Kuwait, foreign investment and development projects in an evolving market
Kuwait, a small but influential Emirate in the heart of the Persian Gulf, is next to three major markets: Iraq, Saudi Arabia and Iran. Despite global economic challenges and a gross domestic product (GDP) predicted to decline by a few percentage points by major international institutions, the dinar remains a strong currency and Kuwait remains one of the most stable economies in the region, with moderate inflation and prudent monetary policy management. It is also remarkably open to foreign trade, with few import restrictions and no restrictions on capital transfers.
The country still needs to work on substantial reforms to diversify an economy heavily dependent on hydrocarbons. The non-oil sector, however, is projected to continue its rise in 2024, boosting non-hydrocarbon GDP by 1.3%.
Economic diversification underpins the ambitious Vision 2035 development plan, which was launched in 2010 with the aim of turning the country into a regional and international financial and business hub, capable of attracting a growing number of investors. The plan envisages seven strategic pillars: administrative and bureaucratic reform; development of a diversified and sustainable economy; infrastructure development; promotion of a sustainable living environment; enhancement of the healthcare sector; development of human capital, Kuwait’s advancement on the international stage. Much attention is paid to the involvement of the private sector, which is the focus of the third 2020-2025 stage of the five stages foreseen in the roadmap for the implementation of Vision 2035.
This momentum, combined with incentives for foreign investors, makes Kuwait a potentially lucrative destination for those who want to seize new opportunities in an ever-changing scenario.
SHORT PROFILE OF KUWAIT
(Sources: World Bank, Kuwait Vision 2035, CIA World Factbook)
SOCIETY
Population: 4.3 million inhabitants (30% Kuwaitis, the remaining 70% of other nationalities, mainly Asian)
Average age: 30 years
Life expectancy: 80 years
Population growth: 1%
Form of government: constitutional monarchy (the current Head of State is Emir Misha’al al-Ahmad al-Jaber al-Sabah)
Independence: 1961, from Great Britain
Language: Arabic, English particularly widespread
Religion: Muslims (75%), Christians (18%), other creeds
ECONOMY
GDP trend: -1% (2024 estimate); +2.5% (2025 forecast)
GDP per capita: $37,700 (one of the richest countries in the world)
GDP breakdown: agriculture 0.4%, industry 67%, services 43.6%.
Exports: 90% oil and gas
Imports: vehicles, machinery, gold and gold products, medicines, clothing
GEOGRAPHY
Located on the Arabian Peninsula, on the northern coast of the Persian Gulf, bordering Iraq to the north and Saudi Arabia to the south
Surface area: 17,820 km2 (Italy 303,000 km2)
Mainly flat and desert territory, with 500 km of coastline
TRADE WITH ITALY
(Source: Economic Observatory)
Italy: 14th destination market for Kuwaiti exports (with a 0.8% share)
7th supplier to Kuwait (with a 3.9% share)
Kuwait: 57th destination market for Italian exports (with a 0.22% share)
70th supplier to Italy (with a 0.09% share)
Italian export value (Jan-Jul. 2024): €822 million
Italian import value (Jan.-Jul. 2024): €300 million
Kuwait
Interview with Ambassador Morini – An increasing number of opportunities
With the leeway available to diversify its economy, through an ambitious investment strategy, Kuwait aspires to become a reference hub for renewable energy and new technologies in the region. These sectors provide many economic opportunities. This is underlined by Ambassador Lorenzo Morini, who represents Italy in Kuwait. In this interview he reviews the areas of activity that could attract Italian companies interested in investing in the country.
Ambassador, what are Kuwait’s assets today? In particular, what are the areas on which Italian companies can or should keep an eye for investment purposes?
‘Kuwait provides interesting opportunities both in terms of Italian companies’ presence in the Kuwaiti market, and in terms of attracting investment to our country. The areas of traditional, strong Italian presence – oil & gas, construction, security – are now flanked by all the sectors to which Kuwaiti authorities pay specific attention in the context of the planned expansion of the country’s strategic infrastructure. Energy production and renewables, drinking water, telecommunications, cybersecurity, are just a few examples of areas where there are interesting opportunities for a greater presence of Italian companies, which are particularly appreciated for their ability to offer products of absolute excellence and advanced technological content.
