Investment Climate Statements for 2016 - Kuwait

Executive Summary

Kuwait has continued to make strides over the past year to improve its investment climate. The ongoing implementation of the 2013 Foreign Direct Investment (FDI) law continued to ease constraints on doing business in Kuwait. The stock exchange was privatized in April 2016. The government is considering a phased privatization of the management and operations of the air and sea ports. After years of delays, the state oil companies awarded several high-value contracts to foreign consortia to upgrade refineries and power plants. Despite the sharp decline in oil prices, Kuwait’s economy – most notably its oil sector and pension and sovereign wealth funds – remained robust.

Nevertheless, Kuwait is a difficult place in which to invest and do business, and challenges to operating in the country remain. Kuwait ranked 101st out of 189 in the world, and lowest in the Gulf Cooperation Council (GCC), on the World Bank’s 2016 “Ease of Doing Business” survey. Implementation of the FDI law has lagged and obstacles to foreign investment remain, including regulations barring foreign entities from the upstream petroleum and real estate sectors, bureaucratic hurdles that delay the start of new enterprises, and a business culture based on clan and family ties that can be difficult for foreigners to penetrate. Kuwaiti law continues to restrict foreign banks from offering investment banking services and prohibits them from competing in the retail sector. While the new Kuwait Direct Investment Promotion Authority (KDIPA) ramped up its operations, its “one-stop shop” to assist investors is not yet fully operational. Kuwait’s copyright legislation is most likely not consistent with its World Trade Organization (WTO) obligations. The U.S. Trade Representative’s (USTR) 2014 and 2015 Special 301 Reports listed Kuwait on the Priority Watch List. The application and enforcement of labor laws are not consistent.

According to the U.S. Department of Commerce, Kuwait was ranked 37th in 2014 as a source of investment in the United States, with an FDI position of USD 1.4 billion. The actual investment into the United States from Kuwaiti sources is very likely to be many orders of magnitude larger and diversified across several sectors. Two major announcements in early 2016 included Gatehouse Capital’s purchase of ten select service hotels in the upper Midwest for USD 137 million and MEGlobal’s planned construction of a new world-scale monoethylene glycol manufacturing facility in Texas worth over USD one billion.

Kuwait has attracted little FDI, in part because of legal and bureaucratic impediments. Despite the many challenges to doing business in Kuwait, however, several U.S. companies have won lucrative contracts and operate successfully in the country. U.S. engineering firms such as Fluor figure largely in the execution of infrastructure development projects, including the USD 16 billion Al-Zour Refinery Project. General Electric is a major vendor to power generation and desalination facilities. Citibank has a branch, and numerous U.S. retail chains operate franchises successfully. Dow Chemical Company owns 42.5% of the EQUATE Petrochemical Company joint venture.

Table 1



Index or Rank

Website Address

TI Corruption Perceptions index


55 of 175

World Bank’s Doing Business Report “Ease of Doing Business”


101 of 189

Global Innovation Index


77 of 141

U.S. FDI in partner country ($M USD, stock positions)


USD 315

World Bank GNI per capita


USD 49,300

1. Openness To, and Restrictions Upon, Foreign Investment

Attitude toward Foreign Direct Investment

In 2015, Kuwait announced that it had attracted USD 1.2 billion of FDI under the umbrella of the new law. Despite that, the level of inward FDI remains low and diversification of the economy away from the petroleum sector remains a national goal. Barriers to foreign investment exist, including long bureaucratic delays in starting new enterprises, agency and sponsorship requirements, a constricted local real estate market, impediments to obtaining visas for expatriate workers and a local business culture heavily based on clan and family relationships that often preclude foreign participation.

Direct investment in the upstream petroleum and real estate sectors is not open to foreign firms. The FDI law does permit 100% foreign ownership in certain industries, including: infrastructure (water, power, waste water treatment, and communications); insurance; information technology and software development; hospitals and pharmaceuticals; air, land, and sea freight; tourism, hotels, and entertainment; housing projects and urban development; and investment management.

Other Investment Policy Reviews

The WTO conducted its latest policy review of Kuwait in 2012. The WTO’s findings noted that Kuwait was pursuing trade liberalization to reduce the economy’s high dependence on crude oil, which accounts for nearly half of GDP, 95 percent of export revenues, and more than 80 percent of government income. The WTO stated that steps were being taken to improve the country’s business environment, increase the productivity and growth of non-energy sectors, and increase the participation of the private sector (local and foreign) in the economy from its low level of about 25 percent in 2012.

Laws/Regulations on Foreign Direct Investment

In December 2013, Kuwait’s Law No. 116 of 2013, regarding the promotion of direct investment, came into effect, to replace its 2001 Direct Investment Promotion Law, as part of the Kuwait Development Plan (KDP). Spanning 2009 to 2035, the KDP aims to reduce oil dependency by transforming the state into a diversified commercial and financial hub. The KDP comprises five separate five-year plans; the current plan provides USD 116 billion for a broad range of projects, including 45,000 new housing units, metro and railway systems, and a new refinery. In the KDP, Kuwait is seeking to propel the private sector’s share of the economy to 41.9 percent, from its current level of 26.4 percent.

The new FDI law established KDIPA ( to facilitate licensing and incorporation procedures. In April 2015, IBM received KDIPA's first investment license, allowing the company to establish a 100 percent foreign-owned company in Kuwait and to benefit from the incentives and exemptions granted under the new law. Since IBM, KDIPA has granted foreign ownership licenses to Huawei, GE, and Berkeley Research Group.

