The drastic fall in the price of oil since 2014 has hit Kuwait’s economy hard. The black gold is the main income source for this Emirate nation, whose population numbers four million. Thanks to an estimated 550 billion US dollars in state reserves and a consistently high income per head, Kuwait is still classed as one of the world’s top ten richest countries, but the fall in oil prices has exposed its Achilles heel. In order to make the country less dependent on oil revenues, Kuwait’s government has set out ambitious five-year plans, which seek to fundamentally diversify the economy, strengthen industry, and foster exports up to 2035. At the same time, the country is to become a global trading and finance hub.
In order to best support the economic transformation, Kuwait is investing considerable sums in the areas of energy, traffic and transport, healthcare, technology, and modernization of infrastructure. With new commercial spaces and industrial zones, Kuwait is supporting the expansion of existing manufacturers and fostering the development of key industries like pharmaceuticals, petrochemicals, plastics and foodstuffs. There are currently more than 700 projects underway, with an estimated total value of more than 230 billion US dollars, many of them for new residential complexes, roads and bridges. To supply all these, construction materials, equipment and technology are all being imported in large quantities. Swiss companies have already helped to realize significant Kuwaiti infrastructure projects in the past, and the latest shift in the country represents another major opportunity for Swiss exporters. The legal prerequisites are optimal: Both countries are linked economically by an investment protection and double taxation treaty, and in 2014 a free trade agreement between the EFTA states and those of the Gulf Cooperation Council came into force.
An overview of the most important projects:
China intends to invest 300 billion US dollars in the Belt and Road initiative, the “new Silk Road”, by means of which a comprehensive trade and infrastructure network will be created linking Asia, Europe and Africa. At the same time, China is working with the Kuwaitis on infrastructure projects, including construction of the new planned Al-Harir City and the development of five uninhabited islands off Kuwait’s east coast.
A new accreditation with regard to export conformity is expected to bring new impetus to the pharmaceutical industry, under which Kuwaiti laboratories will be able to increase the efficiency of pharmaceutical testing and improve product quality. Pharmaceuticals are thought to be one of the areas with considerable growth potential for production and export.
In February 2018 Turkish company Limak Holding signed an agreement to finance a new terminal at Kuwait International Airport to the tune of more than 830 million US dollars. The Kuwaiti civil aviation authority is also reviewing plans for the construction of an airport in the north of the country with capacity for 25 million people each year, which is intended to help manage growing air travel in Kuwait. According to estimates, investments will amount to 12 billion US dollars, with 15,000 new jobs created.
“The Avenues” shopping center
After opening in 2007, “The Avenues” is the biggest shopping center in Kuwait, and with 8.5 hectares of retail space is one of the most extensive worldwide. Two billion US dollars have been invested in its latest expansion, which includes two new hotels. The number of shops is set to rise from 800 to 1,100, with 30,000 new jobs created.
The Turkish building corporation Limak has been awarded an infrastructure contract by the Kuwaiti government for the construction, completion and maintenance of 3,260 plots for the local government authorities. Meanwhile, Kuwaiti real estate giant the United Real Estate Company is planning the construction of two 40-story skyscrapers in the district of Hessah Al Mubarak and along the Arabian Gulf Road. In the area of road construction, more than 80 projects are awaiting completion over the next few years.
The Kuwaiti Ministry of Electricity and Water has signed two contracts amounting to 141 million US dollars for the modernization of the Doha West and Sabiya power plants. Looking further ahead, in light of growing demand, the government is planning to produce around 15 percent of the nation’s power from renewable energy sources by 2030.