The private sector is key to the emirate’s development plans, but it still has a lot to do to attract investors
As civil unrest spread through the region early this year, Kuwait, like the majority of its Gulf neighbours, remained relatively unscathed. While other states push for political reforms, Kuwait can boast the oldest form of democracy in the Gulf.
The problem with Kuwait’s political system, which enables open parliamentary debate, is that it has also restricted it from pushing ahead with vital development schemes. The schism between government and parliament has prevented vital economic reforms.
Kuwait’s economy is heavily dependent on its energy sector, and it is important that it diversifies its economy and expands the role of the private sector while it still has the resources to do so. In February 2010, the government launched its first economic plan since 1986. The plan aims to up private participation and grow the non-oil economy. If completed, it would provide a solid foundation for diversifying Kuwait’s economy. However, as with much of the country’s plans, little has been done.
Increasing foreign investment in the emirate will only be attainable if the government offers increased incentives to private companies.
With an oil production rate of almost three million barrels a day, Kuwait has the resources available to develop its economy and infrastructure. The biggest challenge to its development plans remains the political system. Until consensus can be reached at the political level, Kuwait will struggle to realise its potential.