Other recent legal measures to facilitate FDI and economic growth include Law No. 116 of 2014 regarding public-private partnerships (PPP), and a new Commercial Companies Law No. 25 of 2012, as amended by Law No. 97 of 2013. The PPP law changed the Partnerships Technical Bureau to the Kuwait Authority for Partnership Projects (KAPP) []. KAPP expects to award many of the upcoming large infrastructure projects using the PPP framework.

The court system does not appear to be subject to executive or other interference against foreign investors or companies. Nonetheless, the business climate favors Kuwaiti- and GCC-owned enterprises.

Business Registration

While Kuwait does not yet have a website for online business registrations, a government site provides information about starting a business in Kuwait, The Doing Business project provides information on the steps required to start a business in Kuwait, although the ‘time-to-complete’ estimates are optimistic. Typically, starting a new business in Kuwait requires a minimum of six months to a year.

KDIPA is establishing a “one-stop shop” unit to streamline registration and licensing procedures for investors, thereby reducing the bureaucracy that had caused concerns in the past. Its most recent license e met the deadline of approving a license within 30 days of the completed application.

While the World Bank defines a small and medium enterprise (SME) as any business employing fewer than 100 people, the Kuwait Small Projects Development Company (KSPDC), a state-financed fund established in 1997 to promote SME development, considers projects with capital up to KD 150,000 (USD 495,000) as small, and less than KD 500,000 (USD 1.65m) as medium-sized. The April 2013 Law No. 98 established the National Fund for the Support and Development of SMEs (enterprises that employ up to 50 Kuwaitis and require less than KD 500,000 in financing); however, the financing is limited to enterprises set up by Kuwaiti citizens.

Industrial Promotion

KDIPA places emphasis on attracting investment in modern and sophisticated technologies, means of production and operations, management methods, and technical and marketing expertise that foster the objectives of development. Kuwait’s increasing need for engineering, design, construction, and management firms to execute planned infrastructure projects, as outlined in the KDP, may attract additional FDI to Kuwait.

Limits on Foreign Control and Right to Private Ownership and Establishment

As per KDIPA’s “negative list” issued in February 2015, foreign firms are barred from investment in the following sectors: extraction of crude petroleum, extraction of natural gas, manufacture of coke oven products, manufacture of fertilizers and nitrogen compounds, manufacture of gas, distribution of gaseous fuels through mains, real estate (excluding privately operated building development projects), security and investigation activities, public administration and defense, compulsory social security, activities of membership organizations, and activities of hiring labor including domestic labor.

The Commercial Companies Law intended to simplify the process for registering new companies in Kuwait and reduce wait-times associated with starting a new business, but a law mandating that a Kuwaiti national own at least 51 percent of all local companies remains in place, unless foreign investors apply through KDIPA.

Privatization Program

The National Assembly has passed several privatization laws in the past eight years. The laws stipulated that privatizing any public service would begin with a transition to a public shareholding company. Under the law, 40 percent of any such company’s shares will be sold to citizens in an initial public offering, while 20 percent of the shares will be held by the government, and 5 percent will be distributed to current and former Kuwaiti employees. The remaining 35 percent will be sold at an auction to a local or foreign investor. Kuwaiti employees will have the right to retain their jobs in the privatized service for at least five years with the same salary and benefits.

Kuwait privatized its stock exchange in April 2016 and recently proposed privatizing the management and operations of their air and sea ports. The Kuwait Stock Exchange (KSE) is the fourth-largest in the GCC (after Saudi Arabia, UAE’s combined stock markets, and Qatar), with a market capitalization of KD 24.36 billion (USD 80 billion) as of March 10, 2016, down by 20 percent in the past year. [Note: All currency conversions reflect an April 2016 rate of KD 1= USD 3.3.] In February 2010, the National Assembly passed legislation to establish Kuwait’s first Capital Markets Authority (CMA) to oversee the KSE’s operations and procedures. The KSE began the several-year privatization process by creating a shareholding company in 2014 funded with KD 60 million (USD 198 million). In July 2015, the KSE was renamed the Kuwait Bourse Company, which began operations as a private company in April 2016 and is expected to be fully operational by December 2016. Ownership of its building was transferred to the CMA.

Kuwait has terminated the privatization plan of Kuwait Airways (KAC) and decided to maintain it as a national carrier. A new restructuring plan, introduced to the National Assembly in June 2015, was to retain 75 percent state ownership, sell 20 percent to Kuwaiti citizens, and transfer 5 percent to current and retired employees, excluding potential investors. The Assembly’s Financial & Economic Committee approved the plan in January 2016, as well as an additional KD 600 million to finance a new fleet of 25 Airbus and 10 Boeing jets. Kuwait has also abandoned plans to privatize their postal services.

Kuwait’s telecom sector is the largest source of revenue after the oil sector. Three private mobile telephone companies provide services with the government maintaining significant minority interests in all, and foreign companies own the majority stakes in two. In April 2014, the National Assembly passed legislation creating the independent Communication and Information Technology Regulatory Authority (CITRA) to liberalize markets in the mobile communications and Internet industries, and privatize some elements of the telecom market now handled by the Ministry of Communication (MOC), such as fixed telephone lines. CITRA officially commenced its duties in February 2016, by taking on some responsibilities of the MOC and receiving applications to hire specialized staff.

In September 2014, the MOC announced that the postal service would be transformed into a state-owned corporation. As of April 2016, the MOC had introduced a new bill regarding the postal services to the Council of Ministers for approval.

