Make your own free website on Tripod.com

The economy

Industry

Agriculture

Agency laws and import regulations

Entering the Kuwaiti market

Business licences

Company types

Labor laws

Promoting new industry

Oil sector activities

Oil reserves

Kuwaiti Ports Public Authority

Official organizations

Tenders

Utilities and services

Working in Kuwait

Health care


The economy

Back to top The economy of Kuwait is based almost exclusively on oil. By law, 10% of all petroleum income has been deposited in a special reserve fund to provide for the future when oil revenues are exhausted. During the 1990/91 occupation, a great deal of Kuwaiti wealth was taken to Iraq; the Kuwaiti government-in-exile, however, retained control of the country's very substantial overseas assets. Limited oil exports began a few months after the liberation. It was anticipated that pre-invasion oil production levels would be reached by the end of 1992. It was also estimated that it would take two to five years to restore the country to its pre-war condition.

Industry

Back to top Before the Iraqi invasion of 1990 there was a range of local industries, all of which ran with the cooperation, assistance and support of the government. A subsidized electricity supply helped to keep manufacturing overheads low. Areas of production included the manufacture of bricks for building, cement, aluminum windows and doors and also foodstuffs. Obviously many of these areas were destroyed or seriously damaged during the occupation, but they are coming back to life. The industrial centers are in Shuwaikh, Shuaiba and Sabhan. The two former have ports and the latter is located close to the airport. The Industrial Bank of Kuwait has played a large part in the industrial development of the emirate and is doing much to assist in the recovery of pre-war levels.


Agriculture

Back to top In Kuwait about 1% of the land is suitable for agriculture and most of this is at Wafra or Abdilee where there is a natural water supply. Cereals, tomatoes, melons, radishes and cucumbers are grown. In addition, there are successful dairy and poultry farms. The Kuwaiti government deems it highly important to improve the environment by "greening" the city. To this end, a great number of landscaped areas are seen around the country and much effort is expended in attempts to find plants which will thrive in the country. Fishing has historically been of great importance to both the diet and the trade of Kuwait. Fresh fish is a popular food in the country and care is taken to conserve the resources of the sea.

Entering the Kuwaiti market

Back to top In order to enter the Kuwaiti market, two options are available:

1. Direct sales

This is the most flexible way to enter the market but it does require regular visits to Kuwait. It is preferable if you have a few major clients such as showrooms or supermarkets or if you deal in luxury items with a limited market.

2. Agencies

You will select a local company as your agent. There are two types of agents: a commission agent who acts purely as an intermediary, or an agent who imports directly from outside Kuwait and serves as distributor, wholesaler or retailer within Kuwait. The agency agreement. There must be agreement on a contract or document endorsed according to the requirements of the Kuwait Ministry of Commerce and of the relevant authorities in your own country. As both of these are subject to change from time to time, you should be in touch with your embassy in Kuwait, your local Chamber of Commerce or your Ministry of Foreign Affairs (Department of State in the USA). The contract should be very specific as to the extent of exclusivity agreed upon. In other words, does the agreement cover only Kuwait or other countries as well? It is also possible to give exclusivity to only one line of your products and use different agents for others. The agency agreement is of course for a pre-determined period but a minimum of one year is generally expected. It is also advisable to have a minimum quantity per annum purchase clause. Should the contract be dissolved, indemnity must be paid to the agent if there has been no default on his part.


Agency laws and import regulations

Back to top Only Kuwaiti merchants who are registered members of the Chamber of Commerce may import goods, Hence, an exporter to Kuwait must draw up a contract with a member as detailed in the foregoing. The usual method of payment is the standard letter of credit paid at the moment the goods are sent. However, bank guarantees from both sides can be requested. These take the form of Bid Bonds or Performance Bonds. There are companies in Kuwait which specialize in the inspection of damaged goods. In order to clear goods from customs, you will need invoices showing the manufacturer's name, the carrier, the price and the net weight. Also needed is a Certificate of Origin signed by the Chamber of Commerce. This must state the name of the manufacturer and the freight forwarder, a declaration that the goods did not originate in Israel and do not contain anything made in Israel as well as details regarding the means of shipping the items to Kuwait.

