Kuwait's Business Climate
At the end of November 1999, the Kuwaiti bourse dropped to a record low of 1,388.6 points. During the first week of December, the stock exchange was at 1,409.3, 16 percent below the year's high and about 51 percent under the all time high set in November 1977.
The Kuwait Stock Exchange (KSE) was reopened after the Iraqi invasion. Presently, the KSE lists stocks of 65 Kuwaiti companies, 10 companies from other Gulf states and Kuwaiti mutual funds. A new law now permits foreigners to own up to 40 percent of banks and to invest in stocks directly through the Kuwait Stock Exchange.
A new pier at Mina al-Ahmadi refinery is to be built with private-sector involvement. The pier is expected to be up to two kilometers long with four to six berths. It will handle various products, including gas-oil, naphtha, kerosene, butane and propane and vessels of 60,000-300,000 dwt.
A KD 34 million headquarters is being built for the Kuwait Petroleum Corporation. The complex will cover 54,000 square meters and include a 17-story tower for the Oil Ministry, a car park, auditorium, library, prayer hall, training center, grand mosque and conference.
Denmark's Haldor Topsoe was awarded a contract last autumn to provide the technology for the planned gas-oil desulfurization (GOD) plant at Min al-Ahmadi refinery. The estimated $125 million project involves building a GOD unit with a capacity of 70,000 barrels a day. The unit will produce low-sulfur diesel oil, sulfur and aromatics and the feedstock will be gas-oil from crude distillate units.
Build Operate Transfer
The Al-Sharq waterfront project is one of Kuwait City's main attractions. This project, which consists of shops, restaurants, a marina, a cinema and a fish market, was the third phase of a waterfront development project carried out on a BOT basis by the local National Real Estate Company.
The government is now starting with the fourth and fifth stages. The fourth stage has been awarded to a consortium led by Kuwait's only commercial Islamic bank, Kuwait Finance House. The project involves development of a 2.5 kilometer of coastline.
In the fifth stage, the United Real Estate Company is investing about KD 50 million over 24 years to the project, which includes building a commercial space, government offices, a mosque, parking and recreational facilities.
The $350 million Sulaibiya wastewater treatment plant will also be done on a BOT basis. The plant will have a capacity of at least 250,000 cubic meters a day and a reverse osmosis unit to produce non-potable water. The winning consortium will operate the plant for 30 years and power will be charged at 5 fils ($0.016) a kWh with a 3 percent compounded price increase.
Although the Kuwaiti market is relatively small, franchising offers profitable opportunities. The population of 2.3 million have high disposable income and a strong inclination to buy foreign and especially American goods. Additionally, labor saving services are in demand. At present, most franchises are in fast food, with McDonald's being a recent arrival.
A local sponsor is required to establish such operations. American firms dominate the fast food sector with the following franchises: Hardee's, Kentucky Fried Chicken, Burger King, Chicken Tikka, Wendy's, Pizza Hut, Subway and Baskin Robbins. Light competition in this sector comes from Pizza Italia and Wimpy. Opportunities exist for franchises in other areas such as: automotive service centers, beauty salons, testing centers, dry cleaning/laundry shops and photocopy stores.
The Kuwait franchise market is characterized as fiercely competitive. Japanese electronics and cars have a strong appeal to the Kuwaitis. Brands like National, Panasonic, Sanyo, Toshiba, N.E.C., Sharp, Toyota, Nissan, Datsun, Honda, and Subaru are examples of the heavy Japanese presence in the Kuwaiti market. Similarly, British and German products and services enjoy a strong positive image in Kuwait.
Another major type of franchise in Kuwait is the car dealership, with almost all known automobile makes represented in Kuwait: Ford, Chrysler, GM, GMC, Cherokee Jeep (US); Volvo (Sweden); Mercedes, BMW, and Audi (Germany); Jaguar and Rolls Royce (UK) as well as the Japanese dealers noted above.
Among clothes franchises, Kuwait has attracted the British firms Mother Care and British Home Store (BHS). The market is ready for foreign franchises in the clothing and lingerie areas.
Principal Business Opportunities
1 Hospital Management Services
2 Medical Insurance Services
3 Safety & Security Equipment
4 Rubber Tires for Cars
5 Air Conditioning & Refrigeration Equipment
6 Computer & Peripherals
7 Automotive Parts & Service Equipment
8 Medical Equipment
10 Pollution Control Equipment
12 Building Products
Best Prospects for Agriculture
1 Corn Oil
2 Poultry Meat
3 Frozen/Chilled Beef
© 2000 Mena Report (www.menareport.com)