KUWAIT, 25 May 2005 — Kuwait’s Trade and Industry Minister Abdullah Al-Tawil said on Monday that the Gulf Arab state now expects to attract direct foreign investments of about $10 billion.
He told Reuters in an interview these investments include projects in the works such as the multi-billion-dollar Olefins II project in the petrochemicals field by EQUATE Petrochemical Co, a joint venture between Kuwait and Dow Chemical Co.
The latest figures cited by the minister by far tops the few billion dollars in foreign direct investment that Tawil last June said had been attracted to Kuwait by then.
“We have seen a lot of money coming into Kuwait from foreign investors. At this stage we are talking about $10 billion that we expect to flow in,” Tawil told Reuters on the sidelines of a conference in Kuwait City on combating corruption.
“We are moving in the right direction and opening a lot of sectors for foreign investors,” he added.
Tawil said that besides petrochemicals, another $2.5 billion had flowed in so far to Kuwait to cover foreign investments in several factories as well as two electricity generation stations to meet the Gulf Arab country’s rising power needs. “One of them (power stations) will be soon and another one in the process,” Tawil said. “Many of the factories are being established now.”
The government of Kuwait is now embarking on a host of multi-billion-dollar infrastructure projects, an economic liberalization program and a host of political and economic reforms that it hopes will help it regain its 1970s status as the Gulf region’s trade hub. “We are encouraging investors by opening all the sectors for them. We are telling them exactly what sectors they can go into,” Tawil told Reuters. “We are giving them 10 years tax holidays and helping them in every possible way that we can.”
The minister said the government has opened up 11 sectors to foreign investors, including education, health, banking, telecommunications, petrochemicals, hotels and insurance. But the lucrative upstream oil sector remains off limits to them.
Tawil said the Central Bank of Kuwait was studying applications from international banks that applied to operate in Kuwait. The central bank already gave approval to HSBC unit HSBC Bank Middle East Ltd., National Bank of Abu Dhabi and France’s BNP Paribas to open branches. The minister said the government is also trying to revise the current tax law as part of the drive to attract both foreign and local investments.
The Kuwaiti tax law enacted in 1955 stipulates a punishing 55 percent tax on the earnings of foreign companies. A revised law was presented to Parliament in 2002 but is yet to be passed by the house. “It is going to be changed ... during this parliamentary term,” he said, referring to the tax law.
Arabic daily Al-Anbaa on Monday reported that Finance Minister Badr Al-Humaidhi has recommended an annual tax of 2.5 percent to 25 percent on private companies, in a report he presented to the Cabinet on amending the old tax law.