Screening of FDI

KDIPA screens and licenses proposed branches and representative offices of foreign companies. The process requires the submission of legal and financial documents by the applying company’s head office, as well as a certification of its commitment to fulfill obligations by the branch or representative office in Kuwait. In reviewing requests for licensing, KDIPA places emphasis on creating jobs and training/education opportunities for Kuwaitis, technology transfer, diversification of national income sources, increasing Kuwaiti exports, support for local SMEs, and utilization of Kuwaiti products and services.

Competition Law

Kuwait lacks comprehensive competition protection mechanisms. The government passed Protection of Competition Law No. 10 in 2007. It enacted by-laws in 2012 through the establishment of a Competition Protection Bureau (CPB) intended to safeguard free commerce, bar monopolies, investigate complaints, and refer to prosecution acts determined to undermine competition, supervise mergers and acquisitions, and fix commodity prices. As of April 2016, however, the CPB was not yet fully functional. The World Bank is working with Kuwait to amend the law and redefine the CPB’s mission.

Under the 1964 Public Tenders Law, all bids for government-funded infrastructure projects (excluding military and security programs) in excess of KD 5,000 (USD 16,500) must be submitted to the Central Tenders Committee (CTC). Unless licensed through KDIPA, foreign companies may only bid on these contracts through a Kuwaiti partner (holding a minimum 51 percent share). The National Assembly’s Financial Committee is reviewing a new CTC bill that calls for increasing the existing ceiling for direct contracts that do not require CTC approval to KD 20,000 (USD 66,600), provides for a 15 percent cost differential preference for domestic companies, and mandates that a single tender not be allowed to be redistributed as a sub-tender.

2. Conversion and Transfer Policies

Foreign Exchange

The Kuwaiti dinar has been linked to an undisclosed basket of major world currencies since May 2007. The only restriction on current or capital account transactions is that all foreign exchange purchases process through a bank or licensed foreign exchange dealer. Equity, loan capital, interest, dividends, profits, royalties, fees, and personal savings can be transferred in or out of Kuwait without hindrance. The FDI law permits investors to transfer all or part of their investment to another foreign or domestic investor, including cash transfers.

Remittance Policies

Kuwait imposes no foreign exchange restrictions on remittances for investments. Nevertheless, each investee must ensure compliance with the Anti-Money Laundering policies of the CBK if making direct investments or dealing with counterparties. Time limitations or wait periods do not apply to remittances. No restrictions exist on the inflow or outflow of funds for remittances of profits or revenue, and foreign investors may remit through a legal parallel market, including one utilizing convertible, negotiable instruments. Kuwait is not known to engage in currency manipulation tactics. The CBK advises buy, sell, and middle rates on a daily basis. In February 2015, Financial Action Task Force removed Kuwait from FATF’s list of jurisdictions that require monitoring for Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) compliance.

3. Expropriation and Compensation

Kuwait has had no recent cases of expropriation or nationalization involving foreign investments. As a safeguard, the FDI law guarantees against expropriation or nationalization, except for the public benefit, in accordance with existing laws. In such cases, Kuwait would compensate for the real economic value of the project at the time of expropriation. The last case of nationalization occurred in 1974, when the oil industry was nationalized, and the government negotiated with BP and American Gulf Oil Company to purchase the 40 percent share owned by the two companies.

4. Dispute Settlement

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

Kuwait has a developed legal system that is influenced by Islamic law. As a traditional trading nation, Kuwait’s judiciary is familiar with international commercial laws. Kuwait has been a member of the General Agreement on Tariffs and Trade (GATT) since 1963 and joined the WTO in January 1995. Kuwait, however, is not a signatory to the WTO Government Procurement Code.

Kuwaitis and non-Kuwaitis, including U.S. citizens, who have been charged with criminal offenses, placed under investigation, or are involved in unresolved financial disputes with local business partners, are subject to travel bans. These bans are rigidly enforced and prevent the individual from leaving Kuwait until the matter is resolved. Travel bans can be initiated by requests for legal action and may remain in place for a substantial period while the case is being investigated.

To protect their interests, U.S. firms are advised to consult with a Kuwaiti or locally based foreign law firm when executing contracts with local parties. Contracts between local and foreign parties serve as the basis for resolving any future commercial disputes. The process of resolving disputes in the Kuwaiti legal system can take years depending on complexity and the parties involved.


Kuwait is working with the World Bank to draft bankruptcy legislation designed to assist businesses in recovering from financial difficulties rather than being liquidated. As of April 2016, the Ministry of Finance had referred this draft law to the Council of Ministers for its review. Bankruptcy is still governed under Law No. 68 of 1980, which does not meet international standards in covering the full range of companies, or in restructuring debt. Bankrupt individuals are not criminalized by the 1980 law, but their political rights become limited upon a proclamation of bankruptcy. A bankrupt individual may not serve as a candidate or elector in any political position, be appointed to a public post or assignment, or serve as director or chairman in any company until the individual’s rights are reinstated in accordance with law.

Investment Disputes

The FDI law stipulates that Kuwaiti courts alone are responsible for adjudicating any disputes involving a foreign investor and other parties, although arbitration is permitted. Few contracts contain clauses specifying recourse to traditional commercial arbitration. The Kuwaiti judicial system recognizes and enforces foreign judgments only when reciprocal arrangements are in place.

