KUWAIT has the potential to become the financial and commercial hub of the region; however, red tapism and other bureaucratic tangles in addition to political skullduggery are undermining those prospects, says Abdullah Abdul-Aziz Al-Zahem — a Kuwaiti businessman, owner and board chairman of Al-Zahem Industries Company.
Al-Zahem was talking to the Arab Times, sharing some candid views about the pros and cons of doing business in Kuwait.
If the government doesn’t wake up to the flight of capital from Kuwait to other countries in the region and abroad, unemployment in Kuwait will aggravate, he noted. The private sector, he feels, is the ultimate solution to much of the nation’s crippling problems.

Question: Tell us something about your initiation into business. When did it take place and how was it when you started? How did you adapt to the latest developments in this field?
Answer: I started business in a humble way, in the footsteps of my father. I started in 1961 by helping my father who was in the real estate business. I was involved in the construction of several buildings and houses. I have built several of them.

Q: Every successful person has some spark or a turning point in life that would have launched them in their journey. Yes, you said you were following your father, but then what was it that actually gave you focus and confidence to go ahead in your chosen field? What was the most unusual situation you faced in your work that somehow struck you and made you determined to succeed?
A: For 9 years I was with my father. Then in 1970, I started my own business. When I started out on my own, it was difficult initially, because those were my formative years and you usually need a lot of support and help at that time. But unfortunately, I was not lucky enough to have such help.
I decided to go into my line of business based on very commonsensical logic. We all know that the temperature in Kuwait is hot, and refrigeration and air conditioning will have never ending demand in the country. And so, I thought of getting into the refrigeration and air conditioning business. I had a showroom in Sharq. At that time, it was hard to obtain land for free. And so I had to purchase land. I bought a plot measuring 2,000 square meters in Al-Rai and built the area up for a showroom. My investment on machinery was KD 500,000. I raised that sum by taking a loan from a local bank.

Q: After you started your own business in this fashion, what were some of the important turning points in your business?
A: In hindsight, I feel the single most important turning point in my business was the decision to transfer my business from the commercial sector to the industrial sector. This broadened my opportunities and the very scope of my business. Suddenly, the volume of business multiplied manifolds.

Q: Was it all very smooth as you make it sound, or were there many challenges in your path? What problems do businessmen operating in Kuwait face?
A: It was not a smooth journey. There were challenges. I think, the bureaucracy and the government regulations in Kuwait are huge impediments for a business to flourish and thrive in Kuwait.
We face many obstacles, and the uncooperative attitude of the government can be very frustrating at times. It’s time the government realized the need to encourage enterprisers like me for the benefit of the nation. Otherwise, it will hinder the prosperity of the nation.

Q: How did you establish your company and make it successful in spite of these challenges? Did you work your way around these impediments or did you take them head on?
A: We established our business by working hard to overcome the challenges. It was not easy, but the efforts have been hugely rewarding. Over years, since we launched our business, we have been exerting tremendous efforts to develop our products and improve our sales.
For instance, take re-treading old tyres. It is sometimes very difficult to retread old tyres using the traditional method of vulcanizing rubber. Technology has changed, and we have been always open to change and adopting new methods in our business to give our customers better solutions.
Nowadays, we are using a new method called the ring tread method, which has greatly changed the possibilities in retreading. We began to yielded positive results from the very outset. Based on this, our opportunities also expanded. My company recently signed an agreement with Marangoni SPA Group - an Italian company - for the production of tyres.

Q: Ring tread tyre is a new product introduced in Kuwait. Can you tell us about its advantages when compared to other products? Give us an idea about what this retreading method is all about?
A: It is a very innovative system that has I would say sort of revolutionized retreading of tyres. It is the only retreading system that uses circular, jointless treads and is similar to the principle used in the production of new tyres.
It is the ideal solution for people looking for good quality tyres for low price. Of course, tyres need to be changed on a regular basis and on Kuwait roads, where the speeds are high, good tyres are a must for safety. We know of many accidents that take place because of blowups.
Ring tread is the ideal solution for anyone who wants hundred percent safe, reliable, durable and cost-effective tyres. The price is half that of the high-quality new tyres but is safe and reliable, in addition to the lack of flaws in the design of the tread and undertread profile, which assures reduced and uniform rolling resistance. This is due to the naturally circular shape and jointless application of tread on the casing. Furthermore, the use of high elasticity compounds provides lower rolling resistance, resulting in lower fuel consumption and considerable savings, especially on the medium and long distances.

Q: Are people aware of this technology in Kuwait? A large number of motorists are still ignorant about tyres and the means to maintain them. How is the level of awareness of this new retreading system, and how is it reflecting on your business in Kuwait? Is it encouraging or discouraging?
A: The business I wouldn’t say is very great, and that’s not because of low awareness. There is awareness on this new system of retreading, but the business is not so encouraging because of stiff competition.
Obviously, when you have a large number of players catering to a small market, then the profit margins will be very small. That’s what is happening in Kuwait. Though, yes industrial sector is doing well in general, when compared to the financial sector and the realty sector, it’s not doing that well. I think the real estate sector is doing the best at the moment.

Q: How did you start in retreading, considering it is a new concept and it is not known in the Kuwaiti society? Did the Kuwaiti companies and consumers accept this concept?
A: Two foreign investors had previously approached me to do retreading in their countries. I expect to go ahead with this venture, which has been proven to be a profitable business over the last 25 years. It is also good for the environment because it helps control air pollution.

