The economy
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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.
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