Equally important possibilities are offered in terms of attracting investment from Kuwait. Generally speaking, it should be borne in mind that the Kuwaiti sovereign fund (Kuwait Investment Authority – KIA) is the fifth largest in the world and is constantly looking for investment opportunities abroad. Specifically, there is a strong focus on European markets and there have long been partnerships with Italian institutions, in particular with Fondo Strategico Italiano (FSI), which have favoured the flow of Kuwaiti capital towards Italian SMEs. These experiences turned out to be particularly productive and could be replicated in the future, involving the private operators of the two countries to a greater extent. This also considering the remarkable financial abilities of most Kuwaiti companies and Kuwait’s growing interest in partnerships that facilitate technology transfer and the exchange of expertise.”
In light of the government’s development plan, in addition to the traditional oil & gas sector, are there any sectors to be specifically considered, such as new technologies, renewables?
“Kuwait has developed an investment and diversification strategy called “Kuwait 2035”, which aims to transform the country through investment in high-tech sectors, such as renewable energy and artificial intelligence, or where there is ample scope for development in the Kuwaiti socio-economic fabric, including tourism and creative industries. These are areas in which Italy can offer products of absolute excellence, and it is therefore important to take advantage of the push for the opening up of Kuwait given by the new Emir, Sheikh Mishal Al Sabah, who took over the country’s leadership last December.
Another sector of potential interest for our country is health, which is becoming increasingly important here, also in light of the general rise in the average age of the Kuwaiti population. Kuwait is laying emphasis on the modernisation of health facilities and the introduction of advanced medical services and technologies, areas in which Italian companies have skills and experience of global relevance. Finally, there is also the unchanged huge potential of the luxury sector, which here shows particular dynamism kindled by the high average income of the Kuwaiti population. Italian companies, which are already widely present and appreciated in Kuwait, can count on an ongoing demand for niche products in all the leading sectors of our design, ranging from fashion to furnishings, from high-end jewellery to the automotive and luxury boat sectors, which are particularly developed here.”.
What are Kuwait’s needs in terms of infrastructure?
“Kuwait has significant infrastructure needs considering the country’s fast-growing population and economic development programmes, coupled with the need to cope with the wear and tear caused by the impact of a particularly punishing climate.
The current priority is the modernisation of the energy and water infrastructure, which is essential to ensure a stable supply of essential services, especially during the summer period when temperatures frequently exceed 50 degrees Celsius. There is also a strong expectation on the part of the Kuwaiti population in terms of improving the road infrastructure, which is now inadequate with respect to the very high number of vehicles circulating in the country and is often in poor condition, also due to the impact of the high temperatures on the materials used.
Finally, it should be noted that in recent years Kuwait has begun to invest in sectors related to climate and environmental sustainability, an issue on which there is growing sensitivity in the country. Although there are favourable conditions for the development of solar- or wind-powered plants, the country is lagging behind other regional partners.
Generally speaking, in recent years Kuwait has favoured the criterion of cost-effectiveness of works in the selection of foreign companies that were awarded public tenders. This has often favoured companies from emerging countries. However, there is a growing awareness on the Kuwaiti side of the need to improve the quality and durability of works commissioned to foreign companies. At the same time, upon the new Emir’s initiative, there is the country’s commitment to solving the problems of slowness and excessive bureaucracy that in recent years have discouraged many of the major Western foreign companies from securing an active presence in Kuwait. In this context, any expression of interest by Italian companies in Kuwait would be welcomed with great interest by these authorities.”
Can you tell us about the scale of important regional infrastructure projects, such as the one for electricity interconnection in the Gulf or the railway connection with Saudi Arabia?
‘The economic expansion that Kuwait has been experiencing since the 1950s has also been supported – over time – by shared projects and cooperation with the other Gulf States. This is one of the reasons why the electricity interconnection plan of the Gulf Cooperation Council’s countries – also extended to Iraq – is deemed essential here. The construction of the network began in 2006 and the works were completed in 2011. To date, this network provides high-voltage transmission lines and transformer stations to facilitate the flow of energy between the countries involved, thus enabling the exchange and export of electricity in the region. Kuwait could specifically benefit from the electricity connection with regional partners, thus obtaining immediate support during the blackouts that occurred during the summer months. This is also the reason why Kuwaitis would welcome a further expansion of the network.
