Three 100% state-owned companies nominated to manage the withdrawn vouchers until further notice
- The Public Authority for Industry is studying new mechanisms to exploit active vouchers for investment purposes until they are offered in a tender
- A comprehensive vision defining the management mechanism for withdrawn vouchers and the third-party management share
- The measure falls within a broader strategy adopted by the government to address the industrial sector
- Renting withdrawn vouchers is included in the budget, and the activity involves both tenants and investors
- Keeping withdrawn vouchers in an operational status enhances their investment, financial, and operational attractiveness
Over the past few months, the active movement of the Public Authority for Industry to withdraw vouchers from violators has been evident, to the extent that it can be said that hardly a week passes without the publication of direct orders withdrawing vouchers subject to ministerial decisions in the official gazette, "Kuwait Al-Yawm." This is part of broader measures undertaken by relevant government authorities to address the conditions of the industrial sector.
With the cumulative lists of withdrawn service and craft vouchers designated for commercial use recording historic figures since the beginning of the current year, the golden question has emerged: What is the fate of these vouchers, and will their activity be suspended or continued?
In practice, this question is not hypothetical; it has been widely debated among officials at the "Industry Authority," especially after the number of withdrawn service vouchers designated for commercial use reached dozens, distributed in Al-Rayyan, Ahmadi, Shuwaikh, Fahaheel, Jahra, and Salwa.
Perhaps what heightened the significance of this question is that the areas of some withdrawn vouchers are large, generating rental income included in the "Industry Authority's" budget at high financial levels, thanks to their investment in distinguished commercial sectors and locations witnessing high consumer demand.
These vouchers also include tenants and investors contracted with the original investor, against whom the violation and closure will be enforced.
During discussions opened on this matter, the tendency toward temporary contracting with government companies acting as third parties to manage withdrawn vouchers gained favor among official circles. These vouchers will be withdrawn until they are offered in a public tender and won by a new company or investor.
To gather opinions and assess feasibility, three specialized companies in investment and facility management, wholly owned by government entities (100%), were contacted. They were asked to submit proposals for managing the withdrawn service and craft vouchers designated for commercial use, as well as those that may be withdrawn in the future.
In this regard, the three companies were directed to prepare a comprehensive vision outlining their management mechanism for the vouchers within this scope, and the share of returns they wish to obtain in exchange for maintaining the continuous operation of these vouchers according to their existing purposes.
Notably, at the outset, the tried-and-tested response dominated the scene: re-offering the withdrawn service and craft vouchers designated for commercial use in an auction, as the Ministry of Finance did with projects previously withdrawn from their investors, subsequently re-offering them to investors through the Public-Private Partnership Authority, in an attempt to attract the best investment and return offers for the state.
However, alongside this conventional response, another question has emerged regarding whether it is more prudent for the public treasury, both operationally and financially, to await the re-offering of these units in auctions, or to follow the path of the Ministry of Finance by adopting the East Market model. This approach would involve assigning the withdrawn units to a state-owned company through temporary management contracts with a defined handover date to the new investor. This strategy aligns with a new operational framework for the Public Authority for Industry, covering all withdrawn service and craft units designated for commercial use, thereby keeping pace with the objectives and developmental requirements of the current phase to improve the business environment and increase public revenues.
From an accounting perspective, the procedure of assigning temporary management to specific units holds dual operational significance for multiple government entities. By implementing this mechanism, the Public Authority for Industry has succeeded in maintaining the flow of state revenues derived from these withdrawn units, which are characterized by fixed income and already-equipped commercial spaces for tenant investors operating under a retail model. In this scenario, the Authority preserves its budgetary revenue streams until the withdrawn units are re-offered to investors.
On the other hand, the temporary management step provides additional operational returns for state-owned companies operating within the scope of investment asset management. Meanwhile, keeping the withdrawn units in an active commercial status enhances their attractiveness to investors interested in injecting significant investment liquidity into these operational sectors.
According to a report in “Al-Kuwait Al-Yawm,” the Authority recorded a number of violations in units and shops within industrial and craft areas. These included closed or unused units whose leases had expired, as well as violations related to public safety, storage, and conducting activities without licenses. Additionally, there were encroachments on state property, expired contracts, and failure to utilize the units.
The Authority also identified violations involving the practice of commercial or craft activities without licenses, the exploitation of facilities belonging to others, the construction of worker housing without permits, and encroachments on state property.
