Kuwait has been lagging its neighbors for years in terms of Foreign Domestic Investments (FDI) flow. As of 2009, FDI represented 14% of Kuwait’s GDP, ranking Kuwait 141th in terms of foreign capital receipt. This leads us to question, how can Kuwait turn this situation around?
My thoughts were all mostly negative. Although Kuwait has the best democratic system in the Gulf (maybe in the Arab world), the continuous hostility between the Parliament and the Government is deterring investments, which fear from political turmoil. Kuwait has an abundance of oil, but wouldn’t allow foreign companies to extract it. Recent foreign investment track record hasn’t been encouraging, as the Etisalat acquisition of Zain is being grilled by shareholders and Parliament members. Kuwait announced an ambitious 5-year plan, which would see the government spending $140 billion. Unfortunately, the political crisis is deviating the attention of the government away from that plan. The red tape and bureaucracy within the government is crippling projects and deterring Kuwaitis from doing business.
My question is: why would foreigners invest in Kuwait?
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