The diversification of Kuwait's economy as an opportunity for Spanish investment

At first glance, it goes unnoticed. You have to get a little closer to locate Kuwait's place in the Persian Gulf. Straddling Saudi Arabia, its preferred partner, and Iran, this monarchy is struggling to diversify its economy, which is still heavily dependent on oil. But it starts from a privileged position: little public debt and a sovereign fund with 650 billion dollars. With enviable macroeconomic indicators and a great potential for the development of new businesses, Kuwait can become a very profitable investment. Madrid's Chamber of Commerce held a session this week to introduce the country and point out the most attractive sectors for Spanish businessmen.  

Oil is the engine that greases the Kuwaiti economy. "Oil revenues are used to increase the country's sovereign wealth and the rest reaches the population through salaries, 90% of Kuwaitis work in the public sector, and subsidies to supplies and companies", explains the Spanish commercial attaché in Kuwait, Francisco Javier Medina. Oil still represents almost 49% of production, services 39.1%, manufacturing 6.1%, energy industry 3% and construction 1.9%. Most of the country's goods are imported. It is important to note for those entrepreneurs who want to export is that the halal certificate is requested for products and there is no taxation on consumption.  

The country will be forced to readjust its budget for this year, designed to support prices of up to $50 per barrel. "They have plenty of margin to face the current market volatility because their public debt is very low. Parliament will give the government permission to increase the debt. It is likely that this year they will register a deficit of 28%, according to data from the local consulting firm Kamco Invest," assures the commercial attaché.  

The most interesting points of this small nation are related to its financial solvency, the high purchasing power of its population (45,000 dollars per capita) and its average growth in the last few years (4.5% per year). "It has a great capacity of indebtedness for projects. They have important projects to develop infrastructures, they have announced new investments in the health sector to increase the number of hospital beds and they are also planning to promote renewable energies, especially solar energy", says Íñigo Berruete, advisor to the Economic and Commercial Office of Spain in Kuwait.  

Like other countries in the area, Kuwait has also designed a roadmap to update its production system and diversify its economy. "With the Kuwait 2035 programme they want to transform the country into a commercial and financial centre. They also seek to give greater prominence in private activity," says the adviser. 

Although there are many investment opportunities, the Chamber of Commerce advisors warned that it is difficult to enter the Kuwaiti market. "You need a local partner and it is very complicated to set up in the country to operate directly here. We try to help entrepreneurs from here, although currently, with the lockdown, we have some limitations," says Medina. Only two Spanish companies are operating directly from Kuwait at the moment. "The ideal is to propose a public-private partnership regime. Although it is complicated to establish, the authorities make it very easy to do business and the country is completely open to investment", say those in charge of the Commercial Office in Kuwait.