sovereign wealth fund, managed by the Kuwait Investment Authority (KIA).  By law, KIA may not disclose the total amount of its investments. The Sovereign Wealth Fund Institute estimated that KIA manages one of the world’s largest sovereign funds with more than USD 670 billion in assets as of March 2021.  Kuwaiti officials have indicated that over half, or more than USD 300 billion, of the Fund for Future Generations is invested 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 Petrochemical Industries Company and Dow Chemical Company. MEGlobal opened a billion-dollar monoethylene glycol production facility in Texas in September 2019.  Individual Kuwaitis regularly invest in U.S. securities and real estate.

Kuwait has signed bilateral investment treaties with 85 countries, 70 of which are in force, and 12 other treaties with investment provisions, 6 of which are in force.  More information about these may be found at:  https://investmentpolicy.unctad.org/international-investment-agreements/countries/112/kuwait?type=tips  

Kuwait signed a Trade and Investment Framework Agreement (TIFA) with the United States in 2004.  Although the last bilateral TIFA Council meeting took place in 2008, a 2021 bilateral working group focused on intellectual property rights took place under the auspices of the U.S.-Kuwait TIFA. In October 2012, the United States signed a TIFA with the GCC, which the Kuwait National Assembly ratified in April 2014.  The last U.S.-GCC TIFA Council meeting took place in June 2015. Kuwait and the United States signed a bilateral agreement on investment guarantees in April 1989 that entered into force in October 1989. Kuwait and the United States also signed a memorandum of understanding for the reciprocal tax exemption on income derived from the operation of aircraft in March 2011.

Kuwait does not have a bilateral taxation treaty with the United States.  However, Kuwait and the United States signed an intergovernmental Foreign Account Tax Compliance Act (FATCA) agreement in 2015, which can be accessed at:   https://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA.aspx .

Transparency of the Regulatory System

Kuwait does not have a centralized online location where key regulatory actions are published akin to the Federal Register in the United States.  The regulatory system does not require that regulations be made available for public comment. The government frequently passes draft regulations to interested parties in the private sector, such as the Kuwait Chamber of Commerce and Industry or the Bankers Association, for comment.

Kuwait does not promote or require companies’ environmental, social, and governance (ESG) disclosure to facilitate transparency and/or help investors and consumers distinguish between high- and low-quality investments. However, ESG concepts are increasingly gaining traction in Kuwait with the Kuwait Investment Authority’s January 2022 announcement that it intended to make its investment portfolio ESG compliant.

The State Audit Bureau reviews government contracts and audits contract performance but does not publicly share the results.

Kuwait does not participate in the Extractive Industries Transparency Initiative (EITI), nor does it incorporate domestic transparency measures requiring the disclosure of payments made to other governments related to the commercial development of oil, natural gas, or mineral deposits.  However, the Kuwait economy is almost wholly dependent upon oil, the extraction of which is deemed a responsibility of the government and is subject to close National Assembly oversight.

International Regulatory Considerations

Kuwait joined the General Agreement on Tariffs and Trade (GATT) in 1963 and became a founding member of the WTO in 1995.  However, Kuwait is not a signatory to every WTO plurilateral agreement, such as the Agreement on Government Procurement. In April 2018, Kuwait deposited its Trade Facilitation Agreement instrument of ratification with the WTO after Kuwait’s National Assembly approved the agreement the previous month.

Kuwait has been part of the GCC since its formation in 1981.  The GCC launched a common market in 2008 and a customs union in 2015.  The GCC continues to forge agreements on regional standards and coordinate trade and investment policies.  American standards and internationally recognized standards are typically accepted. For more information regarding GCC standards and policies, please refer to the following GCC website:  http://www.gcc-sg.org/en-us/Pages/default.aspx 

Legal System and Judicial Independence

Kuwait has a developed civil legal system, based in part on Egyptian and French law and influenced by Islamic law.  Having evolved in a historically active trading nation, the court system in Kuwait is familiar with international commercial law.  Kuwait’s judiciary includes specialized courts, including a commercial court to adjudicate commercial law. Residents that are not Kuwaiti citizens involved in legal disputes with citizens have frequently alleged the courts show bias in favor of Kuwaiti citizens.  Holders of legal residence have been detained and deported without recourse to the courts.

