المريح
29-01-2007, 12:48 PM
by The Oxford Business Group on Tuesday, 09 January 2007 | Kuwait
Kuwait’s positive economic performance in 2006 caught the attention of local and international investors. An overview of basic macro-economic indicators illustrates the emirate’s healthy foundations for economic growth.
The International Monetary Fund (IMF) estimates that the Kuwaiti economy grew by 6.2% in 2006, which remains above the global average of 5.1%. However the forecast for 2007 marks a slowdown to 4.7%, slightly below the anticipated global average of 4.9%. Given the revaluation of the Kuwaiti dinar to US dollar peg in May, many commentators, including the ministry of finance, expect a low rate of inflation for the upcoming fiscal year 2006-2007.
Meanwhile, this fiscal year’s budget projected spending at KD10.9bn ($37.6bn) and revenue at KD8.2bn ($29.5bn). However, estimated revenue is based on a price for Kuwaiti crude, $36 a barrel. Given that the average price of oil has remained above $50 in the past year, analysts predict a budget surplus of more than KD6.4bn ($22.13bn)
in 2006-2007.
With such surpluses, the government and national assembly are planning to reduce tax for foreign businesses and companies operating in Kuwait, in a bid to foster more foreign direct investment.
The smooth transition to power of the new Emir, Sheikh Sabah al-Ahmad al-Jaber Al-Sabah, also contributed to the stable and healthy macro-economic outlook. Structural reforms have continued under the new leadership.
Kuwait increasingly looked east for deepening economic integration in 2006, with the Emir Sheikh Sabah embarking on a tour of Asia with a delegation of businessmen. In light of the rise of new economic giants such as India, Kuwait is set to preserve its strategically important position within the global economy.
This year also witnessed a number of important developments in the energy industry, Kuwait’s main source of revenue.
The government unveiled plans to sell 25% of a planned new 615,000 barrels per day (bpd) refinery, along with at least 30% of the Kuwait Foreign Petroleum Exploration Company (KUFPEC) and 49% of the Kuwait Drilling Company.
The state will also privatise two petrochemical projects producing propylene and fertilisers, the only butane factory in Kuwait, a hospital run by the oil sector and Kuwait Oil Tanker Company (KOTC), a subsidiary of Kuwait Petroleum Company (KPC) which operates 24 oil tankers. These privatisations are set to be completed by 2010.
KOTC has already expanded its tanker fleet. Three contracts were concluded in August 2004 at a cost of $540m, to be delivered in 2007. Seven of the nine new tankers were ordered from South Korean companies in 2004. KOTC also unveiled plans in September to order an additional four tankers. Each vessel is expected to cost between $120m and $130m depending on the technical specifications, a significant price increase on previous costs. The capacity of the new tankers will be 300,000 tonnes of crude oil.
This liberalisation strategy will also include the granting of licences for up to three new oil tanker companies. The sell offs will enable KPC to concentrate on exploration, production and refining.
Meanwhile KPC said the country needed to invest $64bn in the energy sector in the coming years. Of this amount, $26bn will be earmarked for hydrocarbon exploration and output hikes inside Kuwait and $4bn for overseas investment. Some $17bn will be used to expand refining and downstream capacity in Kuwait, in an effort to increase refining capacity from the present 64,000 bpd to 100,000 bpd by 2010. The Ministry of Energy plans to increase oil production from the present 2.6m bpd to 3m bpd by 2010, 3.5m bpd by 2015 and 4m bpd by 2020.
With oil prices surging, part of the windfall profits have been reinvested into infrastructural developments, the latest of which is the announced expansion of Kuwait’s international airport. With the surge in passenger traffic flowing through the airport and the recently concluded Open Skies agreement with the United States, such an expansion is timely.
Kuwait's international airport served 5.3m passengers in 2005 and has a handling capacity of around 7m. Traffic through Kuwait is expected to increase between 8 and 10% in the next five years. On October 1, Massouma al-Mubarak, the minister of communications, unveiled plans approved by the Cabinet to spend KD600m (around $2.1bn) on a major expansion for Kuwait's international airport. The aim is to increase capacity to 20m passengers by 2012 at the latest. The project includes the creation of a new terminal, expansion of the two existing runways and the building of a third to cope with demands from larger aircraft, such as the Airbus A380.
On the political front, early elections on June 29 witnessed the participation of women in a national election for the first time. On May 21, the legislative body was dismissed after a long battle that pitted 29 opposition MPs against the government. The main issue of contention was the reduction of the number of constituencies in an effort to fight corruption, vote-buying and tribal affiliations of the elected MPs.
Opposition MPs are estimated to have won between 33 and 36 of the 50 seats in parliament, up from 29 in the previous legislature. Twenty of the 29 opposition MPs running for re-election will return as MPs. The majority (22 MPs) of these opposition figures are Islamist, with Sunni Islamists faring the best (17 MPs). However, the new assembly will remain exclusively male. The highest-ranking candidate among women candidates, Rola Dashti, received 1539 votes out of the 12,779 ballots cast in her district.
The healthy debate surrounding the electoral campaigns illustrated the thriving political scene in Kuwait, matching the strongly encouraging business environment in the emirate.