Business licences

Back to top It is necessary to have a license to initiate and operate a business in Kuwait. Licenses are only issued to Kuwaiti nationals and are obtained from the Ministry of Commerce. Industrial approval is required for industrial development and is given by a Ministry of Finance Committee. If you have a license, you may be eligible for a loan from the Industrial Bank of Kuwait.


Company types

Back to top

I. Joint Liability Partnership

Two or more partners who must be Kuwaiti nationals have liability for the company to the limit of their personal assets. A Form of Memorandum and Articles of Association for a Joint Liability Partnership must be drawn up and lodged at the Commercial Register. The full names of the partners with confirmation that they are Kuwaitis, as well as details of the original capital structure of the partnership, must be stated.

II. Mixed Liability Partnership

The general partners must be Kuwaiti nationals who are responsible for the company liabilities to the full extent of their personal assets. The liability of other parties is limited to their personal capital contribution to the company. A Memorandum and Articles of Association detailing the identity of the partners, the nature and scope of the company and all information relating to its trading activities must be submitted to the Commercial Register.

III. Limited Liability Company (W.L.L.)

All partners are limited in their personal liability and are issued with non-negotiable shares of equal value. The number of shares held by any partner is determined by the amount contributed. Shares are transferable between members. Members have first right to purchase outgoing shares at the minimum level of third party bids. Kuwaiti nationals must control 51% of the paid-up share capital. A Memorandum of Association is issued in the form of a notarized deed. This states the name of the company, personal details of the members, its objectives, capital and duration.


Labor laws

Back to top The Kuwait Labor Law is valid whether or not you have a written contract. If you do have a written contract, it will supersede the Labor Law so it is important to check it carefully. Here are some of the main points of the law.

Contract

This can be verbal but obviously it is preferable to have it in writing. It must be written in Arabic and the employee should keep a copy.

Working Hours

The normal working week is 48 hours, usually 6 days at 8 hours each. Overtime is payable after this at a rate of 1.5 times the normal rate and 2 times the rate on holidays.

Holidays

As well as official holidays, all workers are entitled to 14 days holiday after one year. Note that some employers ask employees to work through national holidays. An employee cannot be compelled to do so according to the law, and if he consents to work, he can also ask for overtime at the applicable rate.

Wages and unions

There is no set minimum wage. Female employees must receive equal pay. Trade unions are allowed, but only one can be formed per establishment and only one per profession or occupation will be recognized.

Other employer responsibilities

Employers are responsible for all safety aspects at work, such as provision of first aid and medical facilities. Industrial injuries must be reported to the Ministry of Social Affairs and Labor as well as to the local police. For non-Kuwaiti employees, compensation for industrial injury is provided for in the Labor Law and employers take out private insurance to cover their liability. Termination benefits must also be arranged. Kuwaiti employees are insured against industrial injury by the Public Institution for Social Security. The employer's contribution is assessed as 2% of the employee's salary. Transport should be provided to and from the work site if this is far from built-up areas in addition to accommodation for workers in remote areas.

Unemployment

Because all expatriates must be sponsored by a Kuwaiti national or company, there should be no unemployment with the exception of dependants. All unemployed Kuwaitis must register at the Ministry of Social Affairs and Labor where assistance will be given to help them find employment.

Disputes

If an employer does not meet the requirements of the Kuwait Labor Law, it is possible to bring a complaint to the Ministry of Social Affairs and Labor.

Inspections

Inspectors from the Ministry of Social Affairs and Labor have the authority to visit any work place to check that regulations are being followed.


Promoting new industry

Back to top Local industries are of course encouraged and supported by the government. As an incentive, new industries are excused from paying customs duties on imported machinery or raw materials. The Industrial Bank of Kuwait also provides long term loans. In addition, cheap rental costs for industrial land is a further encouragement and help to local industries. If you have questions about operating practices or legal matters, you should contact the commercial section of your embassy in Kuwait. If you plan to do business in Kuwait for any length of time it would be advisable to consult a local lawyer.

