Kuwait Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

The European Union has long been the third largest trading partner of Kuwait and is perceived in the country as an important and desirable trading partner, whose advanced technical norms and standards are a guarantee of high product quality. EU trade with Kuwait in 2021 reached the level of EUR 8,01 million, with EU exports significantly predominating. The EU’s main export items to Kuwait include food, consumer goods, machinery and equipment, cars and chemicals. Imports from Kuwait to the EU are based mainly on oil and oil products, mineral oils and products of the petrochemical industry.

  • Allcountrylist: Overview of major industries in Kuwait, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Exports from the EU (million EUR) 4,966.20 5,024.40 5,319.10 4,941.30 5,753.00
Imports into the EU (million EUR) 3,285.40 2,703.10 2,510.00 845.6 1,259.60
Balance with the EU (million EUR) -1,680.8 -2,321.3 -2,809.1 -4,095.8 -4,493.4

Source: European Commission

Trade relations with the Czech Republic

Czech exports to Kuwait grew significantly between 2013 and 2017, when they temporarily exceeded CZK billion, but subsequently fell to CZK 1.14 billion in 2020. In 2021, there was a recovery and growth to CZK 1.23 billion. Imports from Kuwait to the Czech Republic are negligible and the balance of mutual trade has long been in surplus in favor of the Czech Republic. Czech exports have long been dominated by passenger cars, tires, refrigerators and freezers, air conditioning equipment, electrical switchboards and distribution cabinets, construction machinery and materials, chandeliers and other lamps, glassware, sporting goods, food, furniture, iron and steel pipes, pipelines for oil pipelines, steel wire, tanks, pumps and compressors, drugs and pharmaceuticals, textile products and live animals (poultry).

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 2.16 1.86 1.40 1.14 1.23
Imports to the Czech Republic (billion CZK) 0.02 0.04 0.04 0.04 0.11
Balance with the Czech Republic (billion CZK) -2.14 -1.82 -1.36 -1.10 -1.12

Source: CZSO

Trade relations with countries outside the EU

Kuwait is the 8th largest exporter and 10th largest producer of oil in the world. Oil and oil derivatives account for 95% of all Kuwait exports. The largest export destinations are the UAE, Saudi Arabia, India, Iraq, Pakistan and China. (Re-exports represent approx. 4% of total exports.) Kuwait is an import-dependent country due to its own limited production capacities. Kuwait imports the most from China, UAE, USA, Saudi Arabia, Japan, India. The balance of foreign trade is largely dependent on the world prices of oil, which is the dominant export item.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 41,932.4 60,493.7 49,758.7 29,269.7 48,304.5
Imports to countries outside the EU (million EUR) 25,269.4 27,780.2 26,027.6 33,365.4 25,060.3
Balance with non-EU countries (million EUR) -16,663.0 -32,713.4 -23,731.1 4,095.7 -23,244.1

Source: EIU, Eurostat

Foreign direct investment

According to IMF data, total foreign direct investment (FDI) in Kuwait at the end of 2021 was US$14.565 billion and direct investment from Kuwait was about US$32.741 billion. The creation of a suitable business environment with an aspect for the growth of the private sector and foreign investment is one of the key goals of Kuwait’s New Kuwait Vision 2035. The KDIPA agency deals with attracting foreign direct investment to Kuwait(Kuwait Direct Investment Promotion Authority). Kuwait’s investment environment allows up to 100% ownership to be supported in certain specific cases and provides investment incentives. Law No. 116 of 2013 on the promotion of foreign direct investment specifies the supported economic sectors for the entry of foreign investors, the criteria that must be met, state support for the inflow of FDI into the country. Subject to approval, the Foreign Direct Investment Act of 2013 allows up to 100% foreign ownership in the following sectors: infrastructure (water resources, energy, sewage treatment and communications); insurance; information technology and software development; medical devices and pharmaceuticals; air, land and sea transport; tourism, hotels and entertainment; housing projects and urban development; and investment management. The act also established the KDIPA, to receive investment proposals, evaluate their potential and help foreign investors with licensing. The government believes that giving foreign companies greater access to the Kuwaiti market will encourage investment in the Northern Gateway / Five Islands initiative and other projects that make up the New Kuwait development plan.

FTAs and treaties

Treaties with the EU

Trade relations between Kuwait and the EU need to be seen in the broader framework of economic and trade cooperation between the EU and the Gulf Cooperation Council (GCC). Official cooperation between the EU and the GCC has been developing since 1988, when the basic institutional framework for cooperation was created in the form of a cooperation agreement, the goals of which included the deepening of mutual economic relations and the development of mutual trade and investment. However, a free trade agreement (FTA) failed to be concluded. Since 2017, an institutionalized trade and investment dialogue has been taking place between the EU and the GCC, which is intended to support mutual economic and trade cooperation within the framework of conferences, seminars and discussion panels between the EU and the GCC. The dialogue should also contribute to the resumption of the frozen negotiations on the conclusion of the FTA. Kuwait was the first GCC country to

Contracts with the Czech Republic

In the economic and trade area, the most important concluded agreements are the agreement on the avoidance of double taxation and the agreement on the mutual protection and promotion of investments. The negotiation of an agreement on economic cooperation between the Czech Republic and Kuwait, which will become an important tool for supporting mutual economic and trade relations between the two countries, remains current. The draft agreement was mutually agreed upon at the expert level and should be signed in 2022. Priority areas of cooperation are, for example, energy, the transport and automotive industry, medical devices and equipment. The proposal envisages the creation of a mixed economic committee, which will be chaired by a representative of the Ministry of Industry and Trade of the Czech Republic and a representative of the Kuwaiti Ministry of Finance.

