Kuwait woos foreign investors by suspending offset scheme
Kuwait is suspending a program under which foreign winners of big government contracts are required to invest in the local economy, its finance minister says
Kuwait is suspending a program under which foreign winners of big government contracts are required to invest in the local economy, its finance minister said on Tuesday, as it tries to attract more overseas companies to the Gulf state.
“We need to revise it,” Anas al-Saleh told Reuters, adding that many international firms had been critical of the scheme.
“This is why we’ve frozen it to make sure it is not an obstacle for those firms to come in.”
He said new rules could be ready in about six months.
The so-called offset program was introduced in 1992 as a way of weaning Kuwait off its reliance on oil and gaining access to new technologies and training.
According to a 2012 U.S. State Department Investment Climate statement for Kuwait, offset obligations were applied to military contracts of a value equal to or above 3 million Kuwaiti dinars (10.48 million pounds), civil/government contracts of a value equal to or above 10 million dinars and downstream oil/gas contracts.
Critics of the scheme said it favored multinational companies able to absorb offset costs by using economies of scale, and required smaller exporters to divert precious management resources.
“We need to revise it and then, later on, implement it with a more moderate way which we believe will help inviting those international firms,” the minister said.
“I wouldn’t see more than six months,” Saleh said, when asked when the new rules would be ready.