PAI suggests concluding permanent contracts with investors
KUWAIT CITY, Feb 18: Ministry of Finance’s State Property Administration has requested the Municipal Council to issue a decision to convert former Free Trade Zone to a special real estate property, reports Al- Qabas daily.
In this regard, a decision would be issued to evict those using the land after granting them a specific period to settle their legal situation to pave the way for the State Property Administration to work toward putting the land up for public auction, in accordance with Decree Law No. 105 of 1980, concerning the state property system and its executive regulations – provided that the rental value per square meter of plots for all use is in line with Ministerial Resolution No. 40/2016.
The ministerial resolution concerns the issuance of regulations for the use of state property, especially real estate and service fees, followed by a contract between the State Property Administration and the auctioneer.
Ministry of Finance was convinced of Public Authority for Industry’s (PAI) proposal regarding the management and work mechanisms of the future zone in Shuwaikh (previously Free Trade Zone), and it identified four obstacles to assigning the region to the authority:
1 – The nature of design of the area does not allow the practice of industrial and handicraft activities, whether designing buildings or road areas, as it will lead to heavy traffic.
2 – The assignment of free zone will add to its burdens and occupy the place with activities for which it was not established.
3 – The collected financial sums will be useless if the Authority does not retain the surplus profits.
4 – The financial burdens on the authority will intensify due to increase in the administrative and technical apparatus of the district administration.
The Public Authority for Industry noted the following points should be taken into consideration if the administration of the region assigns the Authority to:
1 – Maintain the activities of the area as “Office Park” in accordance with Cabinet Resolution No. 495/2004 without adding any industrial or craftsmanship activity.
2 – Suffice the number of existing restaurants and cafes, in addition to Wajid Hotel.
3– Maintain the current construction ratio.
4– Remove all obstacles and problems that prevent obtaining licenses for investors in the region.
5 – Maintain the Authority’s surplus profits to meet the provision of public services and the development of the region.
6 – Not to distribute lands that have not been invested but allocate them for public use to serve as parking lots, parks or exhibition spaces for the owners of small projects.
7 – Confirm the responsibility of relevant government agencies for the region’s infrastructure services. Public Authority for Industry also suggested concluding permanent contracts with the investors regarding the region – in light of the controls and requirements in force, in order to save time and effort, instead of allowing a temporary period and then canceling the contracts later to prepare new ones for investors.
The authority calls for low-intensity activities (office activities) in the resettlement of the region in line with the vision of the consultant of the state’s fourth structural plan as reported in the services committee meeting. In addition, PAI has decided to give investors the opportunity to reconcile their legal conditions in the future zone provided that the period does not exceed a full Gregorian year.
The annexes to investors’ contracts in the region are concluded in accordance with the provisions of Free Zones Law No. 26/1995 and the prices regulation and fees established in this regard.
General Secretariat of the Council of Ministers had received several proposals and solutions to manage the future region from several sides, whether from a group of investors, Public Authority for Industry, Ports Corporation, Kuwait Municipality and Direct Investment Promotion Authority.
The secretariat held a meeting on Thursday, February 6, 2020 with a host of bodies and economic affairs and services committees to discuss the issue. On May 23, the joint committee decided to assign Ministry of Finance to manage the state property, in coordination with the Ministry of Commerce and Industry, Kuwait Municipality, Public Authority for Industry, Direct Investment Promotion Authority, the Fatwa and Legislation Department, and other entities it deems appropriate.
The subject will be studied in its various aspects, including legal, organizational, technical, and financial dimensions. Accordingly, the opinion of the Ministry of Finance was settled after reviewing the proposals submitted to the Public Authority for Industry.