Council of Ministers debating negative list of sectors excluded from the law
The Kuwait Direct Investment Promotion Authority (KDIPA) expects to release the executive regulations for the Direct Investment Promotion law in mid-November.
The law, 116/2013, permits 100 per cent ownership by foreign companies and will come into force by the end of 2014. It was approved by parliament in June 2013, as an attempt to speed up the investment process.
A final hurdle for the law is the negative list, which will stipulate which sectors are excluded from the law, such as upstream oil. Any sectors on the list will require a foreign company to still have a Kuwaiti partner. The Kuwaiti Council of Ministers is debating the negative list on 10 November and once approved, KDIPA can issue their executive regulations.
Well be ready for business before the end of 2014, says Mona Bseiso, investment promotion consultant for KDIPA. The authority has already started receiving projects.
In 2012, Kuwait attracted only $1.85bn-worth of foreign direct investment (FDI), according to data from the United Nations Conference on Trade and Development (Unctad), while outbound FDI reached $7.56bn.
KDIPA was set up to encourage and facilitate investment, both foreign and local, although its exact role will be defined by the executive regulations. This will include allocating permits for new businesses and tax exemptions for existing ones.
The executive regulations, detailing KDIPAs procedures based on the new law, were supposed to be issued within six months of it being published by the National Assembly in its Official Gazette. The delay of nearly a year is due to the time it took the many stakeholders to reach an agreement on how to put the law into practice.
KDIPA was established by the 2013 law, which replaces previous legislation from 2001 that set up the Kuwait Foreign Investment Board (KFIB). It transfers all the powers and assets of the board to KDIPA. The law also replaces the previous positive list system, which limits possible foreign investment to specified sectors, such as health and tourism, with a negative list approach where the Kuwaiti economy will be open to foreign investment with the exception of specified areas.
The law sets a maximum of 30 days for approving a licence application and establishes a one stop shop contact point for potential investors. This is in response to complaints raised about bureaucratic delays at KFIB.
A separate law, 116/2014, concerns public private partnerships (PPPs), and executive regulations for it are expected to be issued in early 2015 by the Kuwaiti Partnerships Technical Bureau. This law will streamline the process of tendering on a PPP basis.
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