Developmental cooperation

Kuwait is a rich country and does not receive development aid. Kuwait itself provides development aid of approximately 1% of GDP through the Kuwait Fund for Arab Economic Development (KFAED). This organization decides on grants and loans under favorable payment terms, which are granted mainly to developing countries with a Muslim or Arab population (e.g. Egypt, Tunisia, Lebanon, Yemen, Iraq, Pakistan, but also a number of African or Latin American countries, China or Bosnia and Herzegovina). Technical assistance loans or grants are provided for specific projects, mostly in the field of developing the country’s transport, water management and energy infrastructure. Czech companies can also participate in tenders for the implementation of projects, directly in the specific country of implementation of the relevant project and in accordance with local tender rules. In 2019, KFAED provided loans and grants to 27 countries in the total amount of almost USD 929 million. In recent years, the Kuwaiti government has also hosted three humanitarian donor conferences for Syria, and Kuwait has contributed a total of over USD 1 billion to improve the situation there. In February 2018, the country hosted an international donor conference on Iraq linked to a conference on business and investment opportunities in Iraq.

Prospective fields of study (MOP)

The Kuwaiti market continues to provide business opportunities for Czech exporters who can offer original, innovative and advanced technologies and systems in perspective sectors such as ICT, defense industry, healthcare, energy, construction industry, e.g. fire safety systems in buildings, agricultural and food industry, etc. It is a relatively small market with high purchasing power of consumers, whose shopping appetite has not decreased even during the pandemic and who demand a wide range of imported goods, from basic to luxury.

Energy industry

In Kuwait, summer temperatures have been increasing for a long time, climbing well above 50 °C, and hand in hand with the construction boom, they cause an increase in the requirements for air conditioning of premises, or increasing consumption of electricity and pressure to use it more efficiently. As Kuwait plans to upgrade and build new power plants, it plans to increase capacity by 14,000 MW over the next 20 years. Czech suppliers could thus apply, for example, in the supply of transmission cables, switchboards or transformers, but also in the field of renewable energy sources (RES), as the goal is to increase the share of RES by 15% by 2030.

Construction industry

Due to the lack of residential and non-residential spaces, massive building construction continues in Kuwait. This is mainly the construction of new administrative and residential high-rise buildings as part of urban development and related infrastructure projects (smart cities, port, airport, etc.). There is an opportunity for Czech exporters in the supply of technologies, security devices, intelligent systems, air conditioning units, air purifiers, generators and other related equipment, there is great potential in energy-saving and innovative technologies. E.g. automated control of HVAC, electric lighting, shading, access control, security and fire protection systems and other interrelated building management systems – smart building solutions, IoT. The expansion and modernization of the international airport is still ongoing, involving the construction of a new terminal. An important project remains the future construction of a marine terminal on Bubiyan Island, which should become the largest port in the northern Gulf. Furthermore, the construction and reconstruction of other infrastructure projects, such as bridges, roads and other large investment units, such as the northern economic zone or silk city, are planned.

Defense industry

The Czech Republic has built a good reputation in the field of defense industry in Kuwait. It is possible to apply both in state contracts for armaments, e.g. supplies of ammunition, mortars, armored vehicles, parts, unmanned helicopters, drones, as well as in the provision of radar and other systems. Supplies of sporting or hunting weapons and cartridges are also promising.

Healthcare and pharmaceutical industry

Kuwait continues to invest in public healthcare with the aim of further expanding capacities and increasing the quality of services provided by state hospitals and private providers. Due to the lack of own qualified workforce, the offer of systems that make the work of doctors more efficient can be interesting. Due to the spread of a healthy lifestyle and the emphasis on appearance, various nutritional supplements for fitness or a wide range of vitamins, drinks and also cosmetics can be applied in the Kuwaiti market.

Agricultural and food industry

Kuwait imports most of its food, although it has recently been trying to increase local self-sufficiency, e.g. by building farms. Czech companies could therefore establish themselves in the supply of innovative agricultural technologies and systems with an aspect for demanding climatic conditions. The opportunity is in the import of embryos or feed mixtures, as well as in the supply of particularly durable foods, some fresh vegetables, fruits, dairy products, cheeses, food supplements, while it is necessary to meet demanding requirements for certification and comply with the specifics of “halal”.

Water management and waste industry

Kuwait addresses the shortage of drinking water supplies by desalinizing seawater, thereby constantly increasing the salt content of seawater. It also has to deal with the burdens from the past caused by the Iraqi invasion and the underdeveloped waste disposal system (e.g. soil remediation, tire dumps), therefore it launches environmental restoration programs and plans using high-tech and sophisticated means. Czech companies could contribute to this effort with their innovative solutions, e.g. in the field of ecological recycling, soil remediation, innovative systems for obtaining drinking water and in the field of wastewater treatment.

Mining, mining and oil industry

As the world’s leading oil producer, Kuwait will continue to demand technology, services and material to maintain, modernize and expand its mining, refining, processing and distribution infrastructure in the near future. Czech companies could apply by subcontracting valves, pumps, compressors and smart measuring/control technology and other related technologies.

Especially in the post-Covid era, greater attention is paid to accelerating the digitization of business and state administration. There is great potential in Kuwait for Czech ICT companies, software developers and especially smartphone applications and digital service providers. The use of a wide range of services using mobile applications is growing, from ordering food and ready meals, through electronic banking, e-government to e-health. The demand for IT services, systems, technologies and applications will continue to grow in the future. The coronavirus pandemic in Kuwait is already transforming a number of business models in order to find solutions responsive to the new era. Kitchen equipment could also be used in the Kuwaiti market. However, it must be taken into account that there is a lot of competition on the market. It is necessary to obtain the appropriate certification and a reliable local distributor.

Kuwait Trade