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Saudi Aramco’s trading arm plans to open an office in London soon as it expands its international business, sources familiar with the move said.
Aramco Trading Co (ATC) also opened an office in the bunkering hub of Fujairah, United Arab Emirates in December to trade oil products and hired two traders from Trafigura and PetroChina to run operations there, the sources said.
“Last June, a trading office was inaugurated in Singapore, and last December (another) in Fujairah and very soon in London, just like any trading house,” one of the sources said.
Another source said: “They have moved a few trading desks to Singapore and Fujairah. London is surely next.”
A third source said the London office might be inaugurated as early as next week during International Petroleum (IP) Week, an industry event held annually in the British capital.
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Saudi Aramco, the parent company, already has an office in Marylebone, London. The ATC London operations may be located in the same place as the parent company and are likely to start with a handful of crude oil traders, one of the sources said.
ATC did not immediately respond to a request to comment.
The trading sector faces increased rivalry between national oil companies (NOCs), international oil firms and Swiss merchants. NOCs have cheap feedstock and strength in refining, allowing them to compete aggressively with oil majors and especially traders that lack their own production.
ATC aims to boost its trading volumes in crude and refined products to 6 million barrels per day (bpd) by 2020 and the company’s headquarters will remain in Dhahran, Saudi Arabia, ATC’s chief executive told Reuters last year.
The CEO, Ibrahim al-Buainain, also said the plan to open an ATC regional office in Europe - either London or Geneva - was set for the first quarter of 2019.
Middle East oil producers are venturing into buying and selling oil to boost their incomes as a sharp drop in crude prices since mid-2014 has forced the industry to become more efficient and commercially focused.
State-owned Abu Dhabi National Oil Co is establishing a new trading operation along with Italy’s Eni and Austria’s OMV.
ATC was set up in 2012 initially to market refined products, base oils and bulk petrochemicals, but has since expanded into crude trading mainly to feed international Aramco joint ventures such as the U.S. Motiva refinery and S-Oil in South Korea.
Aramco, the world’s top oil producer and exporter, aims to become the largest integrated energy firm, with plans to expand refining operations and petrochemical output. It pumps around 10 million bpd of crude, of which it exports about 7 million bpd.
The company plans to raise its refining capacity - inside Saudi Arabia and abroad - to 8-10 million bpd, from around 5.4 million bpd now. Aramco is expanding its refining business at home as well as in new markets particularly in Asia. (Writing by Rania El Gamal; Editing by Dale Hudson)
Source: reuters
DP World has bought back British ferry and shipping freight operator P&O Ferries for 322 million pounds ($421 million), more than a decade after it sold it.
DP World acquired the British shipping and logistics company in 2006 but soon sold off some assets, including P&O Ferries to its major shareholder, state holding company Dubai World.
DP World announced on Wednesday it was buying the company, and a spokeswoman later told Reuters it had bought it back from Dubai World.
Dubai World was at the heart of the emirate’s financial crisis at the turn of the decade and was forced to restructure around $25 billion of debt in 2011.
DP World said the P&O Ferries deal was expected to be earnings accretive from the first full year of consolidation and meet its return targets.
The transaction is expected to close in the first half of the year, it said.
DP World’s acquisition of P&O Ferries, which includes P&O Ferrymasters, is part of its efforts to expand beyond its core ports business.
One of the world’s largest port operators, DP World bought Danish logistics company Unifeeder Group last year.
P&O Ferries operates more than 30,000 voyages a year in Europe, according to its website.
The ferries operate between Britain, France, Northern Ireland, the Republic of Ireland, the Netherlands, and Belgium.
Last month, the company said it was shifting the registration of its UK vessels to Cyprus ahead of Britain’s departure from the European Union, in part to keep its tax arrangements in the bloc.
Last week, DP World Chairman Sultan Ahmed Bin Sulayem said the indecisiveness of British politicians on the UK’s exit from the European Union was hampering the company’s ability to plan for its UK operations.
DP World operates London Gateway and a container terminal at Southampton port.
Source: reutersreuters
Dubai Tourism remains focused on ensuring that the emirate becomes the most visited city in the world in line with Dubai's Tourism Strategy 2022-25.
Dubai continued to see steady growth in tourist arrivals last year on the back of its traditional markets, led by India, Saudi Arabia and the UK.
Latest data released by Dubai Tourism disclosed that overnight visitors reached 15.92 million in 2018, an increase of 0.8 per cent over the previous year. India topped with over two million visitors followed by 1.6 million from Saudi Arabia and 1.2 million from the United Kingdom.
While the number of visitors from China and Russia increased 12 per cent and 28 per cent to 857,000 and 678,000, respectively. Both the countries were fourth- and fifth-largest markets in terms of visitor arrivals in Dubai last year.
Helal Saeed Almarri, director-general of Dubai Tourism, said they remain focused on ensuring that the emirate becomes the most visited city in the world in line with Dubai's Tourism Strategy 2022-25. "Throughout 2018, we developed and deployed a custom-market specific approach to deeper penetrate our target markets," he said.