International Arbitration

The recognition and enforcement of foreign arbitral awards is comparatively simpler when compared to the enforcement of foreign judgments. Enforcement of the former, however, must meet with the same reciprocity and procedural criteria of enforcing foreign judgments under Articles 199 and 200 of the Civil and Commercial Procedure Code No. 38 of 1980, according to which an award passed by a foreign arbitral panel or tribunal may be enforced in Kuwait provided that: A) the country where the award has been rendered is a member of the New York Convention; B) the foreign award is rendered by a competent arbitrator in accordance with the laws if the country in which it was awarded; C) the parties have been promptly summoned to appear and duly represented before the arbitral tribunal; D) the award must become a res judicata according to the laws of the country in which it was awarded; and E) the award must not be in conflict with an order judgment that has been rendered by a local court in Kuwait and additionally does not contradict mandatory provisions or constitutes a criminal conduct, or violations to morality or public policy, under Kuwaiti Laws.

Kuwait and the United States signed a bilateral agreement on investment guarantees in April 1989, as well as a Trade Investment Framework Agreement (TIFA) in February 2006.

Alternative Dispute Resolution (ADR) mechanisms include conciliation, negotiation, and mediation. These mechanisms depend on the parties’ goodwill to settle their disputes with or without the help of a third party.

Law No. 11 of 1995 on Judicial Arbitration for Civil and Commercial Articles, the relevant organizing and explanatory Ministerial Resolutions thereof, and Civil and Commercial Procedure Code No. 38 of 1980 outline the formation, operation, jurisdiction, and procedures of the arbitral panel, and the issuance of arbitral awards. They also define regulations for international conventions, free trade agreements, and the due application of the reciprocal clause between parties.

ICSID Convention and New York Convention

Kuwait is a signatory to the International Center for the Settlement of Investment Disputes (ICSID Convention) and to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Duration of Dispute Resolution – Local Courts

Resolution of an investment or commercial domestic dispute can take three months to a year. Factors that determine the length of dispute resolution litigated in local courts include the service of notices to parties, the nomination of the elected arbitrators, the timely payment of the arbitrators’ fees, hearings dates and postponements, and the due presentation of documentary evidence and witnesses.

5. Performance Requirements and Investment Incentives


Kuwait is a member of the WTO, and does not maintain measures that are inconsistent with Trade-Related Investment Measures (TRIMS) requirements. However, Kuwait requires a 10 percent preference for national products in public tenders, mandates that a minimum percentage of employees in listed companies are Kuwaiti (variable by industry), and may prohibit the export of certain goods if market shortages prevail.

Investment Incentives

The FDI law’s incentives include: tax benefits, customs duties relief, land and real estate allocations, and permissions to recruit required foreign labor.

Other exemptions exist. For example, entities incorporated in the GCC that are 100 percent owned by GCC nationals pay no corporate tax. Capital gains arising from trading in securities listed on Kuwait’s stock market are exempt from tax. Foreign principals selling goods through Kuwaiti distributors are not subject to tax. Kuwait does not have personal income, property, inheritance, or sales taxes, although discussions regarding adopting a value-added tax (VAT) are ongoing.

Research and Development

No specific restrictions exist on foreign participation, public or private, in government-financed or subsidized research and development. Various U.S. governmental and non-governmental entities are engaged in scientific cooperation in Kuwait. The Kuwait Institute for Scientific Research (KISR) has expressed interest in working with foreign firms and national laboratories in establishing new renewable energy and energy efficiency programs. KISR is also discussing the possibility of establishing a national laboratory that will involve foreign institutions and firms in shared research projects, including renewable energy, energy efficiency, water technologies, and geological studies.

Performance Requirements

The government requires foreign firms to hire a mandated percentage of Kuwaitis in their work force; the percentage varies by industry. The banking, communications, investment and finance, petrochemicals, and refining industries require 66 percent, 62 percent, 40 percent, and 30 percent, respectively. The manufacturing and agriculture sectors have the lowest minimum quotas at three percent.

Foreign employees require work visas prior to arriving in the country. The Ministry of Social Affairs and Labor (MOSAL) controls the issuance of work permits and in recent years has been more inclined to limit perceived non-essential employment of expatriates.

Law No. 37 of 1964 (Articles 43 and 44) specifies the use of local products, when available, in manufacturing processes and prescribes a 10 percent price advantage for local firms in government tenders.

In 2015, the Cabinet rescinded the Counter-Trade Offset Program and transferred legacy responsibilities to KDIPA.

Data Storage

Kuwait does not force local data storage nor require foreign investors to use Kuwaiti domestic content in locally manufactured goods and technologies. Only banks and other financial institutions are required by the AML/CFT Law 106 of 2013 to maintain their data for five years. Otherwise, each private or public entity may choose if and how to store data. Most governmental agencies follow International Organization for Standardization (ISO) certificate standards, which mandate the storage of data for five years.

6. Protection of Property Rights

Real Property

Non-GCC citizens may not own land. Kuwait ranks 68 out of 189 in “Ease of Registering a Property” in the World Bank’s “Ease of Doing Business” 2016 report.

Intellectual Property Rights

Kuwait is a member of the World Intellectual Property Organization (WIPO) and of the WTO; thus, it is a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). However, intellectual property rights (IPR) in Kuwait are protected nominally by a series of copyright and trademark laws adopted in 1999 and 2001.