Persons charged with criminal offenses, placed under investigation, or involved in unresolved financial disputes with local business partners have, in some cases, been subjected to travel bans.  Travel bans are meant to prevent an individual from leaving Kuwait until a legal matter is resolved or a debt settled. Travel bans may remain in place for a substantial period while the case is investigated, resolved, and/or prosecuted.  Failure to repay a debt can result in a prison term ranging from months to years, depending upon the amount owed.

U.S. firms are advised to consult with a Kuwaiti law firm or the local office of a foreign law firm before executing contracts with local parties.  Fees for legal representation can be very high. 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 be subject to lengthy delays, sometimes years, depending on the complexity of the issue and the parties involved.  During these delays, U.S. citizens can be deprived of income streams related to their business venture and be forced to surrender assets and ownership rights before being allowed to depart the country.

Laws and Regulations on Foreign Direct Investment

To diversify the economy by attracting foreign investment and grow private sector employment, Kuwait passed a new foreign direct investment law in 2013 permitting up to 100 percent foreign ownership of a business – if approved by KDIPA. Without KDIPA approval, all businesses incorporated in Kuwait must be 51 percent-owned by Kuwaiti or GCC citizens and seek licensing through the Ministry of Commerce and Industry. In reviewing applications from foreign investors, KDIPA places emphasis on creating jobs and the provision of training and education opportunities for Kuwaiti citizens, technology transfer, diversification of national income sources, increasing exports, support for local small- and medium-sized enterprises, and the utilization of Kuwaiti products and services.  In addition to assistance in navigating the bureaucracy, available investment incentives through KDIPA include tax benefits, customs duties relief, and permission to recruit required foreign labor. Government control of land limits its availability for development.

In 2019, a set of criteria was introduced to assess applications and grant licenses to foreign investors. Decision No. 329 of 2019 enacted five main criteria for assessing licensing and granting incentives. The criteria covered the following: (i) transfer and settlement of technology, including tangible and intangible technological innovation and the enablement of knowledge creation; (ii) human capital, stressing job creation for nationals and employee development programs; (iii) market development; (iv) economic diversification; and (v) sustainable development in the areas of corporate social responsibility and environmental sustainability. Decisions on licenses and the granting of incentives are based on a “Points Scoring Mechanism” (PMS). Other recent legal measures to facilitate foreign direct investment 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 created the Kuwait Authority for Partnership Projects ( www.kapp.gov.kw ).

Competition and Anti-Trust Laws

Kuwait’s open economy has generally promoted a competitive market.  In 2007, the government enacted the Protection of Competition Law No. 10 and by-laws in 2012 that facilitated the establishment of a Competition Protection Authority to safeguard free commerce, ban monopolies, investigate complaints, and supervise mergers and acquisitions.  The Competition Protection Authority presented a restructuring plan with the assistance of the World Bank to the Cabinet in 2018, which is still under review. In some previous years, U.S. investors have alleged instances of discrimination.

The Commercial Agency Law No. 13 of 2016 removed exclusivity, enabling foreign firms to have multiple agents to market their products.

In 2016, the National Assembly passed a new Public Tenders Law No. 49.  All bids on government-funded infrastructure projects (excluding military, security, and some oil sector tenders) in excess of KD 75,000 (USD 250,000) must be submitted to the Central Agency for Public Tenders.  The law requires that foreign contractors bidding on government contracts purchase at least 30 percent of their inputs locally and award at least 30 percent of the work to local contractors, where available.  The law favors local sourcing by mandating a 15 percent price preference for locally- and GCC-produced items, however this provision may be waived on a case-by-case basis.

Expropriation and Compensation

Kuwait has had no recent cases of expropriation or nationalization involving foreign investments.  The 2013 Foreign Direct Investment (FDI) Law guarantees investors against expropriation or nationalization, except for public benefit as prescribed by law.  In such cases, investors should be compensated for the real value of their holdings at the time of expropriation. The last 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 disputes involving a foreign investor, 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 of 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 ordered judgment that has been rendered by a local court in Kuwait and additionally does not contradict mandatory provisions or constitute 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, located at the Kuwait Chamber of Commerce and Industry.  They also define regulations for international conventions, free trade agreements, and the just application of the reciprocal clause between parties.