"Our strategic investments, innovative destination promotion programmes, responsive federal policy reforms, and long-term global partnerships - all backed by the tremendous support of our stakeholders across the government and private sector - continue to yield strong results as we ramp up efforts to increase Dubai's accessibility, visibility and overall appeal, minimise barriers to travel, deliver new standards in global travel experiences, and ultimately drive both first-time and repeat visitation," he added.
Germany, the United States, the Philippines, France and Italy rounded off the top 10 markets.
The number of visitors from the US grew four per cent to 656,000 while the Philippines entered into the top 10 for the first time with 387,000 guests.
Tourists from France jumped 17 per cent to 348,000. Nigeria witnessed the highest growth of 36 per cent, bringing it back into the top 29 with 185,000 Nigerians visiting the emirate last year.
According to Dubai Tourism, tourist arrivals from stronghold markets of Oman and Pakistan declined last year.
Manu Midha, regional head for the Middle East at OYO Hotels and Homes, said the tourism industry in Dubai in 2019 will be largely driven by leisure and trade tourists with India, Saudi Arabia and China driving the numbers again.
"Last year, there were over half-a-million trade visitors alone in addition to millions of leisure visitors. The third promising category would be that of medical tourism as Dubai is home to some world class hospitals. There is a lot of traction from Africa within this category," he said.
"Dubai has so much to offer every kind of traveller, whether it is theme parks or shopping the city has covered it all. Then there are investors who are looking for their second homes in the UAE. This industry will also drive the numbers as investors would like to get a feel of the destination before parking their real estate dollars. The fourth category that will drive the tourism sector would be the world of sports which will go on an overdrive in 2019."
Ammar Kanaan, group general manager of Central Hotels, sees tourist arrival growth trend to continue due to multiple attractions and demand drivers. "At the moment, there is a lot more supply coming into the market in preparation for Expo 2020 Dubai and hence, temporarily, supply is expected to exceed demand. This may put pressure on ADR and RevPAR. While some hotels might compromise on the average room rates to boost occupancy levels, others with stronger room rates will see an impact on the occupancies."
He said this year the summer season will be longer due to the advent of the holy month of Ramadan in May, which could prove challenging for business. "From September onwards, we expect the market to pick up better."
Chris Nader, vice-president at Shaza Hotels, said, Dubai is faring better by creating new demand generators in existing and new destinations.
"There is definitely room for hotels that can offer unique experiences in these new locations. Unfortunately, hotels that have no USPs will continue to suffer and reduce rates in order to maintain some market share, and this will be reflected in their negative RevPAR growth index," said Nader.
According to Dubai Tourism, there were 716 establishments across the emirate with 115,967 rooms, an increase of 8 per cent in terms of new rooms supply last year. Currently, 33 per cent of inventory is controlled by five-star hotels, 26 per cent by four-star properties and one-to-three stars command a 20 per cent share. Hotel apartments constitute 21 per cent of the total inventory.
With average occupancy reaching 76 per cent, occupied room nights were up to 30.13 million, while guests' average length of stay remained unchanged at 3.5 nights.
From a regional perspective, 21 per cent of the visitors came from Western Europe, followed by 18 per cent and 17 per cent from GCC and South Asia, respectively. North Asia and Southeast Asia, meanwhile, accounted for 11 per cent of the total.
Mena arrivals grew 10 per cent and 9 per cent from the CIS and Eastern Europe, respectively.
Source: khaleejtimes
Shell CEO Ben van Beurden and Dr Mohammed bin Hamad Al Rumhy, Minister of Oil & Gas (MOG), have signed an Interim Upstream agreement that details funding and a work programme for 2019 for the development of gas resources destined for integrated projects to help meet the Sultanate of Oman’s growing need for energy. The other signatories were Petroleum Development Oman (PDO), Oman Oil Company (OOC) and Total.
Today’s upstream agreement covers gas acreage in the northern part of Block 6 located to the west of the existing Saih Rawl gas field that is operated by PDO. The project covers investments in gas exploration and production, in partnership with Total and OOC. The aim is to integrate the Shell and OOC share of the upstream project with the development of a gas-to-liquids plant (GTL) currently under discussion, to be developed and operated by Shell in partnership with OOC.
Chris Breeze, Shell’s country chairman in Oman, said, “Today’s agreement is a significant step forward. We hope that the development of gas resources destined for the integrated projects will play an important role in generating in-country value and diversifying Oman’s economy. This agreement marks a new chapter in Shell’s close partnership with the government of Oman.”
MOG, Shell and partners (OOC and Total) continue to work closely and diligently to finalise definitive agreements which will underpin the long-term success of the energy projects which were first outlined in the Memorandum of Understanding (MoU) signed in May 2018.
Source: omanobserver
The government of Morocco and Spain have signed a memorandum of understanding (MoU) to construct the third interconnection cable between the two countries.
Similar to the previous two, this third 400-kV link will have a technical capacity of 700 MW. The combined commercial capacity of the three links will amount to 1,500 MW. Spanish grid operator and its Moroccan peer L’Office National de l’Electricite et de l’Eau Potable (ONEE) will be in charge of the study and analysis of the project.
Morocco-Spain power interconnector
The project will require US $169.9m which will be shared 50/50 between the two counties. Ambitious plans to harness North Africa’s solar resource and export the energy to Europe would depend on such trans-continental grid connection.
