VZCZCXRO2436
PP RUEHDE RUEHDIR
DE RUEHKU #0061/01 0151338
ZNR UUUUU ZZH
P 151338Z JAN 08
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC PRIORITY 0583
INFO RUEHZM/GCC COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPCIM/CIMS NTDB WASHDC PRIORITY

UNCLAS SECTION 01 OF 03 KUWAIT 000061 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/IFD/OIA, STATE PASS TO USTR 
 
E.O. 12958: N/A 
PGOV, EINV, KTDB, USTR, OPIC, KU 
SUBJECT: 2008 KUWAIT INVESTMENT CLIMATE STATEMENT SUBMISSION 
 
REF: 07 SECSTATE 158802 
 
¶1. Per reftel instructions, the following is PostQs submission for the 
 
 
OPENNESS TO FOREIGN INVESTMENT 
 
The Council of Ministers approved the implementing regulations for its 
 
The Direct Foreign Capital Investment Law promotes foreign investment i 
 
Foreign firms still may not invest in the upstream petroleum sector, al 
 
Kuwait's economy has been dominated by the state and the nationalized o 
 
Established after the 1982 stock market crash, the Kuwait Stock Exchang 
 
The National Assembly ratified the "Indirect Foreign Investment Law" in 
 
 
On July 9, 2001, the Kuwaiti government announced an ambitious five-yea 
 
Build, Operate and Transfer (BOT) projects are gaining increasing accep 
 
A new BOT law was approved by the Parliament in January 2008 after BOT 
 
There have been a number of real estate BOT projects by privately owned 
 
Foreign-owned firms and the foreign-owned portions of joint ventures ar 
 
Kuwaiti firms are not subject to the corporate income tax, but those re 
 
Tax exclusions -- besides those offered under the new Direct Foreign Ca 
 
The licensing authority of the Ministry of Commerce and Industry screen 
 
On July 26, 1992, the Council of Ministers of the State of Kuwait estab 
 
In January 2002, the Kuwaiti government transformed its offset program 
 
Offset obligations are applied to military contracts of a value equal t 
 
 
CONVERSION AND TRANSFER POLICIES 
 
After 27 years of linking the Kuwaiti dinar (KD) exchange rate to a bas 
 
There are no restrictions on current or capital account transactions in 
 
 
*Source: Central Bank of Kuwait, May 2007. 
 
 
EXPROPRIATION AND COMPENSATION 
 
There have been no recent cases of expropriation or nationalization inv 
 
DISPUTE SETTLEMENT 
 
The Foreign Investment Law stipulates that Kuwaiti courts alone are res 
 
Kuwait has a developed legal system and a strong trading history.  It h 
 
A feature of Kuwaiti law which U.S. business should be aware of is the 
 
PERFORMANCE REQUIREMENTS/INCENTIVES 
 
Government Procurement Requirements 
 
Law No. 37 of 1964 (Articles 43 and 44) specifies the use of local prod 
 
Boycotts 
 
In June 1993, Kuwait publicly announced its decision to end enforcement 
 
 
Shipping Requirements 
 
The Kuwaiti government has insisted that cargoes for government project 
 
Participation in Research and Development 
 
There are no specific restrictions on foreign participation in governme 
 
Visa and Work Permit Requirements 
 
Kuwait has a stringent visa regime and most work permits require a loca 
 
 
KUWAIT 00000061  002 OF 003 
 
 
 
RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT 
 
Rights to private ownership and establishment are respected in Kuwait, 
 
Kuwaiti law severely restricts the types of collateral to which credito 
 
 
TRANSPARENCY OF THE REGULATORY SYSTEM 
 
Kuwait has not developed effective antitrust laws to foster competition 
 
 
EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT 
 
Kuwait has a free, but inefficient, capital market where credit is allo 
 
BANK ASSETS 
KuwaitQs banks have not yet released their 2007 annual reports.  The as 
 
BANK 
KD (million) 
U.S. $ equivalent 
National Bank of Kuwait 
7,898.300 
2 
(US $1 equals KD 0.274 as of December 11, 2007 - CBK) 
 
The quality of local banks varies from blue chip, world-class to weak. 
 
There are few defensive measures to protect against hostile takeovers, 
 
Finally, U.S. investors should be aware that family, clan, and tribal t 
 
POLITICAL VIOLENCE 
 
Politically Motivated Damage to Projects and/or Installations 
 
With the potential for terrorist actions throughout the Persian Gulf re 
 
CORRUPTION 
 
The often-lengthy procurement process in Kuwait occasionally results in 
 
BILATERAL INVESTMENT AGREEMENTS 
 
Kuwait has signed investment agreements with Germany, France, Italy, Ru 
 
Trade and Investment Framework Agreement 
 
Kuwait signed a Trade and Investment Framework Agreement (TIFA) with th 
 
OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS 
 
In 1989, Kuwait concluded an agreement with the U.S. on investment guar 
 
LABOR 
 
Kuwait has a diverse labor force.  Kuwaiti nationals occupy most of the 
 
Kuwaiti workers have the right to organize and bargain collectively, bu 
 
Separate Kuwaiti labor laws set work conditions in the public and priva 
 
The International Labor Organization's (ILO) Committee of Experts has r 
 
On June 12, 2007, National Assembly ratified a law that bans women from 
 
The law also bans women from working in jobs that are hazardous, rough, 
 
The Ministry of Social Affairs & Labor will assign officers to enforce 
The law stipulates a minimum penalty of 300 USD and a maximum penalty o 
-QUSD300 to 1500 
-QShutting down the store for one month period. 
 
FOREIGN TRADE ZONES AND FREE PORTS 
 
In July 1995, the National Assembly passed Law No. 26 authorizing the M 
 
On November 26, 2006, Cabinet Council issued Resolution No. 507/2006 te 
 
FOREIGN DIRECT INVESTMENT STATISTICS 
 
Kuwaiti public investments abroad consist of portfolio investments held 
 
Other major investors in Kuwait include Dow Chemical which has a 45 per 
 
 
 
KUWAIT 00000061  003 OF 003 
 
 
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