Largely due to its non-WTO-compliant copyright law and its cessation of most copyright and trademark enforcement actions in recent years, an out-of-cycle USTR review in November 2014 resulted in moving Kuwait from the Special 301 Watch List to the Priority Watch List. Kuwait’s copyright law does not provide for deterrent criminal penalties and there are insufficient resources allocated to enforcement. The U.S. government has provided technical assistance on several iterations of a new copyright draft law to address these issues; however, the U.S. government remains deeply concerned that the draft does not yet meet WTO requirements. In June 2015, the draft copyright law was approved by the Council of Ministers and presented to the National Assembly. In May 2016, the National Assembly passed the Copyright and Related Rights Law. Until the law is reviewed and found to meet international standards and Kuwait resumes effective and consistent enforcement efforts, it is unlikely that its Special 301 status will change.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at

Embassy point of contact:

Resources for Rights Holders

Ms. Aisha Y. Salem
Intellectual Property Attaché for the Middle East & North Africa, Embassy Kuwait
Tel: +965 2259 1455
American Business Council Kuwait -
Embassy list of local lawyers:

7. Transparency of the Regulatory System

While Kuwait’s open economy has generally promoted a competitive market, Kuwait has not developed effective antitrust laws to foster competition. When government intervention occurs, it is most frequently to the benefit of Kuwaiti citizens and Kuwaiti-owned firms.

Kuwait does not participate in the Extractive Industries Transparency Initiative (EITI). Neither does Kuwait have any domestic transparency measures requiring the disclosure of payments made to governments for projects related to the commercial development of oil, natural gas, or minerals.

8. Efficient Capital Markets and Portfolio Investment

Foreign financial investment firms operating in Kuwait characterize the government’s attitude toward foreign portfolio investment as welcoming. An effective regulatory system exists to encourage and facilitate portfolio investment. Financial investment firms have told the Embassy that the Kuwait Stock Exchange (KSE) does not attract sufficient liquidity, except in the trading of large-capitalization company stocks, which comprise 15 of KSE’s 184 companies. Existing policies and infrastructure facilitate the free flow of financial resources into the capital market. Government bodies comply with guidelines outlined by IMF Article VIII and refrain from restrictions on payments and transfers for current international transactions. The debt market is not developed in Kuwait; however, banks have the capacity to fulfill this function.

Financial investment firms characterize government authorities as slow, particularly in comparison to regional players perceived to be more active in encouraging foreign portfolio investment. The CMA in November 2015 issued a regulation on portfolio management, but it does not cover foreign investments. Over the past three years, KSE has been illiquid, and observers are not optimistic it will gain liquidity in the short term.

Credit is allocated on market terms. Foreign investors are able to obtain credit on the local market on terms determined by the foreign investor’s collateral level and the intended use of the financing. The private sector has access to a variety of credit instruments.

Money and Banking System, Hostile Takeovers

In January 2016, the CBK reported that the total assets for the banking sector equaled KD 58.6 billion (USD 193 billion). Twenty-three banks currently operate in Kuwait: five conventional local banks, five Islamic banks, 12 foreign banks, and one specialized bank. Conventional banks include: market-leader National Bank of Kuwait, Commercial Bank of Kuwait, Gulf Bank, Al-Ahli Bank of Kuwait, and Burgan Bank. Sharia-compliant banks include Kuwait Finance House, Boubyan Bank, Kuwait International Bank, Al-Ahli United Bank, and Warba Bank. The government-owned Industrial Bank of Kuwait provides medium- and long-term financing to industrial companies and Kuwaiti citizens through customized financing packages.

Confidence in the local banking sector was affected by the global financial crisis and Gulf Bank’s announcement in October 2008 that it had incurred large losses. Following this announcement, the Council of Ministers and the National Assembly promulgated legislation guaranteeing deposits at local banks in an effort to rebuild confidence in Kuwaiti banks. The Central Bank worked with Gulf Bank and key shareholders to orchestrate a USD 1.4 billion recapitalization subscription, with the Kuwait Investment Authority acting as the buyer of last resort. Since 2008, the banking sector, including Gulf Bank, has seen a steady recovery and regained liquidity.

The banking sector opened to foreign investment under the Direct Foreign Capital Investment Law. The CBK has granted licenses to 12 foreign banks thus far: BNP Paribas and HSBC, both of which began operations in 2005; Citibank and the National Bank of Abu Dhabi, which commenced operations in 2006; Qatar National Bank, which began operations in 2007; Doha Bank, which opened an office in 2008; Dubai-based Mashreq Bank, which commenced operations in 2009; the Bank of Muscat, and the Riyadh-based Al Rajhi Bank (the largest Sharia-compliant bank in the world) in 2010. The Bank of Bahrain and Kuwait (BBK) has operated in Kuwait since 1977. In September 2014, the Industrial and Commercial Bank of China (ICBC) officially opened its first, and so far only, branch in Kuwait City. Additionally, Union National Bank, which received its license to operate in Kuwait in 2011, started its operations in 2015.

In March 2013, the CBK announced that foreign banks would be able to open multiple branches in Kuwait on a case-by-case basis. Until this time, foreign banks could only open one branch. The new rules also allow foreign lenders to open representative offices. Kuwaiti law restricts foreign banks from offering investment banking services, and prohibits them from competing in the retail sector. Foreign banks are also subject to a maximum credit concentration equivalent to less than half the limit of the largest local bank, and are expressly prohibited from directing clients to borrow from external branches of their bank or taking any other measures to facilitate such borrowing.

