Kuwait Times

Published Date: September 24, 2009
By Ahmad Saeid, Staff writer

KUWAIT: Conducting business in Kuwait has become more difficult in the last year, according to a recently-released annual report conducted by the International Finance Organization and the World Bank. The report, which assesses the ease of doing business in various parts of the world, shows that Kuwait's rank has been deteriorating. The decline in the rank by nine points could affect the competitiveness of Kuwaiti market to attract foreign investors, which might delay achieving the government strategy to t
urn Kuwait into an international financial and trading center.

The study titled 'Doing Business 2010: Reforming through difficult times' ranked Kuwait in the 61st position among 183 countries covered by the study. Kuwait has slid down from the 52nd position when compared to the study conducted the previous year. The ranking is calculated according to the average obtained from nine different factors that regulate business concerns in the country, and whether they affect business and their development.

The most alarming detail about Kuwait's "doing business" status is the 'starting business' category, which looks into the number of procedures necessary to open a business, in addition to the cost of these procedures and the time range during which they can be completed. In this rank, Kuwait occupies the low 137th position, diving down from the 134th position back in 2009. According to the report, there are 13 procedures which need to be completed in order to complete the paper work needed to establish a b
usiness, when compared to four in KSA, six in Qatar, seven in Bahrain and eight in Jordan.

Despite the deterioration of Kuwait's position in the index of 'paying taxes,' the country is still among the top 15 countries in the world in that matter, soaring to the 11th position after the ninth position of last year's study.
Some business owners in Kuwait, however, found it surprising that Kuwait was ranked so low in the survey. Mansour, a Kuwaiti business owner who has recently established an enterprise said, "It is weird that it's that low, because the procedures were simple and clear, and I got help from the employees of the Ministry of Commerce and Industry about what to do and where to do it. Since I haven't opened a business before, they were of great help.

Although Mansour was surprised at the low ranking, he opined that some procedures for establishing a business could've been simplified. "For instance, you have to go to the Criminal Evidences General Department and two other government authorities to receive the criminal clearance. This can easily be done if there was a database where ministries can check on the criminal status of applicants from their own systems, or at least if these departments will have branches in ministries.

In Kuwait, running the business itself seems to be more simple than establishing it. Ravi Kumar, an executive manager in a local travel agency says,"I don't think that it's difficult to do business here in Kuwait, especially after the recent amendments to the investment law.

The new law (Law No.8/2001) has been enacted permitting foreign entities to establish Kuwaiti companies with up to a 100 percent foreign equity participation. Although a license under the new law can only be granted for certain types of business activities.

The report praised Kuwait for making two positive amendments to perform business regulations, 'trading across borders' and 'closing a business'. "Kuwait established a law enabling restructuring of companies that face financial difficulty or insolvency" and "improvements to customs administration procedures and staff training have helped shorten the time required to clear goods for import and export.

Rank

Doing Business 2010:

Ease of Doing Business-61, Starting a Business-137, Dealing with Construction Permits -81, Employing Workers- 24, Registering Property -89, Getting Credit- 87, Protecting Investors- 27, Paying Taxes-11, Trading Across Borders- 109, Enforcing Contracts- 113, Closing a Business- 69, Ease of Doing Business- 61
Highlights from the report:

* The decline in the rank by nine stages could affect the competitiveness of Kuwaiti market to attract foreign investors.

* There are 13 procedures needed to be performed in order to complete the paper work needed to establish a business in Kuwait, compared to only four in KSA.

* The report praised Kuwait for making two positive amendments to business regulations.