Q: You said the industrial sector, though not doing as well as some of the other sectors, is still pulling on. Do you think the industrial sector is getting enough support from the government to thrive in Kuwait? What about the private and public sector companies in the industrial sector, what sort of treatment are they getting?
A: It is difficult for the commerce and industry ventures to succeed in Kuwait due to the lack of support from the government and financial institutions. The banks charge exorbitant interest rates. It’s a different scenario in advanced countries.
There is more support in advanced countries for this kind of ventures. As I mentioned earlier, bureaucracy is a big impediment in Kuwait and is a spoke in the wheel for enterprises, an obstacle for businessmen. That’s why in Kuwait we find businesses of big families alone succeeding. If you don’t have the backing of your family, any business is doomed to fail in Kuwait.
Kuwait’s businesses run on family money, and not on money generated through financial institutions. This is an unhealthy scenario. If we need to grow and progress, money has to reach talents.
Opportunities should not be some sort of a heritable commodity. It should be open for all, and those who have the right skills and attitude, must be able to avail the opportunities and succeed.
Unfortunately, the ground reality in Kuwait is far different from that. We know how the industrialized nations in the world help their people grow. There, the laws and rules are designed to help private enterprises flourish and grow. There, the government helps people by granting them land, charging minimal interest on loans and eliminating politics from ministries that deal with commerce and industry.

Q: That’s an interesting take. We know that much of Kuwait’s capital is flying to foreign countries, and it’s only a fraction of that amount that gets invested here. Isn’t that also a result of the bureaucracy you mentioned? Can you comment on this?
A: I agree one hundred percent with what you said. Several Kuwaitis have sadly taken the decision to invest their capital abroad because of the tortuous and difficult procedures that are involved in starting a business here. The government has to really sit up and take note of this. We can’t be harking on about unemployment and the need to generate jobs in Kuwait, turning a blind eye to the flight of capital from our country.
Only investments can generate employment. If you don’t look at ways of encouraging investors to invest in Kuwait by making the laws and procedures investor friendly, then we are sure to lose more capital in future, which means losing employment opportunities. Our investors are going out of the country in search for better and more secure business environment.

Q: What about you? Do you have investments in Europe, USA or Asia or anywhere else? If, yes, what in your experience, are the advantages of investing in those countries compared to Kuwait?
A: No, I don’t have businesses outside Kuwait. I do business only in Kuwait.

Q: Some of the issues you raised in Kuwait... how do you think politicians can play a role in resolving those issues? How do the conflicts between the opposition and the government on one hand, and the ruling family on the other, affect businesses and economic development in Kuwait?
A: In my opinion these conflicts have definitely affected the commercial and industrial activities in the country, and have had a negative impact on the economic development of Kuwait. Such political conflicts should not be allowed to go on, they have to be contained for the benefit of the nation. Both the commercial and industrial sectors are unstable due to these conflicts.

Q: Do you think the vision of HH the Amir Sheikh Sabah Al-Ahmad Al-Sabah to transform Kuwait into a commercial and financial hub in the region is feasible given the problems you mentioned? How can Kuwait realize this vision?
A: Yes, HH the Amir Sheikh Sabah Al-Ahmad is a visionary and under his leadership it is possible to realize these goals. However, he needs to be supported duly by others.
The politicians must put national interest ahead of personal interests, and must have the will to do what is good for the nation without fear or favor. Unfortunately, the politicians are driven by personal and political interests and give little importance to the national good.

Q: Of late there has been a lot of talk on private sector and the politicians and the government seem to have realized the importance of private sector for the development of the nation, especially for the generation of employment. What is the role of the private sector in actualizing the vision of HH the Amir?
A: In my opinion, the private sector has a very crucial role to play in the achievement of the national vision of making Kuwait the commercial and financial hub of the region.
Kuwait has many advantages naturally gifted to it because of its geographic location. The position of the country is very crucial and if exploited duly it can become the commercial center of the region.
Kuwait’s businessmen have proven their business abilities in the past as seafaring merchants doing trade with foreign countries. They still have the same spirit of adventure and open mindedness to go out and explore and create opportunities out of adversities.
Today, Kuwaiti businessmen are considered one of the best and the most reliable enterprisers in the world of business. The public sector has saturated, and now it is in the hands of the private sector to absorb the youth of the current and the future generations into the job market. Only we can generate more job opportunities.
With the growth of private sector, there will be more prosperity in the country, and as long as the people are given the opportunity to pursue their dreams and there is a favorable atmosphere for private businesses to flourish, Kuwait will have no looking back. We will prosper and might even exceed the visions of our leaders.

Q: What are the contributions of the small-scale enterprises to the gross domestic product of the nation and the creation of more jobs?
A: I fit that bill of a small-scale enterprise. As a small-scale enterprise, retreading helps in balance of payments. Instead of spending huge amounts of money on new tyres, the consumers can reuse their old tyres through retreading. Educated people benefit much as they pay half the price of the new tyres but they get the same mileage. This is also makes environmental sense, because we are recycling old tyres. So, in a sense it also a green technology.
We have started work in the lighting business. We have done a job for Al-Saif Hospital in Salmiya and the result was very good. We also do business in computer programming.

By Abubaker A. Ibrahim
Arab Times Staff

Abdullah Abdul-Aziz Al-Zahem was born on May 15, 1940. He studied at the Technical College in England in 1957. He later started his own business, which includes lifts, refrigeration and air conditioning, cold stores, lighting, retreading of tyres and computer programming.