The interconnection cable project upon completion is estimated to bring f US $140m to the Spanish electricity system gained from tolls and congestion rent since an auction system for the management of the exchange capacity could be implemented.
Energy regulations
The project will also help meet the goal of energy regulations of countries in North Africa to be compatible with European regulations and also the goal for governments and private investors tapped for big bucks.
Commissioning of the project is expected to take place before 2026. Moreover, the two countries have also signed a second collaboration agreement that is aimed at establishing a strategic partnership on energy with objectives focused on the integration of networks and the energy markets, development of renewable energy and energy efficiency.
Interconnection between Spain and Morocco represents one of the maximum exponents of the policy of cooperation between Europe and the Southern Mediterranean countries, backed by the European Community. This is the only submarine interconnection between two continents. The first power link was built in the 1996 while the second was an undersea cable which came into service in 2005 and double transit capacity to 1400 MW.
Source:constructionreview
In the embrace of new technology, every step counts in Egypt’s digital transformation, according to Jacques-Emmanuel Blanchet CEO, HSBC Egypt.
Egypt’s banking architecture is getting a digital upgrade. Efficiency and personalisation are at the top of the list of preferences as one of the world’s oldest civilisations undergoes a very modern disruption.
Progress and change
Two of Egypt’s national goals, to modernise its economy and to support a rapidly growing population, are being carried out within a positive economic outlook. The GDP in the fiscal year 2018 is expected to rise by 5.8%. Egypt’s proactive attitude is driving digital growth in the country’s banking sector and is filtering down to the consumer too. This is largely down to the government, the Central Bank of Egypt(CBE) with the support of the local banking community.
A progressive tone from the top is matched by an enthusiastic response from the banks and the public. This banking ‘marriage’ is bearing fruit.
Seamless customer experience
From the top down, the National Payments Council is putting in a general framework to shift to a less cash-based society, and to create a national system of payment and cards. Meanwhile, the CBE is investing heavily in developing a ‘seamless’ customer experience that is more efficient and easy to use.
Both aim to safeguard the value of human interaction i.e. intensifying the level of trust and loyalty in the customer-bank relationship. The country’s approach includes the promotion of innovative technologies in the design and delivery of financial services. This includes the review of digital banking regulations, and the launch of a fund for innovation and talent investments worth EGP 1bn ($558m).
Digital maturation
From the bottom up, Egypt’s banking community – banks and customers alike – is keen to embrace change. Nearly all respondents, 90.57%, to an HSBC digital survey carried out in Cairo, expect ‘the internet of things’ (the trend towards more devices being online) to have a major impact on their existing business model. Leveraging this appetite for digital maturation is key.
The same applies to tailoring services for different socioeconomic and digitally-able customers. Clear communication to improve understanding within the banking community is vital to build trust and adopt digital banking tools. Patience is also essential, as it will take time to shift the national psyche towards digital banking.
It’s about family
Egypt’s tightknit family and social network must be addressed in banks’ marketing and communication programmes as ‘word-of-mouth’ recommendations carry significant weight when it comes to building reputations and communicating change. The influence of informal knowledge sharing in Egypt will only heighten as the world’s most populated Arab nation gets busier. The United Nations (UN) expects Egypt’s 97 million population today to rise to 120 million by 2030 – a 23% growth in less than 12 years.
As one of the largest multinational banks in Egypt, and with a presence since 1982, HSBC’s unwavering dedication to build its digital knowledge will continue. The bank has been a leading and respected voice on digital advancements for over three decades. Plans to spend $15bn-$17bn on technology, worldwide, up to 2020 are underway, in addition to $6bn in recent years. Such efforts will undoubtedly enhance Egypt’s digital journey, be it through talent creation, research and development, or tech deployment.
Digital toolbox
There are many new digital methods that Egypt’s banking community can use. These include the next generation virtual accounts, enhanced liquidity management, and more streamlined mobile collections and payments. HSBC is always working on how to design and deploy new technologies, including machine learning, artificial intelligence (AI), biometrics and blockchain.
HSBC completed its inaugural blockchain transaction for trade finance this year. This is highly relevant for a growing banking community as each transactional step is entirely transparent and accountable. It is also attractive for Egypt’s growing trade finance market as the country’s gas exports, for example, are likely to rise significantly.
More than half, or 56.6%, of survey respondents to our digital research agreed that international trade has become more difficult over the last three years. This means that making cross-border trade easier by using digital tools is even more critical to sustain Egypt’s global competitiveness.
Challenges to overcome
As with any market in development, some areas need more attention. These include improving cybersecurity, legal frameworks, and scalability. Therein lies the value of collaboration and knowledge sharing, something that HSBC is able to facilitate.
To take an example – globally, banks’ ties with Fintechs are thriving. HSBC’s data showed that approximately $31bn was invested in Fintechs around the world last year. Collaboration agreements and sandbox environments, both promoted by regulators, can help test the relevance of new technologies in Egypt’s banking community.
We must not fear the unknown. Egypt must keep its best foot forward, for every digital step counts.
Source:zawya
Why Do Business in Saudi Arabia?
Although parts of the Middle East and North Africa have seen political turmoil since the start of 2011, Saudi Arabia has remained stable and investors still view it as an attractive place to do business.
