Kuwait 5th lowest in FDI flow among GCC nations

03/11/2024

Kuwait 5th lowest in FDI flow among GCC nations

KUWAIT CITY, Nov 3: The recent Al- Shall Economic Report has highlighted significant challenges facing Kuwait’s foreign direct investment (FDI) landscape, pointing to a general investment environment that deters both local and foreign investments, reports Al-Seyassah daily. The Kuwait Direct Investment Promotion Authority (KDIPA) has come under scrutiny, though the report emphasizes that the underlying issues lie within the broader investment climate rather than the authority’s efforts alone. According to the authority’s annual report, Kuwait attracted only 206.9 million dinars (approximately $682 million) in inward direct investments during the fiscal year 2023-2024.

Since January 1, 2015, total accumulated foreign direct investments have reached about 1.749 billion dinars (around $5.8 billion). Over nine years, the average annual FDI inflow has been 189.1 million dinars (approximately $614.8 million), ranking Kuwait as the fifth lowest in FDI flow among the six Gulf Cooperation Council (GCC) countries. In stark contrast, the United Nations Conference on Trade and Development (UNCTAD) reports substantial cumulative investments from 2015 to 2023 for other GCC nations: the UAE attracted about $150.7 billion at an annual rate of $16.8 billion; Saudi Arabia received $97.3 billion at $10.8 billion annually; Oman brought in $31.5 billion at $3.5 billion annually; and Bahrain secured $17.3 billion at $1.9 billion annually. The discrepancy is evident, particularly between Kuwait and Bahrain, which recorded three times the FDI of Kuwait.

The report suggests that the focus of the Direct Investment Promotion Authority and other planning agencies should be on radically reforming the investment environment to make it more attractive without excessive effort. Al-Shall emphasizes that the current FDI levels do not justify the extensive efforts required to attract them, advocating for investments that create substantial job opportunities for citizens and incorporate modern management techniques and competitive products. Moreover, the report warns against certain types of foreign investments that may prove detrimental to Kuwait’s economy.

Specifically, investments reliant on cheap imported labor or subsidized infrastructure could exacerbate demographic imbalances and burden public finances. Al-Shall concludes that Kuwait’s primary need is not merely capital, but rather safe and sustainable investments that contribute to income diversification and stabilize the national labor force, a necessity that remains unfulfilled.

According to the latest Al-Shall Economic Report, Kuwait is projected to face a potential budget deficit of approximately 3.2 billion dinars for the fiscal year 2024-2025. This assessment comes as the seventh month of the fiscal year concluded in October, during which the average price of Kuwaiti oil was about $75.1 per barrel.