Combating Commercial Concealment.. A Necessary Step.. But!

There is no dispute that market regulation, enhancing transparency, and safeguarding fair competition are fundamental pillars of the economy, as well as requirements for indicators that protect Kuwait’s international reputation. From this perspective, the steps taken by the Ministry of Commerce and Industry to enhance disclosure of beneficial ownership and combat commercial concealment are necessary and serious measures toward regulating the market, as they put an end to wrongful practices and enhance market transparency regarding who owns, manages, and bears legal responsibility for commercial activities.

On the other hand, while the law combating commercial concealment is important and essential, finding alternatives is an urgent necessity to stimulate the market and create a comfortable business environment for local capital, whether for Kuwaitis or residents, and to attract foreign investors. Praising the objectives of regulation should not cause us to overlook providing solutions and alternatives, especially since market regulation should lead to enhanced economic activity, not contraction. Preventing and combating illegal economic practices is a necessity, which is addressed by the law combating commercial concealment; however, at the same time, adequate alternatives must be provided to ensure that the law does not become a factor driving some capital and projects out of the market.

A resident or foreign investor is not merely a residence holder or someone engaging in commercial activity; among them are individuals with expertise and capital, those with supply networks and clients, and those whose projects have built reputations over years. A foreign investor may not represent a large multinational corporation, but they employ workers, lease one or more premises, deal with suppliers, pay for services, and contribute to activating multiple sectors of the market. When the available legal options for some of these project owners are limited, complex, or effectively drive them out of their line of business, the potential outcome may be the closure or sale of projects, or the relocation of investments to other markets in countries that offer commercial facilitations and attract capital.

Attracting foreign investors should not be limited to large corporations alone. Modern economies also benefit from individual investors, entrepreneurs, small business owners, and innovators with scalable ideas who need a clear and accessible pathway to enter the market, whether they are citizens or residents. Therefore, why should Kuwait not benefit from the capital of residents on its soil, rather than restricting the commercial market to them?

Thus, what is required is not to retreat from combating commercial concealment, but to complement it with a more comprehensive investment regulation policy. The law that prevents violations serves a necessary function, but a successful investment environment also requires clear legal pathways that allow anyone wishing to operate legally to do so without resorting to arrangements unsuitable for the nature of their projects.

This discussion also applies to our young citizen employees in the government sector who are ambitious and own commercial projects, many of which are successful in the market. Therefore, despite its importance, the law should not lead to their exit from the labor market.

Among the solutions worthy of study is the introduction of commercial licenses that allow foreign investors to engage in specific activities under published regulations, with the possibility of full ownership in activities that their nature permits. These licenses could be linked to carefully considered licensing fees and tax obligations, imposing higher fees and taxes on foreigners to distinguish them from citizens. This would ensure financial returns from these fees, while also guaranteeing economic diversification through the presence of these projects, alongside job creation and the activation of various market sectors.

It is also possible to issue commercial licenses with specific regulations for citizen employees who wish to establish their own businesses while retaining their jobs, subject to conditions that ensure the project does not negatively affect the employee’s performance or productivity in their government role. Such conditions might include requiring the appointment of a manager for the project or other similar requirements. This approach does not mean opening the market without restrictions or bypassing existing laws; rather, it entails studying and simplifying the expansion of available legal options, while maintaining oversight and safeguarding national interests. Kuwait already has a legal framework for foreign direct investment, but the question worthy of discussion is the suitability of current pathways for small and medium-sized enterprises and individual investors, and the possibility of developing them to be more accessible and flexible. The economy needs not only fair rules, but also rules that foster growth, ensuring that the legal framework balances a regulated market with one that attracts investment. The state can combat hidden ownership, protect Kuwaiti investors, ensure transparency, and simultaneously open broader doors for legitimate capital. Secrets of the essence of life