WASHINGTON, March 22, (KUNA): Kuwait is tackling dwindling oil prices in a “thoughtful and strategic way,” several US officials, diplomats and experts believe, as they hailed the Gulf country’s attempts to attract foreign direct investment in return.
“I had the privilege to attend the Investment Forum in Kuwait (on March 9), and it is clear to me that the State of Kuwait is tackling the economic downturn in a thoughtful and strategic way,” David Hamod, head of the National US-Arab Chamber of Commerce said in a State Department-hosted panel discussion.
“At a time of low energy prices, Arab countries are looking for ways to reduce their overhead spending – cutting subsidies, eliminating projects that don’t make sense, and overhauling regulations that should have been challenged several years ago,” he said.
Hamod said that as Kuwait tightens its spending, more importantly in the long-term, it is also expanding its outreach efforts to attract foreign direct investment. “American companies are definitely monitoring this emerging opportunity,” he suggested.
Following recent extremely low figures, OPEC crude prices crept up to just above the $35-mark, according to the global oil-producing bloc which includes Kuwait, after they had reached around $100 a barrel in 2014.
Similarly, US Ambassador to Kuwait Douglas Silliman, in his own intervention, agreed that Kuwait is “well-placed to weather the storm.” He said that lower oil prices have encouraged Kuwait to reduce subsidies on basic services, reiterating that “even without doing this, Kuwait is well-placed to weather the price downturn.” Pointing out the recent “liberalization” in foreign investment laws, including the possibility of 100 percent foreign corporate ownership, he said the move has “opened new opportunities for American companies to work and invest in Kuwait.” The two speakers were referring to the Kuwait Direct Investment Promotion Authority (KDIPA), which has already accepted the free-flow entry of international firms like telecommunications giants, Huawei, and Tech Company, IBM into the Kuwaiti market.
The recently-launched body is mandated with the tasks of attracting value-added direct investment and promoting Kuwait as a lucrative investment destination, according to its Director General Sheikh Meshaal Jaber Al-Ahmad Al-Sabah.
The state-established body aims to be instrumental in the goals of supporting economic diversification and the role of the private sector; he is quoted as saying on the body’s official website.
In an interview with a local Kuwaiti newspaper back in July 2015, the KDIPA chief said that the Kuwaiti government is “offering foreign joint stock limited liability companies or individuals or branches of foreign companies’ 100 percent ownership.” Other incentives the state body is tasked with are offering “tax exemptions for up to 10 years, complete and partial customs exemptions and assistance on locating land and labour,” he added.
For her part, US Undersecretary of State for Economic Growth Catherine Novelli believes that this is the way forward for governments in the region.
“Bringing together the right stakeholders is critical. Governments alone cannot and should not solve every problem. But governments have significant convening power,” she said.
Assistant Secretary of State for Near Eastern Affairs Anne Patterson takes the view that the oil prices decline is favourable to nations in the region in spite of it resulting in “an unprecedented level of uncertainty” and putting the budgets of Gulf nations “under stress.” However, she opined that this situation will “ultimately benefit all countries with an improved business climate that will attract new investments”.