New authority works with companies exploring opportunities in Kuwait
Kuwait Direct Investment Promotion Authority (KDIPA) has begun working with companies exploring investment in Kuwait, after issuing Executive Regulations and opening for business on December 29.
A 2013 law permitted 100 per cent ownership by foreign companies, in an attempt to encourage and facilitate foreign investment. The executive regulations, which allowed the law to come into practice, were delayed until the end of 2014.
KDIPA has replaced the Kuwait Foreign Investment Bureau (KFIB) as a one-stop shop for investors. The authority is required by law to approve licenses within 30 days of application.
The new regulations, drafted by a cross-sectional team including lawyers and consultants, are very simple and unambiguous, says Mona Bseiso, investment promotion consultant for KDIPA. Decisions will be made at the authority level, and our workflow will bring out best practices.
So far, KDIPA has been contacted by around 150 companies, and identified two proposals they view as serious prospects. Proposals in the technology, communications, consulting and services sectors are expected to be approved earliest.
KDIPA is stressing simplicity and transparency, and aiming to add value for both Kuwait and investors.
KDIPA has taken great steps to simplify their procedures and keep them as straightforward as possible, says Alok Chugh, a partner at UK firm EY in Kuwait. We are just beginning to test these processes with applications. The team at KDIPA is energetic and we have had quick responses so far.
The Council of Ministers will debate the negative list of excluded sectors, in which investors are still required to have a local partner, in the next few weeks. It is expected to be simple and reduced, with only constitutionally protected sectors such as upstream oil and gas excluded.
KDIPA has received no investment enquiries about sectors likely to be excluded, but will inform investors of the possibility in these cases.
Existing investment incentives will remain, consisting of tax break for up to ten years and customs exemptions, both at KDIPAs discretion.
We wont grant these automatically, says Bseiso. Once a concept paper for a project is submitted, we will evaluate it according to weighted criteria, including benefit to the local community, employment creation, opportunities for Kuwaiti suppliers and improving Kuwaits export potential.
Investors are withholding judgement on the success of the reforms until they have more experience with the new system.
Obviously a lot of processes still have to be worked out, such as interactions with ministries. There is some scepticism about whether industrial projects will be able to secure land and permits adds Chugh. But EY has had eight or ten investor enquiries in two weeks and we are optimistic.
Executive regulations covering reforms of public private partnership laws, which will effect industrial, power and water projects, are due in February 2015.
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