"Commercial Concealment": The Latest Victim of Kuwait's Economic Reforms
Coinciding with the issuance of a draft law decree addressing chronic market distortions and eradicating the phenomenon of “Tastir” (commercial hiding)
Qais Al-Ghanem: The state is making strenuous efforts to prepare an investment environment to diversify income
Mohammed Al-Faraih: The law decree creates a fair environment that opens horizons for Kuwaiti youth
Dr. Salah Bursali: Combating the parallel economy reinforces transparency and encourages youth
Najah Bilal
In a decisive legislative step aimed at reordering the domestic economic house, the new “Law Combating Commercial Hiding” tops the scene of ongoing structural reforms in the State of Kuwait. This law serves as a long-awaited strategic tool to address chronic and deep-seated distortions that have hindered the efficiency of the local market and its capacity for natural growth for many years.
This step has received widespread welcome and extensive discussion among economic experts and investors interviewed by “Al-Siyasa,” who agreed that the fruits of this legislation will positively reflect on the state’s economic and social fabric through a package of vital axes.
In his reading of the current economic landscape, economic and real estate expert Qais Al-Ghanem affirmed that the state is taking serious and practical steps on the path of correcting the structural conditions of the national economy. However, he stressed the necessity of involving experts to achieve positive results from the private sector, especially when enacting laws in which the private sector is experienced.
Al-Ghanem clarified that it is the government’s duty to formulate balanced legal frameworks without harming the private sector or stifling its growth. Considering that the government is currently encouraging foreign investments in Kuwait, there are vital sectors and daily operational projects, such as grocery stores, auto repair garages, and garment dyeing workshops, which present real challenges and difficulties in managing and conducting their daily craft activities independently. Consequently, the role of the experienced expatriate emerges as a genuine partner who contributes his capital and effort to manage and operate the project.
Al-Ghanem noted that expatriates currently manage a large percentage of the small business sector. He clarified that if there were systems regulating the relationship between expatriates and Kuwaitis, built on regulatory foundations according to Kuwait’s Commercial and Civil Laws, this would lead to a positive outcome with greater benefits for the national economy and the individual Kuwaiti.
Al-Ghanem concluded his statement by highlighting the strenuous efforts made by the state to prepare the investment environment and attract foreign capital with the aim of diversifying national income sources.
Broad horizons for Kuwaiti youth
On the same level, economic expert and food security advisor Mohammed Al-Faraih told “Al-Siyasa” that the government’s approval of the draft law decree on combating commercial hiding represents an important strategic step that directly serves the national economy. It aims to address chronic distortions in the local market, the most prominent of which is the illegal management and operation of companies and commercial establishments by some expatriate workers on their own behalf under the “Tasmeen” (sponsorship) system. This practice involves granting the citizen license holder minimal annual financial amounts, thereby depriving the state treasury and the economy of real returns.
Al-Faraih pointed out that the strict implementation of this law would open broad horizons and numerous employment and investment opportunities for Kuwaiti youth, particularly in the small and medium-sized enterprise sector. This vital sector has long suffered from unfair competition, as expatriate labor displaced national cadres and expanded the volume of hidden trade, thereby marginalizing citizen entrepreneurs’ initiatives and reducing their chances of success.
Al-Faraih dismissed concerns raised about the law’s impact on capital flows, affirming that combating commercial concealment will never hinder the attraction of foreign direct investment. He stressed that the state already possesses a comprehensive, independent legislative framework that regulates and supports foreign investment, spearheaded by the Direct Investment Promotion Authority, which ensures that actual investors enter through official channels, thereby generating added value for the economy while avoiding arbitrariness or marginal trade.
Curbing the Shadow Economy
For his part, economist and former president of the Kuwaiti Contractors Association, Dr. Salah Bursali, endorsed the new law combating commercial concealment, describing it as a strategic and serious step to rein in the “shadow economy” and eliminate the structural distortions plaguing the local market.
Dr. Bursali clarified that the primary beneficiary of implementing this law is the national economy, followed by Kuwaiti youth and entrepreneurs, particularly young men and women. He noted that the law directly contributes to creating a fair and transparent investment environment, opening broad horizons for the success and development of national small and medium-sized enterprises without facing unfair competition.
He added that the law’s positive returns will tangibly extend to the end consumer, who will benefit from guaranteed quality in goods and services. This stems from commercial establishments transitioning to become subject to direct government oversight and compliance with official quality standards.
Dr. Bursali emphasized that the importance of combating commercial concealment and the parallel economy lies in strengthening the regulatory legislative framework for economic activities, protecting the public treasury from revenue waste, and entrenching transparency and fair competition in markets. He viewed the Kuwaiti Cabinet’s approval of a draft decree-law on combating commercial concealment as a decisive step to prohibit any individual from conducting economic activities on behalf of others or outside the scope of their granted license—a practice known as “nominee arrangements.”