The Saudi Riyal is one of the world's most stable currencies and there have been no significant changes in its exchange value during the last three decades.
The key reasons for investing in the Kingdom include:
It is one of the world's 25 largest economies and the largest economy in the Middle East and North Africa Region - MENA.
The Kingdom is one of the world's fastest growing countries worldwide, with per-capita income forecast to rise from USD $25,000 in 2012 to USD $33,500 by 2020.
It has substantial cost advantages due to the low domestic cost of energy and industrial land due to generous subsidies and incentives.
It provides duty free access to other GCC and MENA economies and enjoys good transport and infrastructure links which will soon be supplemented by a national rail system.
Opportunities in Saudi Arabia
Saudi Arabia has a very fast growing economy - GDP growth in 2012 reached over 6%. The booming economy is creating great opportunities for both exporters and investors. These are further boosted by moves to diversify the economy away from dependence on oil and gas, economic reform, market liberalisation and a growing private sector.
Investors in Saudi Arabia enjoy increasingly well-developed business clusters and value chains that set the nation apart from its neighbours and from other emerging economies. The World Economic Forum ranks the Kingdom 6th in the world for Local Supplier Quantity and 24th for both Value Chain Breadth and Production Process Sophistication. Well established, competitive and efficient, Saudi Arabia’s domestic industries – from energy and chemicals to transportation – provide industrial projects with exceptional opportunities for cost savings.
There are opportunities at all levels in:
- Oil, gas and petrochemicals
- Power, including nuclear and renewable energy
- Water and wastewater
- Financial and professional services
- Education, training and human capital development
- Mass transport infrastructure including new rail, metro and bus links
- Environmental technology and services
- ICT
- Consumer and luxury goods
- Defence and security
- Healthcare and Life Sciences
- Mining
Key Sectors
Energy
The KSA’s most prominent sector is poised for unprecedented growth, diversification and profitability. The high oil revenue environment has spurred a boom in both oil and non-oil development projects. Unlike previous investment cycles the current round of investment projects is marked by heavy private sector participation with USD $79 billion in private-sector energy projects under development. Activity in the world’s premier energy economy will develop rapidly as large scale capital spending is applied to building new capacity and expansion of existing facilities. For example, the Arab Oil and gas directory forecasts major new energy investments in KSA, including:
Petrochemical projects USD $90 billion
- Power generation USD $90 billion
- Water desalination plans USD $88 billion
- Natural gas-related projects USD $50 billion
Education
Already the world’s 8th highest education spender, Saudi Arabia recently initiated a complete reform of the current education system, building new educational institutes and funding overseas degrees and training programmes for Saudi students. The primary focus regarding the education sector is to educate young Saudis to fill jobs which are currently being held by expatriates. Despite this budget figure, it's vital for Saudi Arabia to attract a substantial amount of foreign investment in education to meet rapid growth demands.
Security and Defence
Defence & Security sector is one of the important sectors in Saudi Arabia, providing enormous opportunities for British companies. Security is a fast growing sector which is currently estimated to be worth between SR 2.27 - 2.51 billion (USD $605 - $670 million.) Of this figure, around SR 318.8 million (USD $85 million) accounts for physical and electronic security for the banking sector. The balance is for government, industrial, retail, residential and commercial sectors. The Saudi government's defence budget continues to grow, standing approximately at SR 153.8 billion USD $41 billion. The Saudi defence relationship with the UK remains strong,as shown by the recent order for 72 Typhoon aircraft.
Construction
Saudi Arabia represents the largest construction market in the Middle East and one of the fastest growing construction markets in the world. They key areas that are currently being focussed on are improving infrastructure, transport, education and real estate all of which will require construction related activity. According to SAGIA, there is a USD $100 billion planned investment over the next 10 years in transport projects.
Financial and Professional Services
The Saudi banking sector is stable and has not experienced much turmoil during the global financial crisis. The Saudi Stock Exchange (Tadawul) is now the largest in the Gulf region. The Stock Exchange is keen to attract limited foreign participation, develop the derivatives market and to start up a future market for other than just oil. It will shortly move to the new King Abdullah Financial District in Riyadh along with major banks and other service providers.
Healthcare
Healthcare is a thriving sector as the government continues to finance healthcare for its rapidly growing population. Saudi Arabia is the largest market for medical equipment and healthcare products in the Middle East, with the opportunity to cater to unmet demand across the healthcare value chain including medical education, research, facilities, provision and reimbursement.
ICT
Saudi Arabia is the region's largest IT market with strong growth in consumer and enterprise end markets. Huge public investments on infrastructure, health and education have paved the way for advanced technology and security systems in the country with the government planning for the industry to raise its contribution to the GDP by 20 percent by 2020. The IT market in the country was valued at USD $3.6 billion in 2011 and is expected to go up to USD $4.9 billion by 2014.
Liberalisation is occurring across the telecommunications industry, driving increases in competition, service levels and usage. Significant unmet demands for web-based and mobile services and increased enterprise and government commitment for web-based services provide large-scale opportunities for contractors and service providers, with massive public investment in connectivity for Economic Cities, providing unique opportunities for greenfield projects covering millions of users.
