Kuwait is one of the richest countries in the world and a leading economic centre in the region. Despite its small size, the country has a number of natural resources that have enabled it to grow its economic strength. The economy depends on oil, with fixed oils reserves of about 102 billion barrels, or about 7.4 per cent of the world’s crude reserves, and about 21.6 per cent of the Gulf Cooperation Council’s crude reserves. Kuwait’s current production level is about 2.3 million barrels per day.
Oil accounts for about 50 per cent of Kuwait’s gross domestic product (GDP), 95 per cent of total export earnings and 80 per cent of government revenue.
Kuwait-Canada bilateral trade in merchandise amounted to $192 million in 2015. Canada’s exports were predominantly comprised of machinery and mechanical equipment, transportation equipment and agri-food products. In 2015, Kuwaiti foreign direct investment in Canada was estimated at $180 million, while Canadian direct investment in Kuwait was estimated at $2 million.
Canadian businesses will find commercial trade and service opportunities mainly in the petroleum, health, defence, security, agri-food and education sectors.
Kuwait-Canada commercial relations are currently witnessing vast new avenues of development in such petrochemical companies as Petrochemical Industries Company K.S.C. (PIC) of Kuwait, a subsidiary of Kuwait Petroleum Corporation, which has been operating in Alberta since 2004 through various investments, including those in the petrochemical industry.
In 2017, PIC entered into partnership with Pembina Pipeline Corporation, a Calgary-based corporation that owns and operates pipelines that transport conventional and synthetic crude oil and natural gas liquids produced in Western Canada.
PIC and Pembina have formed joint-venture agreements and a new entity, Canada-Kuwait Petrochemical Corporation (CKPC). CKPC will proceed with activities for a front-end engineering design for the project, which is expected to produce in excess of 1.2 billion pounds per year of polypropylene that would then be transported to North American and global markets.
The preliminary capital cost estimate of the project is between $3.8 billion and $4.2 billion. It is expected to create about 2,500 construction jobs and more than 150 permanent jobs. Currently, KPC has $2 billion worth of investment in Alberta and is planning to increase that to $5 billion.
Furthermore, there are bilateral projects in a third country. In February 2016, a consortium made up of the Ontario Teachers’ Pension Plan (OTPP), Borealis, AIMCo and Wren House — an infrastructure investment vehicle owned by Kuwait Investment Authority — have taken over London City Airport at a cost of about $2.8 billion.
Kuwait has always been a hub of trade in its region and a promising market for novice and veteran businesses. Hence, I invite all types of businesses to consider investing in Kuwait, which has an open market and an open trade policy. Customs duties do not exceed five per cent for most goods imported from outside the customs union of the GCC and more than 400 goods are exempt from customs duties — most of them foodstuffs.
Kuwait’s major merchandise imports from Canada include industrial equipment, machinery and capital equipment, durable and semi-durable goods, food and beverages, special vehicles, transport equipment parts, non-durable goods and transportation. Imports are not subject to quotas.
Kuwait’s merchandise exports to Canada include petroleum, manufactured fertilizers, ethylene products, other manufactures and re-exported goods.
Under Kuwaiti investment rules, foreign investors can establish Kuwaiti companies with a foreign capital share of 100 per cent. Foreign investors may transfer ownership of their investment to another foreign or national investor. Foreign investors have the right to transfer profits and capital abroad. Additionally, foreign investors can enjoy the following advantages: Exemption from income tax and any other taxes for up to 10 years; full or partial exemption from customs duties on imports required by the project; allocation of land required by the project and employment of foreign workers needed by the project. In addition, any dispute between a foreign investor and another party may be referred to domestic or international arbitration. The “other party” here includes government bodies.
Abdulhamid Ali Alfailakawi is the ambassador of Kuwait. Reach him by email at ambassadoroffice@kuwaitembassy.ca or by calling (613) 780-9999.
