As the most expansive four-year plan in the history of Kuwait is approved, it signals a change in direction for the nation’s economy. The development plan gives Kuwait’s economy a push towards growth and includes distinct expansions in the private sector, according to a leading bank in Kuwait.
It is expected that the private sector will contribute almost 50 per cent of the KD31 billion (Dh387 billion) investment target through this plan approved by Kuwait’s parliament earlier in 2010, according to the National Bank of Kuwait (NBK).
This year might easily become a major crossroads for the nation’s economy, according to a study by the NBK. That change is dependent on the approval of this plan full of ambitious development and forward motion.
After an extended period of time that found the Kuwaiti government spending less on development and infrastructure and causing the local economy to slow down and fall behind others in the region, this new plan exhibits a government committed to pushing important reforms and development plans through.
Other than the plan, there are also plenty of large contracts and projects in the works or set to begin that are sure to have a significant impact on Kuwait’s economy.
The study notes that despite some worry over whether the nation can put all of the various elements of the plan in place, the overall impact of the new initiatives are expected to be positive for the economy of Kuwait.
The plan was ratified by the Parliament of Kuwait this past February and is only the first in a line up of six blueprints for development that the country is counting on to fulfill a goal of being at the top of finance and trade in the Gulf region in 25 years.
The ambitions of this development plan are resting on the role of the private sector, which should grow due to reforms being introduced and incentives offered to generate more private investments.
In line with this hope, 50 per cent of the investments required under the plan should come from the private sector. Investing directly into the projects or using the “Build, Operate and Transfer” or “Public Private Partnerships” (PPP) are some of the ways the private sector can be involved.
NBK notes that the timing of this plan, along with the amount of money involved, make it critical to Kuwait.
The nation has been struggling through difficulties caused by the 2008 financial crisis.
Designed to bring Kuwait through the crisis and stimulate the local economy, as well as stabilize the future situation, the government committed to implementing a large-scale development plan that would result in economic restructuring, less dependency on oil and more private sector involvement, according to the NBK.
This plan brings innovations and legislation into place that will fund projects for development and help sustain a variety of sectors such as small and medium-size business (SMEs), contracting firms, and low income self employed individuals.
When discussing the Kuwait Vision 2035 plan NBK noted that it was a leader in the Arab world in terms of ambitious development and covered five distinct areas. The people of Kuwait, the nation’s economy, both the political and cultural climate and the position Kuwait holds internationally were included.
The bank noted that the following things were part of the goals addressed:
- Red tape reduction: cut down on the red tape required for opening and operating a business, make the process convenient and efficient, allow more access to both the capital and land needed by small business startups and increase international trade.
- Allow More Access to Land: put government land up for auction, involve the private sector when developing infrastructure and land, and organize a central land authority.
- Open Up the Market With Fairness and Equality: battle corruption and inequalities, work towards an anti-trust law as well as a competition commission, create a leveled playing field for businesses of various sizes, decrease the power of the government to intervene in markets, promote FDI and lighten the restrictions placed on foreign investors.
- Promote a Solid, Sustained Fiscal Position: halt the rapidly rising salaries and hiring practices in the public sector, cut expenses with more privatization, decrease government spending for infrastructure and developments by replacing with PPP, and have a more diversified income for the government.
- Expand and Empower the Energy Industry: Help the sector to be more insulated from political intrusion, open up to global expertise, advance the electricity industry through change, have the local available resources optimally exploited, work through petrochemical options, and create an energy hub in the region.
- Advance Transportation in the Region: upgrade the current infrastructure to a higher capacity, work through different management situations within infrastructure, create a leading multimodal hub of logistics that will attract communications through to the north, advance trade through improved regulations, and implement developments in the logistics and trade sectors.Paul Holdsworth, Staff Writer, Gulf Jobs Market News