Industrial Cities
Today, industrial products make up more than 90 percent of the Kingdom's non-oil exports. Saudi Arabia exports petrochemicals, plastics, metal goods, construction materials and electrical appliances to more than 90 countries.
The Saudi Industrial Property Authority (MODON), is responsible for developing and supervising industrial land in the Kingdom. Their aim is to promote and regulate Industrial Estates and Technology Zones and to encourage the private sector to become involved in their development and operation. Since it was created in 2001, MODON has been working towards a Saudi development vision for the 21st century. They are currently building six new industrial cities and have expressed an interest in dealing with UK consultants for master planning, design, operation and maintenance, and facilities management.
Economic Cities
In addition to the sectors and industrial cities mentioned above, Saudi Arabia is investing billions of dollars into the launch of four Economic Cities in different regions of the country:
- King Abdullah Economic City - Rabigh (near Jeddah)
- Prince Abdul Aziz bin Mousdaed Economic City - Hail
- Knowledge Economic City - close to Al Madinah
- Jazan Economic City - close to Jazan City
These cities, once constructed, will be public-private partnerships that will create attractive investment platforms for foreign companies. Each is designed to maximise investment potential in all sectors and deliver huge advantages to business located there. The cities will promote economic diversification, create over a million new job opportunities, homes for 4-5 million people and contribute an estimated USD $150 billion to Saudi’s GDP.
Source: DoingBusinessGuide
Kuwait: Foreign investment
FDI in Figures
Kuwait has always been a country open to foreign investment and is further opening to foreign capital, however, foreign direct investment is still underdeveloped in the country. In early 2003, a new law for FDI came into force. It allowed 100% foreign ownership in a number of sectors. This law also made available a number of tax breaks and other benefits to attract new investors, who in return must guarantee a set of quotas regarding the employment of Kuwaiti nationals. A law on foreign investment, enacted in 2013, was implemented in 2015 and a series of other laws related to businesses and public-private partnerships were introduced as well. The country's authorities intend to attract investment to develop infrastructure through the 2015-2020 National Development Plan.
A number of decisions have been taken since then, allowing the opening of the stock market to non-Kuwaitis, the presence of foreign operators in the petrochemical industry and the entry of foreign banks in the country. A law on taxation of foreign companies (which decreased the maximum rate of tax on profits made by foreign companies, with the exception of investment earnings, from 55 to 15%) was adopted in 2008. Although the opening of oil fields in the North to international oil companies seemed to be blocked for years, in late 2014, the Government started discussions with several foreign companies on this issue. Legislation on free zones and BOTs (January 2009) and on creating an independent stock market regulator (January 2010) also contributed to a more favourable environment for international investment, both financial and direct. Despite this, Kuwait ranks 96th out of 189 economies in the 2018 Doing Business report established by the World Bank, same as the previous year.
Kuwait continues to encourage foreign direct investment with the implementation of the FDI Law. With the decline in oil revenue and the need to diversify its economy, the government seeks increased foreign investments as it plans to diversify its oil-dependent economy, and has taken a number of steps towards achieving this goal. The current policy to promote FDI focuses on a number of sectors that can most benefit from foreign investment and expertise. The industries covered by the FDI Law that allows 100% foreign ownership, include: infrastructure (water, power, wastewater treatment, and communications); insurance; information technology and software development; hospitals and pharmaceuticals; air, land, and sea freight; tourism, hotels, and entertainment; housing projects and urban development; and investment management. So far, the majority of foreign investor interest has come from the United States and China.
According to the UNCTAD's World Investment Report 2018, the lack of diversity in the economy and the fall in oil prices since 2014 caused the decrease of inflows in 2017. This decline began in 2012 and Kuwait's investments did not achieve to recover. Inflows reach 301 millions dollar in 2017, a decrease of 28% compared to 2016 and of 90% compared to 2012. The FDI stock increases by 1.3% in 2017 and reaches 15.1 billion dollar, 11.9% of the GDP.
What to consider if you invest in Kuwait
Strong Points
Kuwait has several advantages for attracting FDI:
- Abundant oil reserves (the country has the 7th largest oil reserve in the world) which provide the country with considerable and stable revenues
- A strategic role in the political sphere of the region (the country is considered a very good ally of the United States)
- A young local population with a high average income and high domestic consumption
- A well-managed financial market and a strong banking sector
- Good quality infrastructure
- A globally positive business environment: the Kuwaiti government, through its desire to diversify its economy, has embarked on a policy of economic openness to foreign investment.
