Country name: State of Kuwait
Population: 2,505,559, includes 1,291,354 non-nationals
Land Area: 17,820km²
Official Language: Arabic (official), English (commercial)
Currency: 1 Kuwaiti Dinar (KD) = 1,000 fils
Main Cities: Kuwait City (capital), Salmiya, Ahmadi, Shuwaikh
Kuwait has proved crude oil reserves of about 96 billion barrels, amounting to about 10% of world reserves. Petroleum accounts for nearly half of GDP, 90% of export revenues, and 75% of government income. Kuwait lacks water resources and therefore has practically no arable land, thus preventing the development of agriculture. Thus with the exception of fishing, Kuwait depends almost wholly on food imports. About 75% of potable water must be distilled or imported. The economy is at present in a healthy state and increasingly attracting investors. It grew by 6.2% in 2006, according to IMF estimates.
Meanwhile, the current fiscal year’s budget projected spending at KD10.9 billion ($37.6 billion) and revenue at KD8.2 billion ($29.5 billion) with estimated revenue based on a price for Kuwaiti crude of $36 a barrel. Given that the average price of oil has remained above $50 over the past year, analysts predict a budget surplus of more than KD6.4 billion ($22.13 billion) in 2006-2007.
In a bid to attract foreign direct investment, taxes for foreign businesses and companies operating in Kuwait have been reduced. Local businesses are exempt from tax, but the amount foreign companies are charged has been reduced to 15% from a rate of 55%.
The growth of China and India has not gone unnoticed in Kuwait which in response adjusted its sights increasingly to these emerging markets in the east in 2006 and through these new alliances looks set to secure a more strategically important position within the global economy.
The year 2006 witnessed a number of important new developments in the country’s energy industry, its main revenue source. Plans were unveiled 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.
Kuwait is also set to 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 privatizations are set to be completed by 2010.
KOTC has expanded its tanker fleet with three contracts, concluded in August 2004 at a cost of $540 million, set for delivery in 2007. Seven of the nine new tankers were ordered from South Korean companies in 2004. KOTC also unveiled plans in September 2006 to order an additional four tankers. Each vessel is expected to cost between $120 million and $130 million depending on technical specifications, a significant price increase on previous costs. The capacity of the new tankers will be 300,000 tonnes of crude oil.
The country’s liberalization 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 $64 billion in the energy sector in the coming years. Of this, $26 billion will be earmarked for hydrocarbon exploration and output hikes inside Kuwait and $4 billion for overseas investment. Some $17 billion will be used to expand refining and downstream capacity in an effort to increase refining capacity from the present 64,000 bpd to 100,000 bpd by 2010. The Kuwait Ministry of Energy plans to increase oil production from the present 2.6 million bpd to 3 million bpd by 2010, 3.5million bpd by 2015 and 4million bpd by 2020.
With oil prices surging, part of the country’s 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 US, such an expansion is timely.
Kuwait's international airport served 5.3 million passengers in 2005 and has a handling capacity of around 7 million. Traffic through Kuwait is expected to increase between 8% and 10% during the next five years. In October 2006, Kuwait unveiled plans to spend KD600 million (around $2.1 billion) on a major expansion for the international airport with aim of increasing capacity to 20 million 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.
The KPC, an integrated international oil company, is the parent company of the government's operations in the petroleum sector, and includes Kuwait Oil Company, which produces oil and gas; Kuwait National Petroleum Co., refining and domestic sales; Petrochemical Industries Co., producing ammonia and urea; Kuwait Foreign Petroleum Exploration Co., with several concessions in developing countries; Kuwait Oil Tanker Co.; and Santa Fe International Corp. The latter, purchased outright in 1982, gives KPC a worldwide presence in the petroleum industry.
The company also purchased from Gulf Oil Co. refineries and associated service stations in the Benelux nations and Scandinavia, as well as storage facilities and a network of service stations in Italy. In 1987, KPC bought a 19% share in British Petroleum, which was later reduced to 10%. KPC markets its products in Europe under the brand Q8 and has interests in the markets of the United States and Japan.
Kuwait has about 94 billion barrels (15 km3) of recoverable oil reserves. Estimated capacity, before the war, was about 2.4 million barrels (380,000 m3) per day. During the Iraq presence, Kuwait's oil-producing capacity was reduced to practically nothing. However, tremendous recovery and improvements have been made. Oil production was 1.5 million barrels (240,000 m3) per day by the end of 1992, and pre-war capacity was restored in 1993. Kuwait's production capacity is estimated to be 2.5 million barrels (400,000 m3) per day. Kuwait plans to increase its capacity to 3.5 million (560,000 m3) barrels per day by 2005.