Bankruptcy Regulations

Kuwait worked with the World Bank to draft bankruptcy legislation designed to assist businesses to recover from financial difficulties as an alternative to liquidation. The Council of Ministers approved new legislation to support competition and create bankruptcy protections and sent it to the National Assembly. On September 29, 2020, Kuwait’s National Assembly passed the long-awaited law. The new law restructures the legal framework for bankruptcy to focus on rehabilitating troubled companies rather than liquidation. The new law removes these penalties for good faith debtors and creates new mechanisms to allow debtors to avoid liquidation, including a preventive settlement procedure and a restructuring procedure.

Investment Incentives

Incentives under the 2013 FDI Law include tax benefits (15 percent corporate tax on foreign firms may be waived for up to 10 years), customs duties relief, land and real estate allocations, and permissions to recruit required foreign labor. Kuwait does not offer incentives for businesses owned by demographically underrepresented investors.

Other tax benefits exist.  For example, entities incorporated in the GCC that are 100 percent owned by GCC nationals are exempt from paying a tax on corporate profits.  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. Kuwait, alongside its GCC neighbors, agreed in 2016 to implement a 5 percent value added tax on consumption. In 2019, Kuwait announced that it would delay implementation until 2021. As of March 2022, the VAT has not been implemented nor is it being seriously discussed in the National Assembly or government.

Kuwait does not offer any incentives for clean energy investment. Conversely, heavily subsidized utilities like electricity and desalinated water incentivize unmitigated use of emissions intense resources.

Foreign Trade Zones/Free Ports/Trade Facilitation

The Kuwait Free Trade Zone was established at Shuwaikh port in 1999.  The Council of Ministers approved legislation that would establish a new Free Trade Zone area as part of Kuwait’s Northern Gateway megaproject.  The legislation is pending in the National Assembly. Many restrictions normally faced by foreign firms, as well as corporate taxes, would not apply within the free trade zone.  KDIPA is developing three Economic Zones (Abdali, Al-Na’ayem and Al-Wafra) that were authorized by Law No. 116 of 2013.

Performance and Data Localization Requirements

The government requires foreign firms to hire a percentage of Kuwaitis that varies according to sector.  The percentages are as follows:

• banking: 75 percent
• communications: 65 percent
• investment and finance: 40 percent
• petrochemicals and refining industries: 30 percent
• insurance: 22 percent
• real estate: 20 percent
• air transportation, foreign exchange, cooperatives: 15 percent
• manufacturing and agriculture: 3 percent

Employers must obtain a no-objection certificate for a work permit for foreign employees from the Public Authority for Manpower (PAM) prior to the employee’s arrival in the country.  Obtaining a no-objection certificate requires submission of the employee’s criminal history and a completion of a health screening through a Kuwaiti Embassy or Consulate. Upon arrival, the employee must obtain a work permit from PAM and complete health and security screenings before receiving final status as a resident foreign worker from the Ministry of Interior.

Kuwait requires that foreign companies store data locally, although an upcoming data privacy law may permit for some external data storage. Kuwait has strict laws governing the use and transmission of data on Kuwaiti citizens. Foreign investors are subject to a 30 percent local content requirement on construction projects and when manufacturing goods locally.  Each company may determine whether and how it chooses to store data. Most governmental agencies follow International Organization for Standardization (ISO) certificate standards, which mandate the storage of data for five years.  Banks and other financial institutions are required by the Anti-Money Laundering/Combatting the Financing of Terrorism Law 106 of 2013 to maintain transactions data for five years. Contractors are subject to performance and completion bonds.

Real Property

Non-GCC citizens may own properties only under special conditions that require Cabinet approval.

Intellectual Property Rights

Kuwait was removed from USTR’s Special 301 Watch List in 2022 for making continued and significant progress on concerns that stakeholders identified with IP enforcement and transparency. Kuwait acceded to the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1995 and the World Intellectual Property Organization (WIPO) Patent Cooperation Treaty in 2016.  The government enacted the GCC Trademark Law in 2015. In 2019, Kuwait passed the Copyright and Related Rights Law and related Implementing Regulations. In 2021, the Ministry of Commerce and Industry and the Copyright Office each created online portals for streamlining the submission of trademark and copyright violation reports, respectively.

