Kuwaiti Reports; Mohammad Al Ajmi, director-general of the Public Authority for Industry, announced plans to boost Kuwait’s industrial output by 25% in the coming years, telling industry stakeholders at a conference that the sector’s current contribution to GDP stands at 9%. Industrial expansion is particularly critical in light of persistently low global oil prices, which are expected to result in a record budget deficit for Kuwait in fiscal year 2016/17.
The situation has prompted the government to launch economic reforms targeting reducing state subsidies, in addition to expanding non-oil sectors. The Kuwait Development Plan 2015-20, targets 4% non-oil growth this year to 5-6% per annum in the following years. Though the KDP’s $100bn infrastructure agenda is forecast to comprise the bulk of non-oil growth, boosting industrial output, particularly in the high-potential chemicals and plastics segments which forms a crucial component of economic diversification. A joint venture between US-based Dow Chemicals and local firms Petrochemical Industries Company, Boubyan Petrochemical Company and Al Qurain Petrochemical Industries Company – announced plans to build a 200,000-sq-metre industrial complex in Al Shuaiba. More recently, the Ministry of Commerce and Industry announced in mid-October that it had approved a request from KPC to establish a new subsidiary, Kuwait Integrated Petrochemical Industries, to carry out refinery and petrochemicals projects. The company, which will launch with $6bn of capital, is expected to execute major downstream projects including the greenfield Al Zour refinery complex, with a production capacity of 615,000 barrels per day and an associated petrochemicals complex. The Al Zour refinery is slated for completion in 2019. The Kuwait Direct Investment Promotion Authority forecasts the country’s petrochemicals output will increase from 7.57m tpa in 2014 to 10.54m tpa in 2019. Production should also go some way to boost export revenues, with organic chemical exports valued at KD77.9m ($257.4m), or 2.2% of total exports between April and June, followed by plastics and plastic products, at KD60m ($198.2m) or 1.7%.
New industrial projects coming on-line are also expected to support increased production, including the KD160m ($528.3m) Al Naayem Industrial Zone, launched by the PAI last year for heavy industries. The new zone joins Kuwait’s Sabhan Industrial Zone, which recently benefitted from a KD12m ($39.6m) investment to establish Block 11 of the industrial zone. More recently, in October the Kuwait Industries Union (KIU) announced plans to release 1056 industrial plots in the KD80m ($264.1m) Al Shadadiyah Industrial Zone to kick-start development in the area. The KIU has already approved over 230 applications for new industrial projects, primarily concentrated in West Shuaiba, Amghara and Subhan in the past two years, Al Ajmi said at an industry conference in October. West Shuaiba, will be home to 35 new industrial investment projects worth some KD1bn ($3.3bn).
This announcement follows on KIU’s partnership with the Public Authority for Manpower to roll out a single-window electronic portal to facilitate project registrations. The KIU has already completed 150 transactions under the new system, according to Al Ajmi. Regulations introduced as part of Kuwait’s new foreign direct investment law from 2013 will make it easier to find foreign tenants for the expanding industrial zones. The law enables a local company with up to 100% foreign equity or a branch of an international company to invest in the country, though 100% foreign ownership remain restricted in some regulated sectors, such as oil and banking.
