Private sector key to Kuwait’s income diversification
KUWAIT CITY, July 7: After the Minister of Finance, Dr. Anwar Al-Mudhaf, emphasized on the importance of activating the private sector to diversify sources of income, the Al-Seyassah daily raised several critical issues such as who benefits from the Kuwaiti capital escaping abroad, which some experts estimate at about 20 billion dinars by the end of 2024.
The question arises, ‘Can lifting subsidies on water, electricity, and land from private companies exacerbate the crises in Kuwait’s industrial sector, thereby negatively affecting the policy of diversifying income sources?
Another pressing question is how long the slogan “Made in Kuwait” will remain merely ‘ink on paper’ for local consumption as some call it?
Housing expert and businessman Khaled Al-Enezi expressed regret over the Kuwaiti private investors ‘fleeing’ abroad, which are projected to reach about 20 billion dinars by the end of 2024.
He attributed this capital migration to bureaucracy and said he considers the option of investing in Saudi Arabia due to lower rents for industrial and commercial plots.
In Saudi Arabia, renting 10,000 meters costs 160 dinars per month, while a 25-meter shop rents for around 60 dinars.
In contrast, Kuwait sees demands for increased fees on industrial and commercial lands and even suggestions to lift support from the private sector.
Al-Enezi called on the government, in its new reform era, to accelerate the implementation of plans aimed at diversifying income sources by encouraging local private sector investment in Kuwait.
Diversifying sources of income, he said, requires reducing the public sector’s dominance over the national economy, which heavily relies on oil, constituting nearly 90% of the state’s resources.
He emphasized the need to stimulate the private sector by facilitating access to necessary financing and land for industrialists and eliminating bureaucracy, which is a primary reason for Kuwaiti capital moving abroad. He also highlighted the importance of implementing slow development plans to support this goal.
He emphasized that the slow implementation of the state’s development plans negatively affects the private sector, especially the contracting sector. The failure to release sufficient land by the Public Authority for Industry increases the cost of leasing industrial land, negatively impacting revenues and pushing many Kuwaiti manufacturers to neighboring countries to implement their projects.
Additionally, the failure of the free zone has led many industrialists to refrain from investing in Kuwait, causing them to emigrate.
Analyst and economic expert Mohammed Ramadan supports the necessity of stimulating and encouraging the Kuwaiti private sector to diversify income sources and provide an opportunity for the return of Kuwaiti capital. However, he rejects any tendency to impose taxes on the private sector, believing it will negatively affect citizens and consumers by increasing the prices of goods.
Ramadan also mentioned the state’s plan to raise the value of industrial coupons, noting that this would revive both the industry and the state.
The industrial sector would benefit from the exit of non-essential industries, thereby increasing the competitiveness of national products and aiding in diversifying income sources.
He stressed the importance of giving a five-year grace period to new industries and maintaining support for water, electricity, and land for strategic industrial projects, including oil and pharmaceutical industries, which are essential to the state.
He pointed out that Qatar’s recent move to reduce industrial fees is not directly applicable to Kuwait, as Qatar supports strategic projects.
In Kuwait, there are those who obtain industrial plots and rent them out, generating returns without benefiting the state.
Ramadan called for learning from the successful pharmaceutical industry in Ras Al Khaimah, specifically the Julphar Company, which exports medicines worldwide. He stressed the need to support industries that contribute to the national product and employ national cadres to address the employment problem.