Kuwait's Business World
Kuwait has a small landmass (less than 20,000 km), but it is still a viable choice for foreign investors. Kuwait is a major oil producer, and has a GDP of over $158 billion, and a per capita income of $45,920 as of 2008. According to that year's Index of Economic Freedom, Kuwait had a foreign reserve of $213 billion. This guide will give you some of the knowledge necessary to successfully navigate Kuwait's business world.
The most important rule in establishing a company in Kuwait is that any foreign investor must have a Kuwaiti partner, who must hold at least a 51% interest in the business. This requirement was relaxed back in 2001, with the enacting of the Foreign Direct Investment law. The FDI law relaxed business requirements by allowing foreigners to incorporate without a Kuwaiti partner. Foreign companies are allowed to take part in business such as:
*Industrial activities (except for those involved in gas and oil production)
*Management, operation and construction of infrastructure for the power, water, drainage and communications fields
*Foreign exchanges, investment corporations and banks incorporated by the Central Bank of Kuwait
*Insurance companies incorporated by the Ministry of Commerce
*Air, land and sea transportation
*Entertainment, hotels and tourism
*Marketing, information and culture (except for magazines and newspapers)
*Real estate investment by subscription in one of Kuwait's shareholding companies
To assure foreign investors of their investment's safety, companies operating under the FDI law cannot be nationalized or confiscated, and if such is deemed to be in the public interest, the investor will be compensated an amount equal to the company's economic value. Foreign investors working under this law can also transfer ownership freely.
To operate a business in Kuwait, one needs a business license. The Ministry of Commerce and Industry issues these licenses for contracting, trading, imports and industrial activities, while other licenses are issued by their relevant ministries. As a rule, business licenses are issued only to Kuwaiti companies and people, unless the license is issued under the FDI law. Kuwaiti business licenses are good for a predefined time, and they are renewable.
In Kuwait, businesses are open from 8 am to 12:30 pm, and from 4:30 pm to 8 pm. The Kuwaiti work week runs from Saturday to Wednesday, with a half day on Thursday. Working hours are subject to change during Ramadan; the average Kuwaiti works over forty hours per week. The country has no minimum wage, and employees must be paid at least once a month. Employees are entitled to at least one day off per week.
Like many other Middle Eastern countries, close personal relationships are important. Kuwaitis prefer to do business with people they trust, so be prepared to spend a lot of time getting to know your Kuwaiti counterparts. Also, keep in mind that meetings are subject to interruption during any of the five daily prayer times. Above all, be patient- Kuwaitis like to carefully consider business decisions, and being impatient can run the risk of ruining your business relationship. Knowing how business is run in Kuwait, and having proper business etiquette, can ensure that your endeavors will be successful.
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