Kuwait just completed an investment forum last week and is looking to implement in September the first tranche of its inclusion in FTSE Russell.
Today, it went back to contemplating making some bewildering decisions that defy logic.
Parliament has a history of sending the wrong signals against expatriates, but this latest one just doesn’t make sense.
Arab Times reported Deputy Chairman of Kuwait Exchange Companies Union (KECU) Talal Bahman questioned the intentions shared by the Ministry of Finance, Central Bank of Kuwait and the relevant parliamentary committees to impose tax on the remittances of expatriates.
“The attitude of some MPs seeking electoral gains will devastate an important economic sector including 40 companies,” the daily reported Bahman as saying.
It said Bahman argued the expected revenues of about KD60 million ($200 million) are insignificant, indicating this amount is not enough to address the budget deficit.
Bahman warned that imposing tax on remittances of expatriates will “negatively affect the citizens’ pockets.”
He said that expatiates will look for alternative ways to transfer their money through black market activities.
Expats under fire
Kuwait’s finance ministry has instructed ministries and government entities to prepare lists of foreign employees to be cut from April 2018 to March 2019 to limit public sector roles to Kuwaitis, quoting Arabic language newspaper Al-Anbaa.
The aim is to reach a 100% Kuwaiti workforce by 2022.
Kuwait has been debating in parliament calls to reduce the number of foreign workers estimated to make up 70% of the 4.4 million population.
Parliament proposed a $3,300 fee for expat driving licenses
As if not enough, an MP requested an annual renewal fee of $1,657 for each car owned by expats.
In a commentary to Gulf News, Dr Mohammad Al Asoomi, a GCC economic expert, said Kuwait is witnessing unprecedented acceleration in implementing large-scale projects expected to create more than 200,000 jobs in the non-oil sector and contribute $35 billion to the wider economy by attracting between $150 billion to $200 billion in investments.
He said Kuwait has all the necessary capabilities to succeed, with abundant capital attracting foreign inflows especially from emerging and fast-growing countries like China and India.
“Of the challenges is the development of an investment-specific legislation, as capital will need to have an incubator environment, and laws and courts that guarantee rights as well as provide transparent and flexible legislation,” Al Asoomi told the daily.
“Furthermore, a separation of duties has to be made in the National Assembly, which sometimes exceeds its authority to intervene in the daily affairs of the business sector and contributing to the instability for investors.”
The Chairman of the Kuwait Chamber of Commerce and Industry, Ali Al Ghanim, said during last week’s investment forum that “economic reform is timid and far from ambitious”.
Saudi’s was today included in the FTSE Russell as Emerging market status but Kuwait had earned that distinction last year and is ready to upgrade in two stages starting September.
“10 Kuwaiti stocks currently look likely to join the benchmark,” FTSE said on Wednesday, and Reuters said that these will range from National Bank of Kuwait (NBK) to small caps such as Alimtiaz Investment Group.
“It will publish a confirmed list of stocks on Aug. 24,” said Reuters.
Kuwaiti stocks entering the index will be given 50% of their weightings in September and the remaining 50% in December.
FTSE projected that Kuwait would have a total 0.4% weighting in the index.