Right holders continue to raise concerns regarding the lack of transparency of administrative and criminal enforcement proceedings.  The government did not prioritize the prosecution of criminal behavior in such cases nor reduce the undue delays in the judicial process. Kuwait does not publicly report statistics on seizures of counterfeit goods, but IPR authorities have increased public outreach and awareness building over the past year.

The following descriptions characterize the protection of IPR in Kuwait:

Legal Structure: strong; Kuwait’s 2019 Copyright Law addressed serious concerns about Kuwait’s intellectual property protection regime. IPR legislation is adequate.

Enforcement: medium; The Kuwait Ministry of Commerce and Industry has made significant progress over the past year in improving enforcement of IPR laws. The Ministry reported that it cited 327 shops in 2021 for selling counterfeits and ordered the closure of 80 of these violating businesses. The Ministry is improving its collaboration with Kuwait’s judicial authorities to increase successful prosecution of IP violations.

Infringement on rights: common; Counterfeit items are widely available and often sold in plain sight. However, increased and improved enforcement of IPR laws is having a visible impact on businesses’ ability to market counterfeit goods.

Theft: uncommon; intellectual property theft is rare, principally because Kuwait’s technology, manufacturing, and research sectors are relatively small.

For additional information about national laws 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

Mr. Peter Mehravari
Intellectual Property Attaché for the Middle East & North Africa
U.S. Embassy Abu Dhabi
Tel: +965 97589223
Email:  Peter.Mehravari@trade.gov

Embassy list of local lawyers:  https://kw.usembassy.gov/u-s-citizen-services/attorneys/

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. 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 restricting payments and transfers on current international transactions. In November 2015, the Capital Markets Authority issued a regulation covering portfolio management, but it does not apply to foreign investors.

The privatized stock exchange, named the Boursa, currently lists 166 companies.  In February 2019, a consortium led by Kuwait National Investment Company that included the Athens Stock Exchange won a tender to acquire 44 percent of the Kuwaiti Boursa.  In December 2019, the Capital Markets Authority sold its 50 percent stake in the Kuwaiti Boursa as part of an Initial Public Offering. The offering was oversubscribed by more than 8.5 times. Kuwait’s Public Institution for Social Security owns the remaining six percent of shares. The Boursa is the only stock exchange owned by the private sector in the Middle East.

FTSE Russell upgraded the status of the Boursa to Secondary Emerging Market in 2017. On December 1, 2020, Boursa Kuwait completed the Kuwaiti capital market’s inclusion into the MSCI Emerging Markets Indexes with the successful implementation of the first tranche of index inclusion.

While the debt market is not well developed, local banks have the capacity to meet domestic demand.  Credit is allocated on market terms. Foreign investors can obtain local credit on terms that correspond to collateral provided and intended use of financing.  The private sector has access to a variety of credit instruments. The Central Bank restricts commercial banks’ use of structured and complex derivatives but permits routine hedging and trading for non-speculative purposes.  In March 2017, the government issued USD 8 billion in five- and ten-year notes but was unable to secure approval from the National Assembly for issuance of 30-year notes.

Money and Banking System

The Central Bank of Kuwait reported that banking sector assets totaled USD 251 billion in September 2021, an increase by 0.6 percent.

Twenty-two banks operate in Kuwait: five conventional local banks, five Islamic banks, 11 foreign banks, and one specialized bank.  Conventional banks include 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, which is the second largest bank in Kuwait, Boubyan Bank, Kuwait International Bank, Al-Ahli United Bank, and Warba Bank.  Foreign banks include BNP Paribas, HSBC, Citibank, 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. In December 2018, the Ministry of Commerce and Industry began permitting more than 49 percent foreign ownership in local banks with the approval of the Central Bank of Kuwait.

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

Foreign banks can offer retail services.  In 2013, the Central Bank announced that foreign banks could open multiple branches on a case-by-case basis.  In 2017, the Al-Rajhi Bank opened its second branch. Qatar National Bank received CBK’s approval in 2014 and opened its second branch in 2018.  Kuwaiti law restricts foreign banks from offering investment banking services. Foreign banks are 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.  Foreign banks may also open representative offices.

The Central Bank of Kuwait announced initial guidelines for digital banking in early 2022. Concurrently, they opened applications for licensing for digital banking and will remain open until June 30, 2022. It is expected many of the existing large banks will apply for a digital license—further crowding the sector.