In April 2013, the National Assembly passed a law requiring banks to write off interest on personal and consumer loans for Kuwaiti citizens, and to reschedule the principal debt over a minimum of 10 years, in exchange for government deposits. Under the law, both government and parliament reached a settlement to refer borrowers to the Family Support Fund, a public debt-relief program that allows the government to purchase outstanding loans acquired by Kuwaiti citizens prior to June 2013. Media reported that by 2014, the program had helped to relieve more than 18,000 borrowers through restructuring debt terms without interest, resulting in KD 122 million (USD 403 million) in restructured loans by 2014.

9. Competition from State-Owned Enterprises

Kuwait has few fully state-owned enterprises (SOEs) outside the oil sector, with the exception of Kuwait Airways. No published list of SOEs exists. The government owns shares in Kuwaiti shareholding companies across the spectrum of the economy, through either KIA or Kuwait’s Public Institution for Social Security. Its stake in such companies varies from 24 percent to 100 percent.

SOEs benefit from tax exemptions and a 10 percent preference on national products in tendered projects. SOEs, furthermore, have independent budgets and are not subject to the same market constraints facing private companies. SOEs are, however, subject to strict government tendering rules and the oversight of the State Audit Bureau and National Assembly.

OECD Guidelines on Corporate Governance of SOEs

Kuwait is not a member of the OECD, but Kuwaiti SOEs are guaranteed by the government. Each SOE has board members reporting to a relevant minister. Political influence factors strongly in the appointment of board members. The judicial system does not appear to favor SOEs.

Sovereign Wealth Funds

Kuwait’s Sovereign Wealth Fund, the Kuwait Investment Authority (KIA), manages the Kuwait General Reserve Fund and the Kuwait Fund for Future Generations. In March 2012, the Amir enacted a budgetary decree to increase the portion of state oil revenues allocated to the Future Generations Fund from 10 percent to 25 percent. Given the sharp decline in oil prices since 2014, however, this figure was cut back to 10 percent in the state’s FY 2015/2016 budget. KIA’s management reports to a Board of Directors, the members of which are appointed by the Council of Ministers. The Board is chaired by the Minister of Finance and includes seats allocated to the Minister of Oil, the Central Bank Governor, the Undersecretary of the Ministry of Finance, and five representatives from Kuwait’s private sector, three of whom are not allowed to hold any other public office. The five-member Executive Committee, of whom at least three are private sector appointees, is formed by the Board. The Chairman of the Executive Committee is the Managing Director, who is appointed by the Board. The primary role of the Executive Committee is to assist the Board of Directors in setting strategic goals and objectives for KIA.

KIA maintains both an internal audit office (which reports directly to the Board of Directors) and an external audit team. Additionally, KIA is overseen by a Board Audit Committee comprising two private sector Board members and chaired by the Minister of Finance. The Managing Director participates in Board Audit Committee meetings as an observer. The external auditor, the State Audit Bureau (SAB), audits KIA on a continuous basis and issues an annual report to the National Assembly. Various committees in the National Assembly, such as the Finance and Economic Committee, the Budget Committee, and the Closing Accounts Committee, review the comments of the SAB audits.

KIA is prohibited by law from publicly discussing the size of its holdings and avoids any but the most general discussions of asset allocation. KIA holds closed-door presentations on the full details of all funds under its management, including its strategic asset allocation, benchmarks, and rates of return, for the Council of Ministers and the National Assembly. The Sovereign Wealth Fund Institute estimated that KIA manages over USD 592 billion in assets.

10. Responsible Business Conduct

Kuwait has a general awareness of expectations of or standards for responsible business conduct (RBC), including environmental, social, and governance issues. No specific government program is in place to require or encourage compliance.

The FDI law obligates the investor “not to violate the laws and regulations applicable in the country, especially the duty to protect the environment and regulations relating to security, public health, public order and not to expose others to risk.”

One aspect of responsible business conduct (RBC) in Kuwait is largely manifested through contributions to local charities and causes. For example, during 2015, Zain, the leading telecommunication company in Kuwait, was awarded the Gold Award for Excellence in Corporate Social Responsibility from the Arab Organization for Social Responsibility in Dubai. The company was recognized for its series of local initiatives and programs including the annual Breast Cancer Awareness Campaign, supporting the Rijeemy health program, internal blood donation campaigns, the internal Health Week initiative, celebrating Earth Day, supporting the Environment Public Authority’s awareness campaign, activities that were assessed to have had a deep and meaningful impact on many groups, institutions, and agencies across multiple communities.

The Kuwait Environment Protection Authority has been active in enforcing compliance and actively addressing environmental violations.

OECD Guidelines for Multinational Enterprises

Although Kuwait is not a member of OECD, local laws require all enterprises to respect residency laws for foreigners and the human rights of employees.

11. Political Violence

Spontaneous and planned demonstrations take place in Kuwait occasionally in response to world events or local developments. At times, even demonstrations intended to be peaceful can turn confrontational, resulting in violence. American citizens are encouraged to remain in contact with the Embassy for up-to-date information. As the Department of State continues to develop information on potential security threats to American citizens overseas, it shares credible threat information through its Consular Information Program documents, including Travel Warnings, Travel Alerts, Country Specific Information, and Emergency and Security Messages, all of which are available on the Bureau of Consular Affairs website at

12. Corruption

The often lengthy procurement process in Kuwait occasionally results in accusations of attempted bribery or the offering of other inducements by bidders. Corruption is criminalized, and several investigations and trials involving current or former government officials accused of malfeasance are underway. In 1996, the government passed Law No. 25, which requires all companies securing contracts with the government valued at KD 100,000 (USD 330,000) or more to report all payments made to Kuwaiti agents or advisors while securing the contract. The law similarly requires entities and individuals to report any payments they received as compensation for securing government contracts.

