Kuwait - Country Commercial Guide
Investment Climate Statement

This information is derived from the State Department's Office of Investment Affairs’ Investment Climate Statement; mail to: EB-ICS-DL@state.gov.

Last published date: 2021-03-16

The U.S. Department of State Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world.  They analyze a variety of economies that are or could be markets for U.S. businesses.

Topics include Openness to Investment, Legal and Regulatory systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

These statements highlight persistent barriers to further U.S. investment.  Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy.  To access the ICS, visit the U.S. Department of State Investment Climate Statement website.

Executive Summary

Kuwait is a country of 1.4 million citizens and 3.3 million expatriates.  It occupies a landmass slightly smaller than New Jersey, but possesses six percent of the world’s proven oil reserves and is a global top ten oil exporter.  The economy is heavily dependent upon oil production and related industries, which are almost wholly owned and operated by the government. The energy sector accounts for more than half of GDP and close to 90 percent of government revenue. The fall in oil prices after OPEC+ failed to agree on production targets in 2019 greatly exacerbated Kuwait’s fiscal deficit. This was only heightened with the onset of the COVID-19 pandemic, which resulted in dramatically reduced oil demand in the first and second quarters of 2020. No one can predict what a post-pandemic economy will look like, except that it is likely to be very different from what it has been. In the background looms the prospect for economic reforms and diversification as outlined by the government in its national development plan, called New Kuwait Vision 2035.

As it develops the private sector to reduce the country’s dependence upon oil, the government faces two central challenges. It must improve the business climate to enable the private sector, and prepare its citizens to successfully work in the private sector. The government has made progress on the business climate, improving from 97 to 83 among 190 countries the World Bank’s 2020 Doing Business Report. Nonetheless, Kuwait remains the lowest ranked of its fellow Gulf Cooperation Council (GCC) countries. Preparing Kuwaitis to work successfully in the private sector and compete internationally may be more difficult. Today, more than 85 percent of all Kuwaitis with jobs work in the public sector, where they receive generous salaries and benefits. Convincing young Kuwaitis that their future is in the private sector will require changing in social attitudes and raising the level of local education so that they may compete internationally.

With a view to attracting foreign investment the government passed a new foreign direct investment law in 2013 that permits up to 100 percent foreign ownership of a business, if approved by the Kuwait Direct Investment Promotion Authority (KDIPA).  All other foreign businesses must abide by existing law that mandates that Kuwaitis, or a GCC national, own at least 51 percent of any enterprise. In approving applications from foreign investors seeking 100 percent ownership, KDIPA looks for job creation, the provision of training and education to Kuwaiti citizens, technology transfer, diversification of national income sources, contribution to exports, support for small- and medium-sized enterprises, and the utilization of Kuwaiti products and services.  KDIPA reported that it had sponsored 37 foreign firms, including six U.S. companies. KDIPA may also provide certain investment incentives such as tax benefits, customs duties relief, and permission to recruit certain foreign employees.

The government remains committed to executing its long-term Vision 2035 national development plan, which focusses on improving the country’s economic infrastructure, such as the construction of new airports, ports, roads, industrial cities, large residential developments, hospitals, a railroad, and a metro rail.  The Northern Gateway initiative, which encompasses the Five Islands or Silk City projects, envisions public and private sector investment in the establishment of an international economic zone that could exceed USD 400 billion over several decades.