As a resource-rich country, Kuwait is diligently looking into steering the economy towards more private-sector activities, as well as exploiting other potential markets.
Kuwait relies almost solely on its energy sector, with oil being the main product of export. In 2018, the nation sold approximately $79.2 billion worth of the commodity, which accounted for almost 90 per cent of export revenues. In addition to crude oil, exports include a number of oil-related products, such as petrochemicals, as well as non-oil exports, including manufactured fertilizers, ethylene products and re-exported goods.
Kuwait imports a significant percentage of products consumed by the local population. In 2018, product imports totalled around $34 billion, mainly comprised of industrial equipment, machinery and capital equipment, durable and semi-durable goods and pharmaceuticals.
In 2020, Canadian merchandise exports to Kuwait reached a value of $96.3 million, and imports from Kuwait stood at $277,095. Canada’s top merchandise exports to Kuwait included machinery, cereals and motor vehicles, while imports from Kuwait contained crude and refined petroleum, fertilizers and food products.
One of Kuwait’s key objectives is to position the country as a global centre for the petrochemical industry. A Kuwaiti Petroleum Corporation subsidiary, the Kuwait Foreign Petroleum Exploration Company (KUFPEC), invested in Canada by acquiring 30 per cent of Chevron’s working interest in the Kaybob Duvernay shale formation in late 2014. The Kaybob project is KUFPEC’s first onshore unconventional liquids-rich tight gas asset. This project provides employment opportunities for qualified locals and has allowed multiple secondment assignments to Kuwaiti nationals, enabling enhanced experience in shale development with tier-one international operators in the areas of hydraulic fracturing, best practices and KPC subsidiary collaboration. Moreover, the Kaybob project has assisted KUFPEC with establishing an unconventional centre of excellence, which is recruiting world-class staff, working with Canadian technology partners and Canadian R&D. To date, 214 wells have been spudded [begun the drilling process], 199 wells completed and 190 have been tied into production.
Kuwait is looking for other ways to diversify its economy. It plans to formulate a new energy strategy, combined with a plan to foster economic diversification and reduce fossil fuel dependency.
With foreign investment steadily increasing, the nation is ready for the opportunities that emerging markets in Canada could bring. Our two countries have always shared good economic relations. In 2019, a Kuwait Canada Economic Forum was held under the chairmanship of Kuwait’s finance minister, which fostered opportunities for investment and discussed the government’s concrete steps towards achieving its ambitions to boost private-sector investments in various areas.
The structural modifications made to the market, alongside changes to the legislative framework governing it, have paved the way for foreign investment. Kuwait currently has a free trade policy under a free economic system where customs duties do not exceed 5 per cent for most goods imported from outside the customs union of the Gulf Co-operation Council. More than 400 types of goods are exempted from customs duties, mostly foodstuffs.
While non-Kuwaitis can own shares in Kuwaiti joint-stock companies, and share in companies, under the Kuwaiti investment rules, a foreign investor can also establish Kuwaiti companies with a foreign capital share of 100 per cent. And, they can transfer the ownership of their investment to another foreign or national investor. Foreign investors have the right to transfer their profits and capital abroad. To create more sustainable opportunities for investments, foreign investors can be exempt from income tax and any other taxes for up to 10 years and have full or partial exemption from customs duties on imports required by the project.
Kuwait is keen on creating a safe and attractive environment for foreign investors and provides all the necessary incentives to facilitate the needs for successful investment in line with the State of Kuwait’s 2035 Vision.
This vision, which stems from the leadership of Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, aims to transform the nation into a regional, commercial and financial hub. This ambitious plan intends to position the country as a centre for trade and finance and would see its economy, health care, infrastructure and public administration become world-class leaders of innovation and prosperity. It will also seek advancements in education, youth training and overall development by bringing into focus the critical role of scientific research and digitalization in economic development and overall prosperity. Taking advantage of its balanced international foreign policy, legislative system and distinguished strategic location, Vision 2035 will chart a path of progress and prosperity that will benefit Canadians, foreign investors and Kuwaitis alike.
Reem Alkhaled is Kuwait’s ambassador to Canada. Reach her by phone at 613-780-9999 and by email at
ambassadoroffice@kuwaitembassy.ca.