Foreign Exchange and Remittances

Foreign Exchange

The Kuwaiti dinar has been tied to an undisclosed and changing basket of major currencies since May 2007.  Reverse engineering suggests that the U.S. dollar accounts for some 70-80 percent of this basket. Foreign exchange purchases must be processed through a bank or licensed foreign exchange dealer.  Equity, loan capital, interest, dividends, profits, royalties, fees, and personal savings can be transferred into or out of Kuwait without hindrance. The Foreign Direct Investment Law permits investors to transfer all or part of their investment to another foreign or domestic investor, including cash transfers.

Remittance Policies

No restrictions exist on the inflow or outflow of remittances, profits, or revenue.  Foreign investors may elect to remit through a legal parallel market, including one using convertible, negotiable instruments.  Nevertheless, each investor must ensure compliance with Kuwait’s anti-money laundering laws. Time limitations or waiting periods do not apply to remittances.  Kuwait is not known to engage in currency manipulation. The Central Bank advises buy, sell, and middle rates daily.

Sovereign Wealth Funds

The Kuwait Investment Authority (KIA) manages the Kuwait General Reserve Fund and the Kuwait Fund for Future Generations.  By law, ten percent of oil revenues can be deposited each annually into the Fund for Future Generations in year of budget surplus. Despite rising oil prices, a surplus has not been formally announced and thus the ten percent policy has not been reinstated as of March 2022. KIA management reports to a Board of Directors appointed by the Council of Ministers.  The Minister of Finance chairs the board; other members include 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 must not hold any other public office).  An internal audit office reports directly to the Board of Directors and an external auditor. This information is provided to the State Audit Bureau, which audits KIA continuously and reports annually to the National Assembly.

The 1982 law establishing the KIA prohibits the public disclosure of the size of sovereign wealth holdings and asset allocations.  KIA conducts closed-door presentations for the Council of Ministers and the National Assembly on the full details of all funds under its management, including its strategic asset allocation, benchmarks, and rates of return.  The Sovereign Wealth Fund Institute estimated that KIA manages one of the world’s largest sovereign funds with more than USD 670 billion in assets as of March 2021.

Economic stress and budget deficits since 2016 due to diminishing oil revenues and, as of March 2020, the COVID-19 pandemic had led to the near depletion of the General Reserve Fund. Authorization to issue debt has stalled in the National Assembly.

The energy sector is dominated by state-owned enterprises (SOEs), as law precludes private participation in most sector activities.  Outside the energy sector, Kuwait has few fully SOEs. One notable exception is Kuwait Airways.  No published list of SOEs exists. The government owns shares in various Kuwaiti companies through the Fund for Future Generations managed by the KIA or the Social Security Fund managed by Kuwait’s Public Institution for Social Security.  SOEs are permitted to control their own budgets.

Privatization Program

The National Assembly has passed several privatization laws since 2008. The Supreme Council for Privatization was established under a Privatization Law to increase the role of the private sector in Kuwait’s national economy. The council is chaired by the prime minister and consists of five ministers and three experts from different sectors.

The Privatization Law was developed to address all the major issues related to privatization, especially the processes of transferring public projects into joint stock companies, protecting the rights of national manpower, and controlling prices and the controls which govern revenues arising from the privatization process. The Supreme Council and then the Council of Ministers must approve any privatization initiative.

Kuwaiti employees have the right to retain their jobs in a privatized company for at least five years with the same salary and benefits.  Privatized shares of any public company must be offered as follows:

• 40 percent of shares reserved for Kuwaiti citizens;
• 20 percent of shares retained by the government;
• five percent of shares distributed to Kuwaiti employees, both former and current; and
• the remaining 35 percent of shares sold at auction to a local or foreign investor.

Telecommunications is the largest service sector in Kuwait.  The Ministry of Communications owns and operates landlines and owns a fiber optic network.  Internet providers may access both landlines and fiber optic networks. Three private mobile telephone companies provide cellular telephone and data services to the country.  The government owns a significant minority interest in each, but foreign companies own majority interests in two of them. In 2014, the National Assembly passed legislation creating the independent Communication and Information Technology Regulatory Authority (CITRA), in part to prepare for the liberalization of mobile communications and Internet markets.  Officially opened in 2016, CITRA serves as the primary national telecom regulator and cybersecurity agency. In March 2022, Kuwait announced the creation of a cybersecurity center that will eventually assume CITRA’s cybersecurity role, although details have not yet been finalized. CITRA also has a mandate to attract high-tech investment.