Industry in Kuwait consists of several large export-oriented petrochemical units, oil refineries, and a range of small manufacturers. It includes large water desalinization, ammonia, desulfurization, fertilizer, brick, block, and cement plants.
Agriculture is limited by the lack of water and arable land. The government has experimented in growing food through hydroponics and carefully managed farms. Fish and shrimp are plentiful in territorial waters, and extensive commercial fishing has been undertaken locally and in the Indian Ocean.
The Kuwait Oil Tankers Co. has 35 crude oil and refined product carriers and is the largest tanker company in an OPEC country. Kuwait also is a member of the United Arab Shipping Company.
Kuwait has been a major source of foreign economic assistance to other states through the Kuwait Fund for Arab Economic Development, an autonomous state institution created in 1961 on the pattern of Western and international development agencies. In 1974, the fund's lending mandate was expanded to include all – not just Arab – developing countries.
With a construction boom in the Gulf region, Kuwait is working towards returning to the days when it was known as ‘the Pearl of the Gulf’. Although the scale of construction is not as massive as in Dubai or Qatar, Kuwait is now making up for lost time. In recent years, the Kuwaiti economy has seen return of expatriated capital, which, coupled with sustained high oil price and consequent revenue, has led to rapid economic growth and a renewed focus on the construction sector.
A number of major construction projects are planned to revitalise the economy and ailing infrastructure. Following the first Gulf War, Kuwait experienced a pronounced halt in large-scale infrastructure development. The results of this under-investment became apparent in recent years as transport, ports, power, water and sewerage systems struggled to support the growth in Kuwait’s population and trade demand.
Kuwait’s Ministry of Public Works has reported that it is gearing up for a $51 billion construction spending spree by end of decade. Among these projects are the government’s ambitious plan to develop two of Kuwait's islands - Bubiyan and Failaka. Recently, the government has announced a series of high profile developments covering various infrastructure sectors such as the extensions of Ring Roads and the construction of the 8th Ring Road, the causeway and access roads in Subiya, intention to build a metro rail system, the Al Zoor power & water station, Kuwait International Airport expansion and the Subiya Water Treatment plant to name a few.
While the public sector has traditionally been the principal force steering Kuwait’s construction sector, private investment in major construction projects has also witnessed a steady rise. Today, the private sector is steering the construction market with private development schemes.
Investment in the private real estate sector has expanded considerably over the last three years. There are a number of high rise residential and commercial buildings either in the planning phase or under construction; prominent among these projects is the Hamra-Firdous Tower which when completed will stand 70 storeys high. Two other buildings are also set to touch the 70 storey limit, with two more planned of 100 floors.
Three other prominent projects on the horizon are “Silk City”, “Khabary City” and “Al Khiran City”. The ambitious Silk City or Madinat Hareer project has an estimated overall value of $86 billion and will have as its central element a mixed use tower which is planned to be the world’s tallest tower / building height in excess of 1,000 meters. The proposal will see 250km² site in Subiya (North of Kuwait Bay) transformed into a new urban centre for 500,000 people over a 25-year development.
While not on the same scale as the Silk City, the Khabary City project to be built in Fahaheel is estimated to cost around $5.5 billion making it Kuwait’s most ambitious private sector real estate development to date.
Kuwait is also witnessing continued residential development to absorb its fast growing population. Kuwait’s population by the end of June 2006 reached 3 million, registering a growth of 6.5%. At this growth Kuwait’s population is set to double every ten years.
To meet the demands of its fast growing population, Kuwait has plans to create satellite cities and towns in the outlying regions. New city developments in Subiya, Khairan (potentially for 500,000 people) Jaber Al Ahmed City (100,000), Arifjan (up to 100,000) and other smaller city developments such as Al Mutlaa, Saad Al Abdullah, Sabah Al Ahmad city which are currently witnessing a surge in activity mostly related to large scale public housing projects.
Some of the other plans and proposals announced include the building of twenty two new hospitals (nine of them are government); proposals (from the private sector) for the construction of a “Medical City” and the building of a new Kuwait University campus at Shadadiyah which is estimated to cost around $3.5 billion.
Quelle: Ghorfa, Arab-German Chamber of Commerce & Industry e.V.
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