Oil sector activities

Back to top The activities of the oil sector include crude oil production, refining, marketing and transportation as well as foreign exploration and the production of natural gas for domestic purposes. Kuwait has three refineries at Ahmadi, Shuaiba and Mina Abdullah. A fourth is planned and all of them have been planned and built with adaptability in mind. In 1980 the Kuwait Petroleum Corporation was formed to take control of Kuwait Oil Company (KOC), the Kuwait National Petroleum Company (KNPC), the Petrochemicals Industries (PI) and the Kuwait Oil Tanker Company (KOTC) in addition to other oil-related activities. Kuwait has long realized that as oil is a finite resource, it is necessary to conserve it and also to diversify the means of wealth production. Emphasis has been laid on supplying the local market and augmenting existing supplies of commodities.

Oil reserves

Back to top The Kuwait Oil Company was formed in 1934 and the first strike was at Burgan in 1938. World War II, however, delayed the first exports until 1946. The rush of oil revenues into the country made possible the development of Kuwait as we know it today. Subsequent to the initial strike, there have been further oil discoveries all over Kuwait and it is conservatively believed that Kuwait has enough recoverable oil reserves to last well into the 21st century.


Kuwaiti Ports Public Authority

Back to top The Kuwaiti Ports Public Authority is an independent government authority managing and operating the commercial ports in Kuwait. At present there are three ports in Kuwait. Each one offers facilities of open and covered storage areas, cattle and livestock pens and refrigerated storage.

Official organizations

Back to top

The Kuwait Fund for Arab Economic Development

The Kuwait Fund for Arab Economic Development was founded in 1961 with the aim of helping to finance development projects in the third world. Projects chosen include industry and agriculture, transport and communications and power supplies. General inquiries, Tel: 243 9075.

The Kuwait Institute of Scientific Research

The Kuwait Institute of Scientific Research (KISR) was established in 1967 to foster interest in scientific research and has done pioneer work in a number of areas of importance to Kuwait since its founding. Unfortunately most of its resources were plundered during the occupation and a great deal of important work was lost. It is, however, getting back on its feet and a number of projects have already received approval. General inquiries, Tel: 483 6100/481 6007/481 6190.

Kuwait Foundation for the Advancement of Science

Kuwait Foundation for the Advancement of Science (KFAS) was established and headed by the Emir, Sheikh Jaber Al-Ahmad Al-Sabah in 1976. The objective of the organization is to support and promote scientific research projects. General inquiries, Tel: 242 5898.

Kuwait Investment Authority

Kuwait Investment Authority (KIA) was founded in order to manage the government's overseas investments. KIA also plays a leading role in the country's financial sector. The organization has been much acclaimed overseas for its business acumen and it was the fruits of its sound investment policy which bolstered the Kuwait government during the months of occupation. General enquiries, tel: 246 3600

Tenders

Back to top
The Central Tenders Committee, which is attached to the Council of Ministers, administers all public tenders. For open tenders, bidders must have applied for registration as an approved supplier or contractor with the Ministry of Planning. They must also have been classified according to their financial and technical capabilities. Foreign companies may participate in a public tender providing it has a Kuwaiti agent or partner and that the tender is open to non-Kuwaiti companies. International firms desiring to pre-qualify either as consultants or contractors should approach the client rather than the Central Tenders Committee. Tender documents may be obtained from the offices of the Central Tenders Committee for a fee. Once a tender is submitted, it will be evaluated on the basis of price, conformity to the specifications required and the level of Kuwaiti involvement in the company as regards the scope of needed work. Normally when a tender is submitted, a percentage of the price must be put up as a bond. The amount will be specified in the RFP (Request for Proposal) or tender document. Non-governmental agencies may also put contracts out to tender but these will be handled directly and not through the Central Tenders Committee.

Utilities and services

Back to top

Telephone

If you wish to have a telephone, application must be made to the Ministry of Communications with the following documents: Passport photocopies of the pages showing your name and residence visa Photocopies of your accommodation lease and an electricity bill Certificate to show there are no outstanding amounts on past phone bills. Refundable deposit or security bank guarantee of KD 500 if you wish to have an international line. Otherwise you can make local calls and receive incoming international calls. Companies do not have to deposit the KD 500 bond or submit a copy of their electric bill. Government workers are also exempt from paying the deposit. Telephone bills can be obtained from the Telephone Exchange.

