KUWAITI CHAMBER OF COMMERCE CHAIRMAN ON

UNCLAS KUWAIT 000150

SENSITIVE
SIPDIS

STATE FOR NEA/ARP, EEB/CBA
COMMERCE FOR ADVOCACY CENTER AND ITA - REICHELT

E.O. 12958: N/A
TAGS: ETRD EINV ENRG ECON EPET KU
SUBJECT: KUWAITI CHAMBER OF COMMERCE CHAIRMAN ON
OPPORTUNITIES FOR U.S. BUSINESSES


1. (SBU) In the context of the Kuwaiti parliamentary passage
of a four year $104 billion development plan (including
approximately $80 billion in oil sector projects),Ambassador
met with Kuwait Chamber of Commerce Chairman Ali Al-Ghanim to
discuss potential opportunities for U.S. businesses.
Al-Ghanim freely admitted that there would be no way that the
GoK could spend $104 billion on development over the next
four years, but stressed that there would be opportunities.


2. (SBU) Al-Ghanim explained that the projects were not new.
What Deputy Prime Minister for Economic Affairs Sheikh Ahmad
Al-Fahad had done, he explained, was to go to the planning
board and pull out all of the stalled development projects
and proposals and package them for the government and for
parliament. Sheikh Ahmad did not study the capacity of the
GoK or the private sector to absorb the projects in a limited
time frame. Furthermore, Al-Ghanim noted, there were
demographic challenges. Kuwaitis made up a third of the
population. If the GoK tried to implement all the
infrastructure projects called for in the next four years, it
would need to import massive quantities of foreign labor and
Kuwaitis would drop "to 10 percent" of the population.


3. (U) Al-Ghanim stressed that Kuwait would need strong
foreign companies able to provide management and technical
skills to implement projects. He added that good political
relations between the U.S. and Kuwait helped U.S. companies.
Although he said U.S. companies could bid on projects in
their own name, the mechanism he recommended would be to
establish joint ventures with Kuwaiti partners. The key
example, he suggested, was the Equate join venture between
Dow Chemical and the Kuwaitis. It included a Kuwaiti State
owned company, a foreign investor (Dow),and the Kuwaiti
private sector. The foreign company brought technical skills
to the table and the Kuwaitis brought their understanding of
the local and regional market. Al-Ghanim added that the
joint venture partners could look beyond Kuwait to serve the
broader region.


4. (U) With regard to specific sectors, Al-Ghanim stated that
the power sector, the construction sector, and harbor
construction all presented good opportunities. If the
privatization law were passed, he suggested, there would be
opportunities to manage power and wastewater utilities or to
manage airports. He offered to host U.S. trade delegations
and to work to facilitate cross border business interests.
Ambassador suggested that it might be worthwhile to bring a
delegation of Kuwaiti companies and government officials
responsible for implementing the development plan to key U.S.
export centers.


5. (U) The four year development plan is split 54%
government sector and 46% private sector. Among other
things, it provides for private sector participation in
downstream petroleum, agriculture and in power and water
projects. It calls for privatizing the transportation and
shipping sectors as well as for the construction of a new
container terminal, a railway (and metro),and starting
construction on a new business hub (Silk City). It also
includes about $80 billion in upstream and downstream oil
sector investments (including major projects such as
retendering a fourth refinery project and upgrading Kuwait's
existing refineries to produce cleaner fuels for exports.


6. (SBU) Comment: It is still an open question as to how
much Kuwait can implement of its development strategy. There
are legal issues (including outdated tender laws),economic
issues (Kuwaiti banks are still nervous about providing
financing for projects),and political issues (potential
parliamentary opposition and concerns about who gets which
piece of the pie). For its part the Chamber of Commerce has
come under attack as being an "illegal" organization
(septel). That said, we are seeing more guarded optimism in
the business community here that "this time there might be
progress." Post would be interested in the modalities of
bringing a "reverse trade mission" of potential Kuwaiti
consumers to the U.S. to better educate U.S. businesses in
the potential (and challenges) of doing business here. If
possible, we would propose doing so in the November-December,
2010 timeframe. End Comment.

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For more reporting from Embassy Kuwait, visit:
visit Kuwait's Classified Website at:

http://www.intelink.sgov.gov/wiki/Portal:Kuwa it

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WILLIAMS