Weak Points
Kuwait has some obstacles to its economic development. They include:
- Necessary structural reforms that are hard to take hold because of a tormented political life and strong tensions between the parties
- Extreme dependence of the economy on the performance of the oil sector and in particular on the price of a barrel of oil
- A high degree of state intervention in the national economy (the civil service provides 90% of the jobs of nationals and the budget is 60% punctured by these current expenditures) which weakens the emancipation of a strong private sector
- The geographical location makes the country particularly vulnerable to political tensions in the region
- A business environment with legislation that restricts the freedom of establishment of non-nationals and that does not sufficiently protect intellectual property
Government Measures to Motivate or Restrict FDI
In order to promote the diversification of its economy, Kuwait has set up the Kuwait Development Plan (KDP) for the 2015-2020 period. This plan is aimed primarily at transforming the country's financial and commercial platforms. A significant investment in the country's infrastructure and human resources and regulatory reform will create an environment conducive to attracting foreign investors and promoting Kuwait as a regional service centre. In addition to seeking to further involve the private sector in infrastructure projects, the government plans annual spending of $32 billion, half of which will be spent on investments in projects considered highly strategic:
- New refinery ($16 billion) and Clean Fuel Project ($13 billion), which will increase the refining capacity and quality of refined products in the country
- New Mubarak Port Al-Kabeer on the island of Boubyan ($7.9 billion), which will help solve the current problems of maritime traffic in the country
- Expansion of the international airport ($5.8 billion) and rail and metro projects that will help develop the country's communication infrastructure
Procedures Relative to Foreign Investment
Freedom of Establishment
The freedom to establish a company/enterprise is very limited and controlled. Non-Kuwaitis cannot hold more than 49% of the capital of a company. Establishing a new office, branch or creating a new company is subject to the existence of a citizen agent. All permits have to be established on his name.
Acquisition of Holdings
Purchasing shares from the stock market has to be done through a broker authorized by the Kuwait Stock Exchange.
Obligation to Declare
There are no special rules to declare if the acquisition is less than 5% of the capital holdings. If the acquisition is higher, a special procedure must be followed.
Competent Organisation For the Declaration
Kuwait Stock Exchange
Requests For Specific Authorisations
Some sectors, such as pharmaceutical, telecommunications, medical equipment, etc. require authorizations from the ministries that control each specific activity.
Source: santandertrade
Kuwait: Foreign investment
FDI in Figures
Kuwait has always been a country open to foreign investment and is further opening to foreign capital, however, foreign direct investment is still underdeveloped in the country. In early 2003, a new law for FDI came into force. It allowed 100% foreign ownership in a number of sectors. This law also made available a number of tax breaks and other benefits to attract new investors, who in return must guarantee a set of quotas regarding the employment of Kuwaiti nationals. A law on foreign investment, enacted in 2013, was implemented in 2015 and a series of other laws related to businesses and public-private partnerships were introduced as well. The country's authorities intend to attract investment to develop infrastructure through the 2015-2020 National Development Plan.
A number of decisions have been taken since then, allowing the opening of the stock market to non-Kuwaitis, the presence of foreign operators in the petrochemical industry and the entry of foreign banks in the country. A law on taxation of foreign companies (which decreased the maximum rate of tax on profits made by foreign companies, with the exception of investment earnings, from 55 to 15%) was adopted in 2008. Although the opening of oil fields in the North to international oil companies seemed to be blocked for years, in late 2014, the Government started discussions with several foreign companies on this issue. Legislation on free zones and BOTs (January 2009) and on creating an independent stock market regulator (January 2010) also contributed to a more favourable environment for international investment, both financial and direct. Despite this, Kuwait ranks 96th out of 189 economies in the 2018 Doing Business report established by the World Bank, same as the previous year.
Kuwait continues to encourage foreign direct investment with the implementation of the FDI Law. With the decline in oil revenue and the need to diversify its economy, the government seeks increased foreign investments as it plans to diversify its oil-dependent economy, and has taken a number of steps towards achieving this goal. The current policy to promote FDI focuses on a number of sectors that can most benefit from foreign investment and expertise. The industries covered by the FDI Law that allows 100% foreign ownership, include: infrastructure (water, power, wastewater treatment, and communications); insurance; information technology and software development; hospitals and pharmaceuticals; air, land, and sea freight; tourism, hotels, and entertainment; housing projects and urban development; and investment management. So far, the majority of foreign investor interest has come from the United States and China.
According to the UNCTAD's World Investment Report 2018, the lack of diversity in the economy and the fall in oil prices since 2014 caused the decrease of inflows in 2017. This decline began in 2012 and Kuwait's investments did not achieve to recover. Inflows reach 301 millions dollar in 2017, a decrease of 28% compared to 2016 and of 90% compared to 2012. The FDI stock increases by 1.3% in 2017 and reaches 15.1 billion dollar, 11.9% of the GDP.
What to consider if you invest in Kuwait
Strong Points
Kuwait has several advantages for attracting FDI:
· Abundant oil reserves (the country has the 7th largest oil reserve in the world) which provide the country with considerable and stable revenues
· A strategic role in the political sphere of the region (the country is considered a very good ally of the United States)
· A young local population with a high average income and high domestic consumption
· A well-managed financial market and a strong banking sector
· Good quality infrastructure
· A globally positive business environment: the Kuwaiti government, through its desire to diversify its economy, has embarked on a policy of economic openness to foreign investment.
