Kuwait approves direct investment exclusions

05 February 2015

Oil and gas extraction closed to 100 per cent foreign ownership

Kuwait’s Council of Ministers has approved a list of ten sectors of the economy which are excluded from laws allowing 100 per cent foreign ownership on 1 February 2015.

The excluded sectors, such as crude and oil extraction, are based on the constitution and key national interests.

The brief list opens up the majority of the Kuwaiti economy to foreign investors, who are currently submitting proposals to the Kuwait Direct Investment Promotion Authority (KDIPA).

The list includes:

  • Extraction of crude oil
  • Extraction of natural gas
  • Manufacturing of coke oven products
  • Production of fertiliser and nitrogen compounds
  • Production of domestic gas and its distribution via main pipelines
  • Real estate activities, except construction development projects for private operations
  • Private security and investigation activities
  • Private organisations in public administration, defence and compulsory social security
  • Activities with a professional body (for example lawyers)
  • Labour services, including domestic labour

The negative list represents the final step in putting 2013 reforms to the direct investment law into force. The law is intended encourage direct investment in Kuwait and simplify bureaucratic processes.

Under the previous 2001 law, only specified sectors such as infrastructure, tourism and insurance were open to 100 per cent foreign ownership.

“There are clear, dedicated areas on the list,” says Philip Kotsis, a partner at UAE law firm Tamimi & Company. “Everything else, including sectors such as oil services, technology, and import and distribution, appear unrestricted, which is very positive foreign direct investment opportunities.”

The reforms were in response to a lack of interest by foreign investors, as gaining approval for projects was so slow and complex.

The 2013 law also established KDIPA, which opened for business at the end of 2014. Under their simplified regulations, projects have to be approved within 30 days of application.

So far, one project, in the IT sector, has been approved and can now be granted a license. A second IT and telecoms project is in the advanced stages of the approval process.

“There’s a great deal of interest from numerous companies spanning various sectors and industries; large multinationals to medium-sized companies,” says Kotsis. “They are looking at everything from industry and manufacturing to technology and services.”

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