Commercial Concealment and Business Environment Reforms
Is the Commercial Concealment Law the solution to improving the business environment in Kuwait for business owners, small and medium-sized enterprises (SMEs), and industrial and agricultural projects? The answer is no. However, the Commercial Concealment Law is merely the beginning of a long reform process filled with details addressing numerous problems that require development and regulation. There are many problems and challenges faced by SME owners. I will touch upon some of these issues, hoping that the message reaches the Ministry of Commerce and the relevant authorities to work on finding appropriate and swift solutions before it is too late.
Cessation of Project Financing: There is a scarcity and lack of financing channels in Kuwait. The cessation of financing is considered one of the biggest problems plaguing the commercial sector and the SME sector. Following the coronavirus pandemic, the National Fund for the Care and Development of Small and Medium Enterprises halted project financing. The reason was the default of many small projects funded by the fund, due to the fund’s own poor management in monitoring these projects.
Lack of Industrial, Artisanal, and Agricultural Land: There are no available industrial plots, agricultural areas, or artisanal sites for new entrepreneurs and business owners. Therefore, it is difficult for an entrepreneur to start their commercial project without suitable spaces for the business.
Rising Rental Prices: The prices of offices, shops, and commercial sites have increased significantly due to the scarcity of spaces available to business owners. Consequently, the chances of success for any new commercial project are very slim, as the project begins with substantial debts, creating a heavy burden on expenses and operational revenues.
Increased Licensing Fees: Government authorities have recently raised the fees for obtaining commercial licenses and official documents, as well as increased health insurance costs. The cost of labor has become very high. Therefore, these additional fees and the increase in charges negatively impact business owners.
Multiplicity of Regulatory Authorities and High Violation Fines: The Kuwait Municipality, the Fire Department, the Public Authority for Civil Power, the Public Authority for Food and Drugs, and the Public Authority for Environmental Affairs all monitor commercial establishments and impose financial fines or penalties in case of violations.
Continued Bureaucracy Among Some Government Authorities: When visiting one ministry, the employee may ask you to visit the Kuwait Municipality. When visiting the municipality, the employee may ask you to visit the Fire Department. This circular process results in wasted time with no outcome.
A Short Story Illustrating the Confusion of Some Government Authorities: A friend of mine owns an industrial establishment. When a Fire Department employee inspected the establishment, he requested a permit for the mezzanine. The Fire Department employee was informed that the establishment is fully licensed and that the license covers both the ground floor and the mezzanine. The Fire Department employee refused to accept this. Upon visiting the municipality, the municipal employee confirmed that the establishment is fully licensed and that the license includes the mezzanine. There is no coordination between these government authorities.
Fawaz Ahmed Al-Hamad
