Kuwaiti lawmakers on Tuesday, January 23, backed a draft bill calling to open the oil-rich emirate to foreign investments in a bid to boost the sagging national economy. MPs are due to vote on February 5 on the legislation which grants foreign investors tax holidays for up to 10 years, exemption from customs and charges, and long-term protection against nationalization.
The bill also allows foreign investors to establish companies in the emirate without a Kuwaiti sponsor or partner currently needed for any business venture. MPs said the bill would help bring advanced technology and modern management, besides billions of dollars of investment needed to revitalize the local economy.
"Luring foreign investment is necessary for the growth of our private sector and boosting its contributions to Gross Domestic Product (GDP)," which is less than 25 percent at present, Islamist MP Ahmad al-Duaij said. "We need giant foreign companies to invest in major strategic ventures that require advanced technology," MP Abdul Wahab al-Haroun, head of the finance and economic committee, said.
Total foreign investments in Kuwait in the past 20 years amounted to just $550 million, said Haroun, who also called for other economic reforms such reducing taxation on foreign companies. A 1955 taxation law requires foreign firms operating in the emirate to pay up to 55 percent of their net profits in taxes. Planning Minister Mohammad al-Dweihees said a new law, cutting the maximum percentage to 25 percent, will be presented to parliament within one month. However veteran opposition MP and former speaker Ahmad al-Saadun called for more controls on foreign investments and warned against opening the country's doors without restrictions.
The parliament last May passed legislation allowing foreigners to trade and own shares on the Kuwait Stock Exchange. The law was enforced in August.
Kuwait's economy is heavily dependent on oil revenues which contribute more than 85 percent of the emirate's total income. —(AFP)
© Agence France Presse 2000
© 2001 Mena Report (www.menareport.com)