(C) Oxford Business Group - www.oxfordbusinessgroup.com (http://www.oxfordbusinessgroup.com/)
Kuwait’s positive economic performance in 2006 caught the attention of local and international investors. An overview of basic macro-economic indicators illustrates the emirate’s healthy foundations for economic growth.
The International Monetary Fund (IMF) estimates that the Kuwaiti economy grew by 6.2% in 2006, which remains above the global average of 5.1%. However the forecast for 2007 marks a slowdown to 4.7%, slightly below the anticipated global average of 4.9%. Given the revaluation of the Kuwaiti dinar to US dollar peg in May, many commentators, including the ministry of finance, expect a low rate of inflation for the upcoming fiscal year 2006-2007.
Meanwhile, this fiscal year’s budget projected spending at KD10.9bn ($37.6bn) and revenue at KD8.2bn ($29.5bn). However, estimated revenue is based on a price for Kuwaiti crude, $36 a barrel. Given that the average price of oil has remained above $50 in the past year, analysts predict a budget surplus of more than KD6.4bn ($22.13bn)
in 2006-2007.
With such surpluses, the government and national assembly are planning to reduce tax for foreign businesses and companies operating in Kuwait, in a bid to foster more foreign direct investment.
The smooth transition to power of the new Emir, Sheikh Sabah al-Ahmad al-Jaber Al-Sabah, also contributed to the stable and healthy macro-economic outlook. Structural reforms have continued under the new leadership.
Kuwait increasingly looked east for deepening economic integration in 2006, with the Emir Sheikh Sabah embarking on a tour of Asia with a delegation of businessmen. In light of the rise of new economic giants such as India, Kuwait is set to preserve its strategically important position within the global economy.
This year also witnessed a number of important developments in the energy industry, Kuwait’s main source of revenue.
The government unveiled plans to sell 25% of a planned new 615,000 barrels per day (bpd) refinery, along with at least 30% of the Kuwait Foreign Petroleum Exploration Company (KUFPEC) and 49% of the Kuwait Drilling Company.
The state will also privatise two petrochemical projects producing propylene and fertilisers, the only butane factory in Kuwait, a hospital run by the oil sector and Kuwait Oil Tanker Company (KOTC), a subsidiary of Kuwait Petroleum Company (KPC) which operates 24 oil tankers. These privatisations are set to be completed by 2010.
KOTC has already expanded its tanker fleet. Three contracts were concluded in August 2004 at a cost of $540m, to be delivered in 2007. Seven of the nine new tankers were ordered from South Korean companies in 2004. KOTC also unveiled plans in September to order an additional four tankers. Each vessel is expected to cost between $120m and $130m depending on the technical specifications, a significant price increase on previous costs. The capacity of the new tankers will be 300,000 tonnes of crude oil.
This liberalisation strategy will also include the granting of licences for up to three new oil tanker companies. The sell offs will enable KPC to concentrate on exploration, production and refining.
Meanwhile KPC said the country needed to invest $64bn in the energy sector in the coming years. Of this amount, $26bn will be earmarked for hydrocarbon exploration and output hikes inside Kuwait and $4bn for overseas investment. Some $17bn will be used to expand refining and downstream capacity in Kuwait, in an effort to increase refining capacity from the present 64,000 bpd to 100,000 bpd by 2010. The Ministry of Energy plans to increase oil production from the present 2.6m bpd to 3m bpd by 2010, 3.5m bpd by 2015 and 4m bpd by 2020.
With oil prices surging, part of the windfall profits have been reinvested into infrastructural developments, the latest of which is the announced expansion of Kuwait’s international airport. With the surge in passenger traffic flowing through the airport and the recently concluded Open Skies agreement with the United States, such an expansion is timely.
Kuwait's international airport served 5.3m passengers in 2005 and has a handling capacity of around 7m. Traffic through Kuwait is expected to increase between 8 and 10% in the next five years. On October 1, Massouma al-Mubarak, the minister of communications, unveiled plans approved by the Cabinet to spend KD600m (around $2.1bn) on a major expansion for Kuwait's international airport. The aim is to increase capacity to 20m passengers by 2012 at the latest. The project includes the creation of a new terminal, expansion of the two existing runways and the building of a third to cope with demands from larger aircraft, such as the Airbus A380.
On the political front, early elections on June 29 witnessed the participation of women in a national election for the first time. On May 21, the legislative body was dismissed after a long battle that pitted 29 opposition MPs against the government. The main issue of contention was the reduction of the number of constituencies in an effort to fight corruption, vote-buying and tribal affiliations of the elected MPs.
Opposition MPs are estimated to have won between 33 and 36 of the 50 seats in parliament, up from 29 in the previous legislature. Twenty of the 29 opposition MPs running for re-election will return as MPs. The majority (22 MPs) of these opposition figures are Islamist, with Sunni Islamists faring the best (17 MPs). However, the new assembly will remain exclusively male. The highest-ranking candidate among women candidates, Rola Dashti, received 1539 votes out of the 12,779 ballots cast in her district.
The healthy debate surrounding the electoral campaigns illustrated the thriving political scene in Kuwait, matching the strongly encouraging business environment in the emirate.
(C) Oxford Business Group - www.oxfordbusinessgroup.com (http://www.oxfordbusinessgroup.com/)