KUWAIT: An Introduction
Key Growth Sectors in Kuwait
The following sectors show the most growth potential from a mid- to long-term perspective.
Renewable energy/ESG/sustainable investments
On 30 January 2017, the government of Kuwait unveiled the country’s National Development Plan, branded as “New Kuwait”. Derived from the late Emir of Kuwait Sheikh Sabah Al-Ahmad Al-Jaber Al Sabah’s vision statement, the Kuwait National Development Plan mobilises development efforts across seven pillars with the aim of transforming Kuwait into a financial, cultural and institutional leader in the region by 2035. The seven pillars are also in line with the United Nations Sustainable Development Goals (SDGs).
Kuwait has been working on a strategy to implement the Paris Agreement climate objectives. It has issued non-binding guidelines on how registered companies should start adhering to these principles. The Council of Ministers has begun issuing legislation that will allow oil companies and the government to buy electricity from the private sector. Currently, Kuwaiti oil companies are developing and exploring programmes that encompass “renewable energy infrastructure”.
The Kuwait Authority for Partnership Projects (KAPP) has been able to implement PPP legislation that authorises international arbitration. Additionally, the PPP framework provides for tax relief and attractiveness to foreign investors. One of the world’s largest wastewater treatment projects, the Umm Al Hayman Wastewater Project, originated during the start of the COVID-19 global pandemic under this PPP framework.
Cybersecurity and data protection
The foundation of Kuwaiti data protection laws and/or regulations stems from the Kuwaiti Constitution and, subsequently, the “Electronic Transactions Law” (Law No 20 of 2014), the “Evidence Law” (Law No 39 of 1980), “Right to Access Information Law” (Law No 12 of 2020), Law No 37 of 2014 on the “Establishment of the Communications and Information Technology Regulatory Authority (CITRA)” and various resolutions/regulations issued by CITRA, including Resolution No 9 of 2021 on the Classification of Data and the CITRA Resolution No 42 of 2021 “On the Regulation of Data Privacy Protection”. Legislation is being developed to codify the data privacy protection within an international best practices framework.
In February 2020, Central Bank of Kuwait (CBK) announced the cybersecurity framework for the Kuwaiti banking sector in order to improve cybersecurity capabilities and maturity in the financial domain in Kuwait and to improve cyber-resilience. Legislation and regulatory guidance is still evolving with regard to the following:
- cybersecurity preparedness and governance;
- incident response and crisis management; and
- regulatory enforcement and counselling.
Financial technologies (fintech)
The Central Bank of Kuwait instituted a Regulatory Sandbox Framework document, which encourages companies and individuals looking to provide innovative products and services (that are built on or associated with electronic payment of funds and that use new technology or an existing technology in an innovative way) to test their innovations within a methodology that ensures the safety and soundness of the financial and banking sector. Legislation and regulations are progressing in relation to the following:
- payment services (electronic payments systems, e-wallets, and new payment models such as “buy now pay later”);
- raising capital (crowdfunding, peer-to-peer lending, blockchain and cryptocurrencies); and
- digitisation of financial services, open banking, and the use of enabling technologies such as Application Programming Interfaces and Distributed Ledger Technology.
Key Trends in the Kuwaiti M&A Market
Local, regional and international players have been extraordinarily active in Kuwait’s M&A market since the onset of the pandemic. The M&A marketplace remains challenged by a continued limitation of liquidity in the financial markets and by strategic buyers filling the void left by private equity sponsors.
Additionally, the Kuwait Competition Protection Agency (CPA) has implemented new legislation (similar to EU competition law) in recent years, resulting in pre-merger notifications for specific transactions triggered by certain conditions. As a result, the CPA has played an active part in enforcement – including assuming a hands-on role in transactions in order to prevent harm to the competition in Kuwait.
Finally, litigation that was spawned by the broken M&A deals in recent years has given rise to more opportunities for lawyers to net more business.
The key industries showing the most growth include finance and business (including API solutions), life sciences, education, technology and telecommunications, media, banking and finance, and real estate.