Kuwaitis have a general awareness of expectations for responsible business conduct, including environmental, social, and governance issues.  One aspect of responsible business conduct in Kuwait is contributions to local charities and causes.  Kuwaiti labor law is generally adequate in its protection of workers, although actual implementation of the law varies. Labor rights violations are generally more common in the domestic worker sphere than in the business community, although violations are common in low wage sectors with high expatriate populations. Economic stress following the onset of the COVID-19 pandemic in early 2020 led to an increase in illegally forced “resignations” or illegal salary cuts as businesses sought to relieve themselves of financial obligations. The Kuwait Environmental Public Authority has been active in enforcing compliance and addressing environmental violations, since the passage of the Environmental Protection Law of 2014.

Additional Resources

Department of State

• Country Reports on Human Rights Practices;
• Trafficking in Persons Report;
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities;
• U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises; and;
• Xinjiang Supply Chain Business Advisory 

Department of the Treasury

• OFAC Recent Actions 

Department of Labor

• Findings on the Worst Forms of Child Labor Report ;
• List of Goods Produced by Child Labor or Forced Labor ;
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World  and;
• Comply Chain .

Climate Issues

Kuwait is developing its national climate strategy. Although it has not committed to reaching net-zero carbon emissions by 2050, the New Kuwait Vision 2035 plan does incorporate a focus on environmentally sustainable economic diversification, renewable energy, and environmental conservation. Kuwait does not offer regulatory incentives to achieve policy outcomes that preserve biodiversity, clean air, or other desirable ecological benefits nor do public procurement policies explicitly include environmental considerations. Kuwait is increasing its focus on the creation of protected areas and ecosystem management plans and hopes to eventually set 18 percent of its surface area aside as protected space.

In recent years, Kuwaiti authorities have increased their focus on combatting corruption and several investigations and trials involving current or former government officials accused of malfeasance are active.

Transparency International’s 2021 Corruption Perceptions Index ranked Kuwait 73 out of 180 countries, an improvement from 78 in 2020.  Kuwait ranked behind all other GCC countries except for Bahrain.  According to Transparency International, Kuwait’s numeric score is 43 out of 100.

The often-lengthy procurement process in Kuwait occasionally results in accusations of attempted bribery or the offering of other inducements by bidders.  In 1996, the government passed Law No. 25, which required all companies securing contracts with the government valued at KD 100,000 (USD 330,000) 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.

Kuwait signed the UN Convention Against Corruption in 2003 and ratified it in 2007.  In 2016, the National Assembly passed legislation to establish the Anti-Corruption Authority, also known as Nazaha (integrity).  The legislation was passed to comply with the United Nations Convention Against Corruption. Nazaha has sent several cases to the Public Prosecution Office for failure to comply with financial disclosure requirements.

Resources to Report Corruption

Contact information for the government agency responsible for combating corruption is as follows:

Mr. Abdul Aziz Abdul Latif Al Ibrahim
President
Kuwait Anti-Corruption Authority (Nazaha)
Shamiya, Block 2, Opposite Wahran Park, Kuwait City, Kuwait
Tel:  +965 2464-0200/118
Email: contact@nazaha.gov.kw

The U.S. Embassy occasionally receives threat information indicating possible targeting of official and private U.S. citizens for terrorist attacks.  Soft targets are vulnerable to terrorist attack, although many have improved their perimeters and internal security. There have been no terror incidents in Kuwait since 2016.  There have been no attacks targeting businesses or infrastructure. Since late 2013, Kuwait has seen no large-scale, politically motivated demonstrations, although it experienced some small-scale protests against COVID-19 restrictions over the winter of 2020-2021. U.S. citizens are encouraged to enroll in the U.S. Department of State’s Smart Traveler Enrollment Program (STEP) for up-to-date information from the Embassy.  The Department of State shares credible threat information through its Consular Information Program, including Travel Advisories, Alerts, and Country Information for Kuwait, available at  https://travel.state.gov/content/travel.html or the Embassy’s website:  https://kw.usembassy.gov/.