Weak Points
Kuwait has some obstacles to its economic development. They include:
· Necessary structural reforms that are hard to take hold because of a tormented political life and strong tensions between the parties
· Extreme dependence of the economy on the performance of the oil sector and in particular on the price of a barrel of oil
· A high degree of state intervention in the national economy (the civil service provides 90% of the jobs of nationals and the budget is 60% punctured by these current expenditures) which weakens the emancipation of a strong private sector
· The geographical location makes the country particularly vulnerable to political tensions in the region
· A business environment with legislation that restricts the freedom of establishment of non-nationals and that does not sufficiently protect intellectual property
Government Measures to Motivate or Restrict FDI
In order to promote the diversification of its economy, Kuwait has set up the Kuwait Development Plan (KDP) for the 2015-2020 period. This plan is aimed primarily at transforming the country's financial and commercial platforms. A significant investment in the country's infrastructure and human resources and regulatory reform will create an environment conducive to attracting foreign investors and promoting Kuwait as a regional service centre. In addition to seeking to further involve the private sector in infrastructure projects, the government plans annual spending of $32 billion, half of which will be spent on investments in projects considered highly strategic:
· New refinery ($16 billion) and Clean Fuel Project ($13 billion), which will increase the refining capacity and quality of refined products in the country
· New Mubarak Port Al-Kabeer on the island of Boubyan ($7.9 billion), which will help solve the current problems of maritime traffic in the country
· Expansion of the international airport ($5.8 billion) and rail and metro projects that will help develop the country's communication infrastructure
Procedures Relative to Foreign Investment
Freedom of Establishment
The freedom to establish a company/enterprise is very limited and controlled. Non-Kuwaitis cannot hold more than 49% of the capital of a company. Establishing a new office, branch or creating a new company is subject to the existence of a citizen agent. All permits have to be established on his name.
Acquisition of Holdings
Purchasing shares from the stock market has to be done through a broker authorized by the Kuwait Stock Exchange.
Obligation to Declare
There are no special rules to declare if the acquisition is less than 5% of the capital holdings. If the acquisition is higher, a special procedure must be followed.
Competent Organisation For the Declaration
Kuwait Stock Exchange
Requests For Specific Authorisations
Some sectors, such as pharmaceutical, telecommunications, medical equipment, etc. require authorizations from the ministries that control each specific activity.
Source: santandertrade
GCC Investment and Development Awards 2018
Following disappointing GDP growth in 2017, GCC nations made a concerted effort to ensure sustainable economic development and structural diversification were prioritised throughout 2018
Since its inception in 1981, the Gulf Cooperation Council (GCC) has pushed an ambitious programme of infrastructure development and economic reform, with the aim of reducing the region’s dependence on oil. The importance of this diversification project has become clear over the past 12 months, as fluctuations in crude oil prices have revealed weaknesses in the region’s economies.
Global trade tensions and the reimposition of US sanctions on Iran have also contributed to a challenging fiscal environment. However, this has only spurred the GCC’s programme further, with countries including Qatar and Saudi Arabia accelerating development projects. Investment has also been catalysed by the renewed drive for diversification, with foreign investment increasingly encouraged by regional governments. This has led the IMF to raise its economic growth predictions to 3.9 percent over the next 12 months, according to its Regional Economic Outlook.
In the quest for growth, the most successful players are, as ever, those that balance speed and sustainability by implementing structural reforms alongside investment. The World Finance GCC Investment & Development awards recognise those that are taking action now to safeguard the future economy.
Leaving oil behind
Economic growth in the GCC bottomed out in 2017, falling by 0.2 percent across all six member states. Saudi Arabia saw its first economic contraction since 2009, due for the most part to oil production cuts introduced by the so-called ‘OPEC+’ group. Historic heavy reliance on oil revenues has left many GCC nations beholden to the fluctuations of the market, which has been particularly volatile since hitting a low point in 2014.
The outlook for oil was far brighter in 2018, with prices climbing to four-year highs of $82.16 per barrel in September. This provided a spell of relief for the GCC’s five oil-exporting nations, with Oman registering the region’s leading GDP recovery of 3.8 percent. Nevertheless, past oil fluctuations have clearly spooked the GCC states, with all opting to pour additional funds into non-oil ventures in 2018.
Infrastructure development in particular has accelerated in the context of several high-profile global events, notably Expo 2020 Dubai and the 2022 FIFA World Cup in Qatar. Qatar is forecast to spend $220bn in preparation for the tournament, which includes the construction of an entirely new city, Lusail, featuring a 90,000-seat stadium where the final game will be held. Once complete, the city is expected to house 250,000 future residents. Meanwhile, Dubai has allocated AED 56.6bn ($15.41bn) to Expo preparations, which comprise the conference site itself, an extension of the metro line to access the area, and the AED 735m ($200m) Museum of the Future, which is widely considered to be one of the most complex buildings in the world.
In Kuwait, construction forms part of the country’s seven-pillar New Kuwait Vision 2035 strategy, which aims to transform the country into a financial and trade centre. At the annual Leaders in Construction Summit, the country’s chief of development, Talal Al-Shammari, announced a 46 percent increase in capital expenditure on infrastructure projects for the 2018-19 financial year, to $14.4bn.
Supportive substructure
Many GCC countries have also embarked on a programme of bureaucratic reform to complement infrastructure development and allow the private sector to thrive. In February 2018, Bahrain introduced a wage protection scheme that seeks to end the exploitation of staff by ensuring they are paid on time. It was launched in May and will be rolled out in a controlled release programme until May 2019.
Qatar’s visa-free entry programme, launched in 2017 in an effort to boost tourism, has been expanded this year to include Indian and Ukrainian nationals in a sign of increased openness from the Qatari Government. It has also pledged to put an end to the notorious kafala system that disadvantages migrant workers. However, more transparency is needed with regards to workers’ rights.