Electricity

Electric power is supplied at 240 volts, 50 cycles AC and transformers are available in hotels and shops. Electricity charges may or may not be included in the terms of your lease. When you rent a flat or a villa, you must take the rental contract to the nearest electricity office together with your passport, residence visa and a refundable deposit of KD 100. An electrician from the Ministry of Electricity and Water will go with you to switch on the power when you move to new accommodation.

Gas

Gas is produced at the Mina Abdullah Refinery and is delivered to depots in canisters. Depots are conveniently located in all areas. The number of canisters that can be purchased at one time is now limited. A permit is required for buying in commercial quantities.

Working in Kuwait

Back to top

Work Permits/No Objection Certificates

If you intend to take up employment in Kuwait, you will need a Work Permit and a No Objection Certificate. The first is issued by the Ministry of Social Affairs and Labor at which point the Ministry of the Interior must be applied to for the NOC and entry permit. Your sponsor of course must complete these formalities.

Residence Permits

In order to obtain a residence permit, it is necessary to complete a form issued by the Ministry of the Interior and to have this signed by your sponsor. You will need to be fingerprinted and also to undergo a medical check. After completion of these two, the form is then taken to your local Passport Office with the following:
  • Fingerprint Department form
  • Medical Certificate
  • Work Permit from the Ministry of Social Affairs and Labor
  • No Objection Certificate and copies
  • A copy of your passport
  • At least four passport photographs

As a general rule, these procedures are the responsibility of the sponsor. In a large company, a man who deals with various government departments and agencies (called in Arabic a mandub) will probably have the responsibility of carrying out these jobs.

Health Regulations

Vaccination Certificates are required against cholera and yellow fever for travelers coming from infected areas. Vaccination against TB is also recommended. In order to qualify for residence in Kuwait, you must have a medical check. This is primarily aimed at detecting such major infectious diseases as AIDS and TB. Those found to have serious infectious diseases will not be allowed to stay in the country.

Civil ID

Once residence procedures have been completed, you are required to register for a Civil ID card. This is compulsory and the cards, once issued, should be carried with you at all times. Once the form has been completed, you will need to submit it along with photographs and a photocopy of the relevant pages of your passport to the Public Authority for Civil Information.


Health care

Back to top The government subsidizes the health service and treatment is free for Kuwaiti citizens. Expatriates are charged low fees. When an expatriate has completed residence formalities, he or she is entitled to a medical card. This can be obtained by taking your passport, a rent receipt and a letter from the District Administrator of your area to the nearest clinic.

Hospitals and clinics

Clinics are located in most areas throughout Kuwait and offer medical and dental care. There are a number of well-equipped hospitals in Kuwait. In regard to hospital treatment, the government has divided the country into different health areas. Specialized treatment is available at the Al-Sabah Center for Medical Specialties. A number of Kuwaiti businessmen and women have set up specialized medical centers as donations to the Ministry of Public Health. Some of these are:
  • Hussain Makki Al-Juma's Kuwait Cancer Control Center at Al-Sabah Hospital Compound
  • Thanian Al-Ghanim's Center for Gastroenterology at Al-Amiri Hospital Compound
  • Lulwa Al-Marzouq's Center for Islamic Medicine at Al-Sabah Hospital Compound
  • Hamad Al-Essa's Kidney Center at Al-Sabah Hospital Compound


In addition, there are a number of private hospitals in Kuwait. If you wish to be treated at one of these, you will pay a registration fee, a treatment fee and a further fee for any tests required. Many expatriates and Kuwaitis do select private medical treatment.

Dentists

There are both government and private dentists in a number of locations throughout the country.

Pharmacies

There are a large number of pharmacies in Kuwait and these have a duty roster for night service.

Opticians

Many opticians are available in Kuwait. Eye check-ups are free, Hard and soft contact lenses are available but sand storms can cause irritation and more than usual care should be exercised by the wearers of contact lenses. In many cases, glasses can be delivered within 24 hours.

Blood Bank

The new Central Blood Bank is behind the Mubarak Al Kabeer Hospital in Jabriya. Blood donors are always welcome and should report to the Central Blood Bank for further information. Tel: 533 6538 and 533 6539.