The Industrial Bank of Kuwait K.S.C. (IBK)
The government has participated in the establishment
of The Industrial Bank of Kuwait (IBK) which offers
soft loans to the industrial sector, was established
in late 1973 as a joint venture between the Ministry
of Finance, the Central Bank of Kuwait, commercial
banks, investment companies and some large industrial
establishments.
The primary aim of IBK is to promote industrial
development in Kuwait by participating in the
development of long-term strategyfor industrial
growth in Kuwait and identifying sectors and activities
which best suit local conditions and constrains.
The cumulative industrial loan commitments since
the Bank started until the end of 2001 reached
KD 489.652 million, provided to 607 industrial
projects. IBK's financing represented, on an average
49.7 per cent of the total cost of any project.
Industrial loan commitments in 2001 increased
by 203.7 per cent compared to 2000 level. Total
industrial loan commitments in 2001reached KD
20.365 million provided to 27 industrial projects,
compared to KD 6.705 millon provided to 15 industrial
projects in 2000.
The agriculture credit portfolio, terminated due
to Iraqi aggression of 1990, restarted its operations
in 2001. From the restart of its operations till
the end of 2001, the total agricultural loan commitments
by the portfolio reached KD 4,052,850, provided
to 43 agricultural projects.
Public Authority for Industry
(PAI)
PAI is responsible for issuing industrial licences
and developing local industry. Its objectives include
encouraging, protecting and supporting the local
industry. Its functions include drawing up an industrial
plan, proposing industrial sites, providing the
necessary infrastructure and industrial services.
PAI is responsible for rules and procedures regulating
the granting or cancellation of industrial licences.
It supervises the compliance with the Kuwaiti, Gulf
and International standards and specifications dictated
by the regulations for imported and local products.
It is also responsible for verifying the compliance
of any industrial project with the domestic and
international rules governing the environment protection.
Its functions include carrying out studies relevant
to the industrial activity and ways to support it
and determine the means for protection of domestic
products.
Industrial Areas and Plots
Clause (1), Article (15) of the Industrial law allows
industrial to apply for land plot to set up the
industry. Such applications may be submitted to
the competent authority which allocates these land
plots with the consent of the Ministry of Commerce
and Industry.
While the preparation and provision of infrastructure
and services cost the government more than one KD
per sq. meter the subsidised offer to industries
may be only 5 - 10 fils per sq. meter for periods
up to 50 years. In Sabhan and Mina Abdullah areas
the subsidised cost is about 200 fils per sq. meter.
The number of industrial areas in Kuwait may reach
ten. While some areas are fully developed with all
necessary services provided, some new areas are
still under development.
According to the Ministry of Commerce and Industry
1997 statistics, 33% of the industrial establishments
are in Shuwaikh Industrial area, 27% are in Sabhan
and the rest are distributed in other industrial
areas as follows.
It is worth mentioning that most industrial sectors
are concentrated in two main areas; namely ,Shuwaikh
and Subhan, except the sector of the mining products
which concentrate in Amghara and Senior Contractors
areas.
Kuwait Oil Industry
Production of crude oil and refined products accounts
for nearly half of Gross Domestic Product (GDP)
and over 90 per cent of exports.
Kuwait Petroleum Corporation
Kuwait Petroleum Corporation (KPC), an independent
wholly state-owned public body, is responsible for
all hydrocarbon-related operations in Kuwait and
abroad. KPC buys the crude oil it extracts from
the ground from the State through the Ministry of
Oil at a selling price that is related to world
market prices. KPC then sells and distributes the
oil, or refines it and markets the petroleum products.
The international marketing of oil, products and
liquefied gas is carried out from KPC's headquarters
in Kuwait City. But all other main operations, such
as exploration, production, refining, petrochemicals,
transport, and distribution, are effected through
KPC's subsidiaries, and the Corporation has a worldwide
vertically integrated network of businesses extending
from the wellhead to the petrol pump, including
refineries and petrol stations in Europe.
Petrochemicals
PIC, KPC's wholly-owned subsidiary, produces, markets
and distributes petrochemicals. It has fertiliser
and salt and chlorine plants in Kuwait and is involved
in joint ventures abroad. PIC has a petrochemicals
complex in Shuaiba.
The complex includes a polypropylene plant and plants
for processing olefins. The polypropylene plant
takes feedstock of propylene from KNPC's refinery
in Mina al-Ahmadi and converts it into three types
of plastic material: homopolymer (clear plastic),
random polymer (a strong plastic used for bottles
and lids) and high impact copolymer (used for suitcases
and car bumpers, etc).
The olefins plants, which began operations in November
1997, are owned by EQUATE, a joint venture between
PIC and Union Carbide of the USA. Using local feedstocks,
they produce polyethylene (one of the most commonly
used plastics) and ethylene glycol (which is used
to make polyester for fabrics and plastic bottles).
There are plans to add an aromatics plant, for making
industrial solvents, to the complex in the near
future.
The plans for increasing the crude oil production
capacity from an average of 2.5 million bd to over
3 million bd by year 2005 encompass a number of
projects. Emphasis is on the projects concerning
developing the Kuwait Oil facilities and equipping
them with the latest technologies for enhancing
the production rates of existing reservoirs. Existing
gathering centres are being enhanced and new gathering
centres are being developed. The Supreme Petroleum
Council has recommended the completion of the procedural
requirements for the proposed KPC project to draw
on the technological, financing and marketing capabilities
of international oil companies to develop certain
Kuwaiti oil fields, specially the oil fields situated
northwest of the country, namely Al-Rawdhatain,
Al-Sabriya, Ritqa, Abdali, Bahra, Manaqeesh and
Um Qadeer.