In May, Kuwait’s parliament voted to delay the introduction of VAT until 2021, ensuring operating costs remain at the current rate for private companies. To date, Saudi Arabia and the UAE are the only GCC countries to have implemented VAT.
With regards to the international sphere, all GCC countries have been opening up their economies to foreign direct investment (FDI) over the past year as part of their respective diversification strategies. In terms of volume, the UAE is the region’s largest destination for FDI, drawing in around $9bn in 2018. The country has also announced key changes to its residency programme, offering foreign investors a 10-year residency visa with the aim of boosting FDI by 15 percent over the next year. Meanwhile, FDI inflows to Bahrain grew 138 percent over the first three quarters of the year, the fastest rate of all GCC nations. In May, the country announced it would extend the term of residence visas for qualified investors and professionals from two years to 10 to further attract foreign interest.
In the past 12 months, under its Saudi Vision 2030 plan to transform economic and social infrastructure, Saudi Arabia has implemented more business-related reforms to boost international investment than any other GCC country. The World Bank noted it introduced reforms across six of its 10 pillars in its Doing Business 2018 report, from reducing documents needed for customs clearance to implementing online systems for administrative tasks.
The kingdom has welcomed western banks in particular, with Citibank becoming the latest firm to receive a banking licence, joining JPMorgan Chase and HSBC. International fiscal interest was reignited at the beginning of 2018 when Saudi Arabia announced it would float five percent of state oil giant Saudi Aramco. This was predicted to be the largest IPO in history before it was called off in August, with the company’s chairman, Khalid al-Falih, announcing in a statement: “The government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum.” He added that the timing of the IPO will depend on “favourable market conditions” and a “downstream acquisition”, which the company will pursue in 2019. London, New York and Hong Kong exchanges have been vying for some time to list the Saudi oil giant, which is expected to be valued at around $5trn at IPO.
Looking ahead
The GCC has plenty to look forward to over the next few years, with high-profile events bringing prosperity and new interest to the region. The IMF named the FIFA World Cup and Kuwait’s implementation of five-year growth plans as key stimuli over the next 12 months. Increased FDI and further progress on key infrastructure development projects will also help diversify the economies of all six member nations.
As ever, those that are committed to economic diversification, welcoming foreign investment and opening up their nations are the firms that are reaping the rewards of the affluent region. It is these individuals and companies that World Finance recognises in the 2018 GCC Investment & Development Awards.
Source: world finance
Sharjah, Finland open doors for investments in education and socioeconomic fields
SHARJAH, 22nd January, 2019 (WAM) -- In a bid to explore new areas of collaboration in education and socioeconomic fields, and boost bilateral investment prospects between Sharjah and Finland, the Sharjah Department of Government Relations, DGR, has hosted a high-level delegation from the city of Oulu, Finland, who conducted a series of visits to key government organisations, departments and entities across the emirate.
The Finnish delegation, comprising 21 state officials and key Finnish company representatives, visited six entities from Sharjah, namely; Sharjah Research Technology and Innovation Park; American University of Sharjah; Sharjah Entrepreneurship Centre – Sheraa; Sharjah Arts Foundation; and the Sharjah Museums – Sharjah Islamic Museum and Sharjah Calligraphy Museum, who showcased their key developments in economic, touristic and educational projects.
Shedding light on the importance of fuelling bilateral interactions between Sharjah and Finland, Sheikh Fahim bin Sultan Al Qasimi, DGR Executive Chairman, said, "This compressive visit was organised to boost to the recent breakthrough in Emirati–Finnish bilateral relations, which have been strengthened through a number of visits from both sides, including a DGR delegation visit to Oulu in September 2017."
Sheikh Fahim noted that this visit cements Sharjah’s strategy to create a dynamic network of cross-governmental relations between the emirate and Finland, and exemplifies DGR’s role in boosting Sharjah’s global socioeconomic rank that has been receiving an upward push, a result of growing interest from large-scale businesses, tourists and foreign students from Northern Europe.
He also underscored that DGR attaches considerable importance to harnessing successful global expertise to nurture Sharjah’s endeavours. "We seek to learn from the positive results of policies of openness and experience-sharing among countries worldwide. In order for any national experience to succeed, it has to take into consideration the international dimension in its policies, objectives and results."
The delegation was also hosted by the Sharjah Chamber of Commerce where a roundtable was held. Officials from both sides shed light on the two-way business prospects, in addition to showcasing commercial and investment partnership opportunities between Sharjah and Finland.
The need to diversify and build a knowledge-based economy is at the heart of both Emirati and Finnish systems of educational and entrepreneurial development. A Sharjah Education Seminar was organised during the visit; an education meeting that allowed the two parties to exchange expertise and lessons in the field relevant to one another’s education systems. The SBFO shared Sharjah’s 40-year efforts in making the emirate the first city in the world to be awarded the titles of ‘Baby-Friendly’ and ‘Child-Friendly’ city by the UNICEF.
In return, Sharjah heard from Finnish educational experts about the outstanding Finnish approach to early childhood education, which includes daily care programmes for infants, toddlers and children, in addition to pre-school programmes, as well as vocational and lifelong training they provide to their citizens.
Source: emirates news agency
