Throughout the world, countries work hard to develop their infrastructure to promote social stability by stimulating the economy, creating job opportunities for improving the standard of living for their citizens, and enhancing prosperity locally. The more advanced and reliable a country’s infrastructure, the more attractive it becomes to both foreign and local investors.
Recognizing that the private sector is a natural partner to the public sector, governments often offer incentives to encourage private investment— aiming to create a mutually beneficial partnership. Given that the private sector is the natural partner of the public sector, governments are keen to offer greater incentives to the private sector to ensure that the partnership is mutually beneficial. As a result, major projects in those countries, particularly infrastructure projects such as metros, railway networks, roads, and even health and education facilities, are often awarded through long-term, stable agreements that include substantial incentives for contracting companies, whether local or foreign.
Foreign firms, in particular, are granted more favorable terms as they bring in external capital and contribute to the local economy by employing local labor. Most countries around the world adopt the “build, operate, transfer” (B.O.T.) system to implement national projects, involving the private sector in development through long-term usufruct agreements that may extend for 50 years or more
In Kuwait, however, the situation is different. Instead of promoting the private sector as a development partner, some government agencies hinder productive projects of the private sector through restrictive decisions, such as recent measures affecting industrial, agricultural, and service plots. These decisions run counter to Cabinet’s directives aimed at encouraging private sector participation and, in effect, contribute to rising inflation by reducing market competitiveness. In most countries around the world, local or foreign companies take on the construction and financing of airports, railways, and roads. These companies then recover their investments through a mutual benefit or usufruct system.
This ensures that governments avoid financial burdens and do not expose public budgets to deficits. The B.O.T. system creates a stable, supportive, and investment-friendly environment while enabling governments to achieve sustainable development goals. This is clearly evident in the UAE, Saudi Arabia, and other neighboring countries that have moved away from the policy of state monopolization of development projects.
These countries have realized that such a policy limits the economy’s potential, discourages both local and foreign investment, and increases dependence on already strained state resources, thus ultimately hindering efforts to diversify income sources. In the past, certain decisions hindered the stability of local development. The burdensome conditions imposed on the private sector, especially those related to industrial, service, and agricultural plots, created widespread concern. Both local and foreign investors require incentives and attractive terms to increase their participation in the local market.
Such restrictions have driven investors to seek more stable environments that offer greater support and facilities. For example, the Chinese-Kuwaiti partnership has been discussed for nearly three years, yet no tangible achievements have materialized so far. While progress may be underway, it remains slow. Kuwait appears to be moving against the global trend. Here, investors are expected to offer incentives to the state, rather than the state providing incentives to attract investment. This raises an important question – Which party truly needs the other, and who is seeking to attract foreign investment?
