2008 KUWAIT INVESTMENT CLIMATE STATEMENT SUBMISSION

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 ?? ?? ?? ??