KPC has plans to execute several projects for production
of natural gas with the technical consultancy of
the American 'Shell' company. KOC has also announced
a project for building a new gas liquefaction plant
north of the country at a cost of US $ 150 - 175
million.
PIC, subsidiary of KPC, has several petrochemical
industry projects. PIC is implementing a project
for establishment of a new plant to produce methanol
at an average capacity of 2000 metric tons per day.
The production will rely on using natural gas and
maximizing the utilization of the plant's available
equipment. Methanol is used in production of unleaded
fuel, paint solvents, adhesives and insulation materials.
The year 2001 witnessed the completion of the first
catalyst production plant by Kuwaiti Company for
the Manufacturing of Catalysts (KCMC). The plant
started operation in April 2001, and aims to produce
various types of catalysts needed by the refined
petroleum products industry, the chemical and petrochemical
industries and water distillation.
The Supreme Petroleum Council has decided in July
2001 to approve an increase in production quota
of Kuwait Foreign Petroleum Exploration Company
(KUFPEC) to a minimum 100,000 barrels and increasing
productivity of KUFPEC to 200,000 bpd by 2010. The
council also approved the second olefines venture
costing 2.2 billion US dollars and approved in principle
the aromatics project of the Petrochemical Industries
Company, estimated at US dollars 1.4 billion. Both
projects belong to Petrochemicals Industries Company
(PIC). The Aromatics project, scheduled for completion
in the year 2005, includes two units , one for the
production of para-xylene (at a capacity of 650,000
tons per year) and the other for producing styrene
(500,000 tons per year).
The second olefines project, also scheduled for
completion by the year 2005, is complimentary to
the Equate venture, comprises a unit for division
of ethane and propane for the production of ethylene
with productivity estimated at 850,000 tons per
year, two units for the production of low-density
polyethylene with productivity estimated at 450
tons a year in addition to ethylene glycol estimated
productivity of 650,000 tons a year and propylene
70,000 tons per year.
According to the latest available statistics the
natural gas reserves in the State of Kuwait are
estimated at 52400 million cubic meters. KPC plans
to execute several projects to benefit from the
natural gas reserves available in the Kuwaiti underground.
Work was initiated in mid 2000 for the establishment
of the plant for de-sulfurization of natural gas
at a cost of $92 million.
Non-Oil Industries
A wide range of products are being manufactured
in Kuwait covering food products, household durable
products, textile, paper, detergents, construction
materials, furniture, decor and electrical, mechanical
and industrial products.
Small industrial set ups (employing less than 10
workers) represent 84% of the total industrial units,
while medium industrial set ups (employing 10 -
49 workers) represent about 14 %.
The majority of the small set ups manufacture textiles
and ready-made garments. Metal products industry
occupies second position, manufacture of wooden
products and furniture and foodstuff follow next.
The value added in the non-oil sectors (excluding
the refined petroleum products) at current prices
rose by KD 146.3 to KD 5026.1 million in the year
2001 compared to an increase of KD 112.1 million
in the year 2000. This development, along with the
decline in the total value added in the oil sectors
(encompassing the production of crude oil, natural
gas and the refined petroleum products industry)
led to the increase of the relative contribution
of non-oil sector to the GDP at current prices from
44.4% in the year 2000 to 50% in 2001.
According to data prepared by the Ministry of Commerce
and Industry, the value of the Kuwaiti private sector
exports of goods, for which national-origincertificates
were issued, declined in the year 2001 to KD 129.6
million from KD 139.6 million. Nonethe less, the
relative importance of the Kuwaiti private sector
exports of national-origin goods in the total value
of Kuwaits non-oil exports of national-origin goods
incresed to 42.4% in the year 2001 from 41.9% in
the previous year.
The Kuwait Free Trade
Zone
The Kuwait Free Trade Zone, established in 1998
at Shuwaikh harbour, offers state-of-the-art facilities
ranging from warehousing, light industries, offices,
open land for development, kiosks and traders exchange
market and exhibition facilities. These combined
products with a continued commitment to providing
premium and timely services to clients enables KFTZ
investors to focus on growth and business development.
The information industry is getting special attention
and efforts are being exerted to attract international
entrepreneurs to Kuwait. Kuwait Free Trade Zone
has reserved around 700,000 square meters for such
industries. The strategic location of Kuwait is
a plus point in attracting foreign companies to
the Kuwait Free Trade Zone.
Attracting Foreign Investors
With an aim to attract foreign investments, the
draft law on foreign investment which was approved
by the Cabinet in June 1999, got approval of the
Parliament in April 2001 as Law 8/2000. It is
supposed to provide the best incentives in the
region for foreign investors. It aims at transferring
tecnology and funds besides creating new jobs.
It allows upto 100 per cent foreign ownership
of Kuwaiti companies. The Council of Ministers
will determine the economic sectors of the projects.
Upon recommendation from Foreign Investment Committee
and approval of the concerned authorities, the
minister will issue a licence to the foreign investor.
As per the law investment projects can be exempted
from income tax for a period of upto ten years,
as well as be allotted land and real estate required
for the project. Part or full exemption from custom
duties may also be granted on the import of machines,
equipment, spare parts, raw materials, semi-processed
goods, and wrapping and packaging materials.
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