Strides in industrial development
Kuwait has moved significantly from the fishing and pearling industrial base to a more diversified industrial base over the past six decades after the discovery of oil.
The discovery of oil in Kuwait was a crucial turning point for industrial development.
Despite the fact that Kuwait is considered an arid area, successive Governments have adopted an aggressive industrialization policy since the 1960s.
The policy envisages diversification of the economic base and providing support to oil revenues as well as relying on the private sector.
A five year development plan in 1967 was drawn to develop all economic activities in Kuwait including industry. The plan allocated 86 million KD for industrial development. As a pragmatic approach, the Government divided the investment amount between public and private sectors to encourage the expansion of industry at all levels.
The Public Authority for Industry (PAI) plans to boost Kuwaits industrial output by 25%. Industrial expansion is critical in light of persistently low global oil prices as well as Kuwaits goals to reduce dependence on oil revenue through expansion and diversification of its industrial base.
Consequently, the Government has initiated a raft of reforms aimed at reducing State subsidies in addition to intensifying its efforts to expand non-oil sectors.
The Kuwait Development Plan (KDP) 2015-2020 initially envisages 4% non-oil growth to gradually accelerate to 5-6% per annum. KDP which has earmarked $ 100 billion infrastructure agenda for its targeted non-oil growth. However, boosting industrial output, particularly in the high potential chemicals and plastics segments will also form a crucial component of economic diversification.
To this end, a 200,000 sq. metre industrial complex in Al-Suaiba is being built in a joint venture local and US firms. In a further move, KPC is working on a new subsidiary, Kuwait integrated Petro Chemical Industries to carry out refinery and Petro Chemical projects. The Company has been launched with $ 6 billion of capital.
The KDIPA plans to raise Petro Chemical output to 10.54tpa in 2019 from the current 7.57 tpa. The Kuwait Industries Union (KIU) is in the process of releasing 1056 industrial plots soon and has so far approved 230 industrial projects.
The foreign investment law, 2013 will facilitate the inflow of foreign investment with upto 100% foreign equity.
At the Core Kuwaits Development Plan is an effort to involve private investors through a PPP Program that currently includes projects valued at KD 10 billion mainly in power, water, waste water treatment, housing and transportation.
Once fully implemented, these projects are expected to add KD 1 billion per year to capital spending, hence boosting the real GDP growth by 2%. In Kuwait, the PPPs have typically taken the form of a Build-Own Operate (BOT) contract.
The Core advantage of the PPP in Kuwait is that they help diversify the economy as well as generate employment.
The vision 2035 envisioned in the 20 year National Development Plan that was launched in 2010 is designed to catapult Kuwait as a banking, trade and services hub for the Gulf.
