Investment Promotion Authority and Resistance to the Old Model
For many years, a significant aspect of Kuwait’s economic activity has been tied to a model in which the state is the largest buyer, and government capital expenditure serves as the primary driver, with local intermediaries standing between the state and global companies, adding their costs and profit margins to bills borne by the public treasury. This model requires review.
For this reason, I believe the proposed amendments to the Law for Encouraging Direct Investment deserve praise, not only because they facilitate the entry of foreign investors, but also because they reflect a deeper transformation: from an economy where some benefit from intermediation to one where added value should be the basis of competition.
The proposal allows investors to establish companies, acquire existing firms, and relocate foreign companies to Kuwait, while expanding their ability to operate without requiring a Kuwaiti partner or local agent. It also proposes the creation of an “Investor Service Center” to serve as a unified digital window and a single point of contact for investors dealing with government entities, rather than forcing them to navigate between multiple agencies.
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The most important aspect is that the proposed incentives are linked to what investment adds to the economy: technology transfer, innovation, local content, exports, and the employment and training of Kuwaitis.
It is natural that any transition from an economic model that has been stable for decades will face resistance from those accustomed to benefiting from it. However, protecting an intermediation model is not sound economic policy. Those in the private sector who possess genuine expertise, services, or market knowledge will remain in demand; the difference is that their value will lie in what they add, not merely in their presence between the state and the investor.
This path does not start from scratch; there are successful regional and international models that have proven that facilitating direct investment and improving the business environment can yield tangible results when accompanied by effective implementation.
Therefore, optimism about this direction is not based solely on intentions, but on previous experiences that demonstrate what works and how it can be applied.
Conversely, the success of reforms does not depend on legislation alone. The Authority must take it upon itself to explain its project at various levels, addressing direct, indirect, and potential beneficiaries, and not limiting itself to sporadic media statements. The wider the circle of those affected by the reform, the greater the need to clarify its objectives, mechanisms, beneficiaries, and how its outcomes will impact public finances and the Kuwaiti economy. Leaving a gap in this area may give those harmed by change the opportunity to present positive reforms as objects of suspicion or objection. A reform that does not explain itself well may find others explaining it to the public in ways that contradict reality.