In December 2015, the Constitutional Court ruled that Law No. 24 of 2012 (on the establishment of the Anti-Corruption Authority and provisions pertinent to financial disclosure) was unconstitutional. Later the same month, the Council of Ministers approved a new anti-corruption bill which was approved by the National Assembly in January 2016.

Transparency International’s 2015 Corruption Perceptions Index (CPI) ranked Kuwait 55 out of 175 countries, making it fifth within the Gulf Cooperation Council after Qatar, UAE, Saudi Arabia, and Bahrain. Kuwait’s CPI score of 49 (out of 100) indicates it has a “serious corruption problem,” according to Transparency International.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Kuwait signed the UN Anticorruption Convention in 2003 and ratified it in 2007. Kuwait is not a participating country in the OECD Convention on Combating Bribery.

Resources to Report Corruption

Mr. Abdulrahman Al-Namash
Kuwait Anti-Corruption Authority
Shamia, Block 2, Opposite Wahran Park, Kuwait City, Kuwait
Tel: +965 2464-0200

13. Bilateral Investment Agreements

Kuwait has signed bilateral investment treaties with 75 partners and 14 other International Investment Agreements [].

In 2013, the United States and Kuwait initiated exploratory discussions toward a potential bilateral investment treaty. Discussions continued in 2015. Kuwait signed a Trade and Investment Framework Agreement (TIFA) with the United States in 2004, which aimed to deepen trade relations and to strengthen the overall U.S.-Kuwait economic relationship. The TIFA provided for periodic technical discussions on issues including intellectual property rights, standards-related issues, taxation, and service and investment requirements. The last bilateral TIFA Council meeting took place in 2008. In October 2012, the United States signed a TIFA with the GCC; the National Assembly ratified it in April 2014.

Bilateral Taxation Treaties

Kuwait does not have a bilateral taxation treaty with the United States. In April 2015, Kuwait and the United States signed an intergovernmental Foreign Account Tax Compliance Act (FATCA) agreement.

14. OPIC and Other Investment Insurance Programs

Kuwait and the United States concluded an investment guarantee agreement in 1989, which facilitated the extension of programs from the Overseas Private Investment Corporation (OPIC) to Kuwait. In 2015, there were no active OPIC programs in Kuwait. Kuwait is also a member of the Multilateral Investment Guarantee Agency (MIGA).

15. Labor

Kuwait has a diverse labor force, with 2.14 million expatriate laborers accounting for approximately 50 percent of the total population (4.24 million) and approximately 83 percent of the total workforce (2.57 million) as of December 2015 according to the Public Authority for Civil Information (PACI): Kuwaiti nationals occupy most of the top management positions in the private and public sectors. Due to a welfare system that guarantees government jobs, unemployment among Kuwaitis is less than three percent, but is rising because of a growing influx of young Kuwaitis into the labor force. The new entrants are reluctant to enter the private sector and cannot easily be absorbed by the government, where underemployment remains a serious problem. Of approximately 434,800 Kuwaiti nationals in the workforce, 76 percent (~331,600) work in the public sector.

A number of white-collar workers from OECD countries occupy primarily high-skilled positions and many middle management positions are occupied by Egyptian, Lebanese, and South Asian nationals. The vast majority of expatriate workers are low-paid laborers from other Middle Eastern countries, South Asia, and the Philippines, and abuse of the sponsorship system is widespread, especially in the area of visa trafficking.

Since 1991, the Government of Kuwait has adopted inconsistent policies intended to limit growth of the resident expatriate population. This has resulted in unfavorable working conditions for some expatriates, especially lower-paid, unskilled workers. The government has instituted a tracking system for companies, allowing only enough work permits to be issued for pre-verified positions. The tracking system is designed to protect workers, following years of visa fraud whereby a Kuwaiti could create “ghost” positions and sell the visa for personal profit. The consequence of the fraud was the importation of workers who then found themselves unemployed. These workers often remained in Kuwait illegally, working “under the table.” Unskilled foreign workers are restricted from transferring from one sponsor to another within the private sector for a minimum of two years, but college graduates may transfer after one year. The government also levies fees on expatriate workers and their families to raise the cost of employing foreign workers.

Kuwaiti workers have the right to organize and bargain collectively, but Kuwaiti law restricts the right of freedom of association to only one union per occupational trade, and the law permits only one federation, the Kuwait Trade Union Federation, which comprises 15 of the 47 licensed unions. Foreign workers, who constitute the vast majority of the work force, are permitted by law to join unions only as non-voting members after five years of work in the particular sector the union represents. The right to strike is also recognized for private sector workers, although provisions calling for compulsory negotiation and arbitration in the case of disputes limit that right. Although public sector workers do not have the legal right to strike, several such strikes have occurred in the past four years. Kuwaiti labor law prohibits anti-union discrimination.

Separate Kuwaiti labor laws establish work conditions in the public and private sectors, with the exception of the oil sector. Forced labor is prohibited and the minimum age for employment is 18 years in industrial or dangerous jobs. Some youth under the age of 18 may be allowed to work part-time in some non-industrial positions. A two-tiered labor market ensures higher wages for Kuwaiti employees while foreign workers, particularly unskilled laborers, receive substantially lower wages. In the private sector, the minimum wage is KD 60 (USD 198) per month. In the public sector, the minimum wage is KD 250 (USD 825) per month for Kuwaiti bachelors and KD 325 (USD 1,072) per month for married Kuwaitis, plus KD 50 (USD 165) for each child, compared to a standard monthly minimum wage of KD 90 (USD 297) for non-Kuwaitis in the public sector. Kuwaitis employed in both the private and public sectors receive substantial government subsidies on top of their base salaries. The amended labor law of February 2010 did not change the previous work week limitation from 48 hours, but extended annual leave to 30 days after six months of employment. However, the law is not consistently enforced and disputes over the payment of salaries and contract-switching are common, especially among unskilled workers. The labor laws do not apply to domestic (household) workers.