The rail link with Saudi Arabia, instead, is still at a drawing board stage and is not deemed of pressing importance here. Partly due to the strong preference of Kuwaitis for the use of car in all travels, the national collective transport system has never really developed and the population is not accustomed to use rail connections. At present, Kuwait has not yet started tenders for the works on the portions of the project under its jurisdiction (according to the GCC, the line should start in Kuwait and pass through Saudi Arabia, the United Arab Emirates and Oman). However, it is foreseeable that the progress of the initiative in the neighbouring countries may also push the Kuwaitis to take an active part, thus favouring the development of a project that will be a huge opportunity for Italian companies in the railway sector.”
Can you give us an overview of the current Italian presence in Kuwait?
‘The Italian community in Kuwait today numbers almost one thousand people, with a growing trend. They are mostly compatriots employed in managerial positions in Kuwait’s main economic sectors, including oil & gas, energy, construction, defence, together with hospitality, catering and luxury. The Italian community also includes several hundred members of the Armed Forces serving in the context of Operation Inherent Resolve to counter Daesh, deployed at military bases with an international presence and subject to frequent rotations. There are also around 200 Italian employees of the Kuwaiti-registered company LAS, controlled by Leonardo, who are engaged in the Italian-led programme to supply the Kuwaiti Air Force with a fleet of Eurofighters.
Due to the relatively small size of the community, the Italian Embassy in Kuwait can involve its compatriots in the social, cultural and promotional activities carried out on a regular basis in the country and respond effectively to our citizens’ needs. One of the objectives that I have set for myself since the beginning of my mandate is to further strengthen the services and initiatives offered to the Italian community resident here. In collaboration also with the ITA Office in Riyadh (responsible for Kuwait), we plan to promote a series of events to celebrate Italian quality in fashion, design, art, cuisine and culture, with the participation of Italian ateliers, artists, musicians, chefs and pastry chefs resident here or from Italy. At the same time, we will open the Embassy’s premises for cultural and social activities, in which we also intend to involve our usual Kuwaiti counterparts.”
What are the relations between Kuwait and Italy, the possible developments (also from a European perspective), the upcoming events, and how is the Italian System present?
‘This year we are celebrating the 60th anniversary since the establishment of bilateral diplomatic relations and I can undoubtedly say that relations between Italy and Kuwait are excellent from all viewpoints. The recent meeting in New York between the Prime Minister and the Crown Prince of Kuwait – on the sidelines of the United Nations General Assembly – reaffirmed the mutual interest in further strengthening a very intense relationship that has developed over time, based on the sharing of the fundamental principles of respect for democratic values and the central role of multilateralism, dialogue and respect for human rights. The intensity of bilateral relations is also favoured by the enduring gratitude for the active role played by Italy in the liberation of Kuwait during the first Gulf War and by the great passion and admiration of the Kuwaiti people for Italy.
Italy is one of the main tourist destinations for Kuwaitis. Italian fashion and design, but also gastronomy, tourist resorts and art cities, are particularly appreciated here, as witnessed by the high number of tourist visas issued each year by the Embassy. In 2023 a total number of 30,000 visas was reached and more than 13,000 were issued in the 2024 summer season alone. The aim is to expand the supply of direct Italy-Kuwait air connections, currently only provided by Kuwait Airways, in order to meet the growing local demand, also taking into account the fact that many Kuwaiti citizens use Italy as a departure base to visit other countries in the Schengen area and get to know Europe’s beauty and diversity.
There is, however, ample room for manoeuvre to further deepen Italian-Kuwaiti relations. In my opinion, a factor on which we should focus is the strengthening of interaction between the academic institutions and think-tanks of the two countries, also in view of a greater presence of Kuwaiti students and researchers in Italian universities and institutes. The limited spreading of the Italian language in this country and the scarce knowledge of the education supply in Italy -also in English – are factors that negatively affect the presence of students from Kuwait. From this viewpoint, it will be important to match cultural and commercial promotion activities with initiatives specifically focused on Italian excellence in scientific, artistic, and technical education.
This is also the reason why I wish to actively involve Kuwaiti universities in the cultural programmes that we have been implementing in recent months, and at the same time to make the local public know the particularly important Italian activities carried out by our academic institutions, such as the work carried out by the Perugia University’s Archaeological Mission on Failaka Island, and the new project on the north-east coast of Kuwait that will be managed by La Sapienza University of Rome. The aim is to increase the visibility of Italian universities in the country, through open events and communication initiatives in the press and social media, in order to stimulate the attention of the local public and stir interest in possible collaborations by Kuwaiti public and private academic institutions.”
