Kuwait is taking positive steps toward achieving developmental goals, thanks to new laws, a medium-term development plan and the rise in the country's projects market, an economic report has said.
2014 has so far witnessed increased activity in Kuwait's projects market, the fourth largest in the GCC with a market value of USD 217 billion (KD 62 billion), according to MEED Projects, the National Bank of Kuwait (NBK) said in a weekly report issued on Tuesday.
By the end of August, the government had awarded more than USD 20.7 billion (KD 6 billion) worth of contracts, almost twice as much as last year, making the country's projects market among the fastest growing in the region, the report added.
It also said that with at least USD 17 billion (KD 4.9 billion) in contracts still to be awarded before the end of the year, the government is hoping that 2014 will prove to be a turning point for Kuwait's projects market and a springboard for implementation of the country's recently unveiled 2015-2020 development plan.
"Kuwait's new 5-year plan (now before parliament), the tactical thrust of the state's longer-term strategic Amiri vision for 2035, aims to transform the country into a financial services and commercial hub for the northern Gulf.
"In the broadest sense, the objective is sustainability, both fiscal and economic, which should see the country lessen its dependence on oil revenues by diversifying its income streams and broadening and deepening its economic base." According to the plan, the authorities envisage average annual investment spending of KD 11.8 billion over the next five years. From this, KD 6.3 billion per annum is earmarked for public investment in a range of strategically important projects.
"These include, among others: the KD 4.0 billion New Refinery and KD 4.6 billion Clean Fuels projects. Through both Kuwait's refining capacity will expand and the quality of its refined products improve," the report said.
Other strategic projects include the KD 2.3 billion Mubarak Al-Kabeer port on Boubyan Island, which aims to solve capacity constraints at the country's existing ports and meet the projected growth in trade.
In addition to this, there are the KD 1.7 billion international airport expansion project and the KD 5.6 billion metro project. Both projects aim to relieve congestion and ensure that the country's infrastructure is fit for the future.
"Moreover, the plan renewed emphasis placed on expanding and developing the country's private sector. The government is targeting real private sector growth of 9.4 per cent per year in average during the next five years, with the sector's contribution to the economy rising to 34 per cent from 22 per cent (according to 2012 figures)," the NBK noted.
To that end, the government hopes to secure the participation of private enterprises in a number of high profile projects which have been slated for implementation as public private partnerships (PPPs).
Included among these are the KD 2.4 billion Al-Zour North Independent Water and Power Producer (IWPP) project, which will help meet rapidly rising water and electricity demand, and the KD 3.9 billion Khairan and the KD 0.7 billion Mutla city developments, which should help alleviate some of the current pressure on housing.
Activity in the construction sector has also been buoyant over the last two years. USD 2.6 billion (KD 0.75 billion) and USD 3.1 billion (KD 0.9 billion) worth of contracts were awarded in 2013 and 2014, respectively, with the Ministry of Health's nine hospitals expansion project among those to witness an improvement, the weekly report stated.
A further contract worth USD 1.2 billion (KD 0.35 billion) for the upgrade of the Jahra Hospital is expected in the last quarter of 2014.
The report noted that a raft of regulatory reforms aimed at transforming the business environment has also been forthcoming during the last year. Along with the introduction of a new companies law and a new BOT/PPP law, a new law aimed at attracting foreign investment to the country, the Direct Foreign Investment Promotion Law, has also come into force.