The Kuwait Business Guide is a detailed manual on doing business in Kuwait. Written in clear, direct English, it covers virtually everything an expatriate business person needs in order to do business successfully in that country.
The Kuwait Business Guide was originally published in hard-copy in 1997 and 2004 under the title Doing Business with Kuwait. As it is no longer available in printed form, an updated version is being reissued as a Kindle e-book.
The Bible on Doing Business in Kuwait
The objective of the Kuwait Business Guide is to illustrate Kuwaiti business culture and practices, and to indicate how commercial opportunities, of which there are many in the country, should be approached.
The book is aimed at major international corporations, SMEs and independent entrepreneurs looking to exploit the commercial potential of Kuwait.
To a foreign business entity or entrepreneur contemplating the country for the first time, Kuwait seems a very attractive place to do business because:
- about 40% of its population of nearly 2.5 million enjoy some of the highest disposable incomes in the world;
- the economy has continuous requirements for imported goods, technical expertise and labour;
- there are plenty of opportunities for major contracts, especially in the oil and related industries;
- the government is actively pro-business;
- there is a stable legal framework of business laws;
- there are few controls over imports and exports;
- there are no exchange controls nor restrictions on the repatriation of funds;
- the country has excellent communications and a sophisticated trading infrastructure;
- it is possible for foreigner to have 100% ownership of a local business under the direct foreign investment laws; and last, but not least,
- English is used fairly extensively as the second language of business.
Also, the simplicity of operating within a system where taxes are for the most part non-existent for individuals (but not companies) and everything is open to negotiation is a major enticement.
In addition, resident senior executives will find that their life-style is almost as good as it could be anywhere else.
The competition however is intense and decision-making is notoriously slow. Kuwait also abounds with rules and regulations which can cause confusion and frustration. Generally speaking:
- foreign individuals and firms may not own real estate in Kuwait;
- foreign equity participation in local firms is limited to a minority interest of 49%;
- foreign individuals and corporations may not acquire commercial licences in their own name;
- a foreign individual or firm carrying on business in the country must be represented by a Kuwaiti person or firm;
- a branch of a foreign firm must be represented locally by a Kuwaiti service agent;
- a foreign firm may only bid for a public sector contract through a local representative; and, in addition,
- foreign corporations (but not individuals), unlike local companies, are taxed at some of the highest rates in the world.
The purpose of these restrictions is to ensure that control of domestic business is retained by locals. Nowadays, however, most of the restrictions can be circumvented.
Establishing a presence in Kuwait’s Free Trade Zone allows a wholly-owned foreign business entity to be set up with a minimum of fuss and time. However, the KFTZ is really only suitable for SMEs.
Large international corporations intending to make a substantial investment in the country can do so under the Direct Foreign Investment law. But this will require the approval of the Council of Ministers, ie the government, and is likely to take some time.
In this writer’s view the greatest impediments to doing business successfully in Kuwait are cultural and language barriers.
The Kuwaiti people have a different way of looking at the world than do persons from the West or the Far East, a difference that is reflected in the State’s social, political, economic and legal foundations.
Unless Kuwaiti business culture is understood by overseas businessmen, and their approach modified accordingly, any success they achieve is likely to be due to luck rather than a planned effort.
PAUL D KENNEDY MA BBS FCCA