Kuwait has a diverse labor force.  According to the Central Statistical Bureau (CSB), as of September 30, 2021, approximately 1,479,454 million expatriate workers account for 77.7 percent of Kuwait’s workforce. According to the Kuwaiti government’s statistics, the number of foreign workers in the private sector fell by over 280,000 over the course of the COVID-19 pandemic.

Many expatriate workers are low-paid laborers from other Middle Eastern countries, South Asia, and the Philippines working in Kuwait under a legally established “sponsorship” system.  Under the kafala system, a migrant worker’s immigration status is legally bound to an individual employer or sponsor for their contract period. The migrant worker cannot enter the country or transfer employment for any reason without first obtaining explicit written permission from their sponsor. This situates the migrant worker as almost entirely dependent upon their sponsor for their livelihood and residency. Abuse of the sponsorship, or “kafala” system is widespread. Sponsors sometimes confiscate workers’ passports despite legislation declaring this practice illegal. Workers who fled abusive employers had difficulty retrieving their passports, and authorities deported them in almost all cases. The law does not explicitly prohibit private sector workers from paying recruitment fees. For domestic workers, employers are required to pay recruitment agency fees, which cannot be deducted from the worker’s remuneration.

White-collar workers from around the world occupy highly-skilled positions in Kuwait, while many middle management positions are occupied by Egyptian, Lebanese, and South Asian nationals.

Kuwaiti nationals occupy most of the top management positions in the private and public sectors.  Generally, unemployment among Kuwaitis is quite low, but new labor entrants are reluctant to enter the private sector. According to the Public Authority for Manpower, approximately 73,000 Kuwaiti citizens worked in the private sector as of September 2021.

The International Monetary Fund has stressed that limiting public sector employment growth should be part of broader public sector reforms and accompanied by efforts to boost private sector job and entrepreneurship opportunities for Kuwaiti youth.

Since 1991, the government has adopted inconsistent policies intended to limit growth of the resident expatriate population. This population has continued to increase steadily however.  Lower-paid, unskilled workers often suffer unfavorable working conditions. The government has an electronic 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 Kuwaiti sponsors created ghost positions and sold the visas for personal profit. Workers brought to Kuwait under such fraudulent schemes found themselves unemployed, forced to seek illegal work, vulnerable to exploitative work conditions, and eventual arrest and deportation.  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. However, the quota system has impacted ability of domestic and foreign firms, delaying their ability to bring in new expatriate 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 a specific sector.  Private sector workers have the right to strike; however, negotiation and arbitration are compulsory in the case of disputes. Public sector workers do not have the legal right to strike, though groups of public sector workers threatened to strike on occasion during the past few years.  Kuwaiti labor law prohibits anti-union discrimination.

Kuwaiti labor laws establish work conditions in the public and private sectors, except for the oil sector. Kuwaiti 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 multi-tiered labor market ensures higher wages for Kuwaiti employees. The minimum monthly salary for the private sector is approximately 75 dinars (USD 250) whereas the approximate lowest monthly salary for Kuwaitis in the public sector is 600 dinars (USD 2,000). Domestic workers earn a minimum monthly salary of approximately 60 dinars (USD 200). Kuwaitis, whether employed in the private or public sector, receive substantial government payments and benefits on top of their base salaries. The amended labor law of 2010 did not change the previous workweek maximum from 48 hours but extended annual leave to 30 days after six months of employment. Labor laws are not consistently enforced and disputes over the payment of salaries and contract switching are common, especially among unskilled workers.  A specific set of laws and regulations cover domestic (household) workers.

The International Labor Organization’s (ILO) Committee of Experts has longstanding criticisms concerning discrepancies between the Kuwaiti Labor Code and ILO Conventions 1, 30, and 87 regarding work hours and freedom of association.  The ILO has criticized the prohibition on more than one trade union for a given field; the requirement that a new union have at least 100 workers, of whom 15 must be citizens; the regulation that workers must reside in Kuwait for five years before joining a trade union; the denial of foreign workers’ right to vote and serve in trade union leadership positions for; the prohibition against trade unions engaging in political or religious activity; and the reversion of trade union assets to the Public Authority for Manpower in the event of dissolution. While Kuwaiti public sector union leaders and workers faced no government repercussions for their roles in union or strike activities, companies directly threatened migrant workers calling for strikes with termination and deportation.