The International Labor Organization’s (ILO) Committee of Experts has reiterated its longstanding criticisms of the discrepancies between the Kuwaiti Labor Code and ILO Conventions 1, 30, and 87 regarding work hours and freedom of association. Areas criticized by the ILO include the prohibition of more than one trade union for a given field; the requirement that a new union have at least 100 workers; the regulation that workers must reside in Kuwait for five years before joining a trade union; the denial of the right to vote and to be elected for foreign trade unions; the prohibition against trade unions engaging in any political or religious activity; and the reversion of trade union assets to MOSAL in the event of dissolution.

The State Department’s annual Trafficking in Persons Report highlights the vulnerability of domestic workers to exploitation. Partly because of the plight of domestic workers and other workers in Kuwait, the State Department’s 2015 Trafficking in Persons Report listed Kuwait as a “Tier 3” country of concern. In February 2010, the National Assembly enacted a private sector labor law, updating the antiquated 1964 law. The 2010 law provided private sector workers with longer leave, higher severance pay, and maternity leave. It required payment of salaries to bank accounts, rather than cash transfers, and provided for the establishment of a state-owned recruitment company to oversee the importation of foreign labor, a move intended to eliminate visa fraud and illicit recruitment of foreign workers. In June 2015, the government passed a domestic labor law that established a 12-hour work day, a minimum wage of KD 65 (USD 215), and a formal grievance system. The domestic labor law is expected to be fully implemented in 2016.

In June 2007, the National Assembly ratified a law that bans women from working between 8:00 p.m. and 7:00 a.m., except for sectors approved by MOSAL. The law also bans women from working in jobs that are hazardous, rough, and damaging to health, as well as in “immoral jobs that abuse women’s femininity,” and in places that exclusively serve men.

16. Foreign Trade Zones/Free Ports/Trade Facilitation

From late 1999, the MOCI supervised a 50 square-kilometer Kuwait Free Trade Zone (KFTZ) at Shuwaikh port. Many restrictions normally faced by foreign firms, such as corporate taxes, technically do not apply to offices or plants within the KFTZ. Some 90 percent of space within the KFTZ has been leased and the majority of firms operating in the zone are Kuwaiti. However, both Kuwaiti and foreign businesses report irregularities on the part of central and municipal government officials. Frequent management and operational disputes have plagued the KFTZ over the years. In December 2013, MOCI finalized a new master plan for the KFTZ area and began issuing new commercial licenses.

17. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Kuwaiti investment abroad consists of portfolio investment by KIA and direct investment by other government entities. According to the 2015 World Investment Report published by the secretariat of the United Nations Conference on Trade and Development (UNCTAD), Kuwait attracted USD 486 million in FDI in 2014, compared with FDI outflows of USD 13.1 billion, making Kuwait the highest overseas investor in the GCC. U.S. enterprises invested USD 315 million in Kuwait in 2014, up from 301 million in 2013. Despite the many challenges to doing business in Kuwait, several U.S. companies have won lucrative contracts and operate successfully in the country. According to the U.S. Department of Commerce, Kuwait was ranked 37th in 2014 as a source of investment in the United States, with an FDI position of USD 1.4 billion. The actual investment into the United States from Kuwaiti sources is very likely to be many orders of magnitude larger. Kuwaiti investment in the United States is diversified across several sectors. Two major announcements in early 2016 included Gatehouse Capital’s purchase of ten select service hotels in the upper Midwest for USD 137 million and MEGlobal’s planned construction of a new world-scale monoethylene glycol manufacturing facility in Texas worth over USD one billion.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy


Host Country Statistical source

USG or international statistical source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data






Host Country Gross Domestic Product (GDP) ($M USD)


KD 45,654




Foreign Direct Investment

Host Country Statistical source

USG or international statistical source

USG or international Source of data: BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)





Host country’s FDI in the United States ($M USD, stock positions)





Total inbound stock of FDI as % host GDP






Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data (2014)

From Top Five Sources/To Top Five Destinations (US Dollars, Millions)

Inward Direct Investment

Outward Direct Investment

Total Inward



Total Outward






Saudi Arabia






Cayman Islands



United Arab Emirates






Saudi Arabia












"0" reflects amounts rounded to +/- USD 500,000.

Source: IMF Coordinated Direct Investment Survey

Host country data are not made publicly available.

Table 4: Sources of Portfolio Investment

Portfolio Investment Assets (June 2015)

Top Five Partners (Millions, US Dollars)


Equity Securities

Total Debt Securities

All Countries



All Countries



All Countries









United Arab Emirates



United Arab Emirates



Saudi Arabia



Cayman Islands



United States



United Arab Emirates






Saudi Arabia



United States






Cayman Islands



United Kingdom






Source: IMF Coordinated Portfolio Investment Survey

Host country data are not made publicly available.

18. Contact for More Information

Economic Section
American Embassy
P. O. Box 77
Safat 13001
+965 2259 1001