Law No. 91 of 2013 for Combating Trafficking in Persons and Smuggling of Migrants defines human trafficking in Kuwait and the penalties for trafficking in persons. Forced labor conditions for migrant workers included nonpayment of wages, long working hours, deprivation of food, threats, physical and sexual abuse, and restrictions on movement, such as withholding passports or confinement to the workplace. During recent years, the Government of Kuwait has taken several measures to address human trafficking and to improve protections for workers.  In September 2020, the Public Authority for Manpower, the Supreme Council for Planning and Development, the United Nations Development Program and the International Organization for Migration launched the Tamkeen initiative to implement the International Recruitment Integrity System to promote ethical recruitment of migrant workers. As of November 2021, the Public Authority for Manpower completed the first phase of the Tamkeen initiative, which included training for its own staff and recruitment agencies. In October 2021. the Anti-Trafficking Department of the Ministry of Interior established a 24/7 hotline in Arabic and English to receive reports of human trafficking, but there are reports it did not operate at all times.

Since 2007, labor laws have banned women from working between 10:00 p.m. and 7:00 a.m., except for sectors approved by the Public Authority for Manpower such as nursing.  The law also banned women from working in jobs that are judged to be hazardous, rough, and damaging to health, as well as in positions that the government deems “immoral or abuse women’s femininity,” or in businesses that exclusively serve men. The Supreme Council for Planning and Development reported that women make up 56 percent of the labor market in the public sector and 11 percent in the private sector.

The Director General of the Public Authority for Manpower issued an administrative decision in March 2022 annulling a previous 2021 decision that banned the renewal of work and residency permits for expatriates who reached the age of 60 and held only a high school certificate.

Kuwait’s Public Authority for Manpower assists all residents of Kuwait with private sector employment and labor disputes.  The Public Authority for Manpower’s labor and occupational safety inspectors routinely monitored private firms for labor law compliance. Noncompliant employers faced fines or a forced suspension of their company operations. Offices assist residents according to the location of the employer and are open Sunday through Thursday, 8:00 a.m. – 1:00 p.m. Some expatriate residents have reported that the offices were unable to provide any assistance. It is recommended that residents seeking assistance be accompanied by an Arabic speaker. Following is information on Public Authority for Manpower offices:

Capital Business Administration:
Sharq,
Mohammad al-Haqan Street
Tel: +965 2246-6830 and 2246-6831

Hawalli Business Administration:
Hawalli
Tunis Street, opposite Ahli Bank of Kuwait
Tel: +965 266-0229 and 2266-0228

Al-Farwaniya Business Administration:
Dajeej
Adjacent to General Department of Criminal Evidence
Tel: +965 2431-9555

Al-Jahra Business Administration:
Saad al-Abdullah (Amgarah)
Street 1, Block 10
Tel +965 9494-5446

Al-Ahmadi Business Administration:
Al Ahmadi
Next to Kuwait Oil Company
Block 1, Street 20
Tel: +965 2398-2059

Mubarak Al-Kabeer Business Administration:
Mubarak Al-Kabeer
Co-op #4, beside National Bank of Kuwait and Kuwait Finance House
Tel: +965 2543-8595

The Public Authority for Manpower offers Arabic and English responses via their Twitter handle: @manpower_KWT, or Instagram account: pr.manpower.  The Authority attempts to answer inquiries within one business day.

Kuwait and the United States concluded an investment guarantee agreement in 1989, which facilitated the extension of programs from the Overseas Private Investment Corporation, now the U.S. International Development Finance Corporation (DFC).  There are no active DFC programs in Kuwait currently. Kuwait is a member of the Multilateral Investment Guarantee Agency.

According to the 2020 World Investment Report published by the United Nations Conference on Trade and Development, Kuwait attracted a foreign direct investment inflow of USD 104 million in 2019, while divesting USD 2.5 billion of overseas investment.

According to the U.S. Department of Commerce Bureau of Economic Analysis, 2019 U.S. direct investment in Kuwait was USD 398 million, down from USD 499 million in 2018.  Kuwait’s FDI stock position in the United States totaled USD 1.26 billion in 2019. Kuwaiti direct investment in the United States is largely in real estate, stocks, and logistics.

*Host country source: https://www.cbk.gov.kw/en/statistics-and-publication/publications/quarterly-statistical-bulletin 

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