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Kuwait, 20 February 2021: In a policy proposal exclusively published on Kuwaitimpakt.com, the Kuwait Economic Society (KESOC) today called for the immediate establishment of a KD125 million fund to help small and medium enterprises weather COVID-19 related lockdowns. 

The document presents the critical state of Kuwait’s SMEs and proposes the establishment of the “Ina’ash SME Fund” to cover rents and waive a range of government duties in an effort to resuscitate the sector, as captured by its name. Ina’ash is Arabic for ‘resuscitate” or “to resuscitate”.

To benefit from the grants, waivers and protections offered by the fund, which has already received the endorsement of Kuwait University’s College of Business Administration Excellence Center, participating businesses must commit to trade with other fund benefactors, share data, and join an online procurement platform. 

The proposal calls upon the government to set up a two-year Special Purpose Vehicle (SPV), which disburses grants to companies entering the fund voluntarily. Benefits of joining the fund include:

  1. Reimbursement of 25% of the annual rental value for companies.
  2. Waiving PIFSS subscription for one-year, to be covered by the fund for Chapter Five registrants.
  3. Exemption on all government fees for one-year, including renewal of licenses, customs duties and clearances.
  4. Waiving registration fees for commercial vehicles/fleets for one year.
  5. Waiving fees on employee transfer and renewal for one year (Ministry of Social Affairs and Labor).
  6. Waiving utilities fees for one year. 
  7. Recommendation to settle dues from government and cooperative societies to businesses within 30 days.
  8. Streamlined SME loans from local banks by establishing a committee to review and facilitate loan options.

Kuwait Economic Society Chairman Mr. Abdul Wahab Muhammad Al-Rasheed, said “Today we published this paper in cooperation with kuwaitimpakt.com, as we believe in the importance of civil society’s contribution to the policy making process. Our goal is to have this policy paper act as a catalyst for decision-makers in Kuwait to provide the much needed relief to Small and Medium Enterprises and not delay it any longer. Kuwait’s economy has been plagued by many challenges over that last year and we aim, through this paper, to present a realistic and viable solution to the SME problem that can be implemented by decision makers.”

The proposal calls for the establishment of a Board of Directors of nine members to manage the INA’ASH SME FUND. In order to ensure good governance, the proposal calls for a balanced representation on the board between government agencies and civil society institutions.In addition to managing the fund, the Board Of Directors would be tasked with coordinating efforts to improve the SME ecosystem in Kuwait, working with the cabinet and legislator on amending Articles 28 and 49 of Private Sector Law (No. 6 of 2010) and insure the issuance of bylaws to law No. 74 of 2019 pertaining to government tenders. 

“Kuwait faces major economic challenges whose repercussions have multiplied in light of the global pandemic. Failure to move to save the small and medium enterprises sector will exacerbate the challenges even more.” said Mohammad Bader Al-Jouan, the head of the Public Policy Committee at the Kuwait Economic Society, “Today, we are locked in a race against time to build a sustainable national economy away from oil by diversifying the production base and increasing the private sector’s contribution to the gross domestic product. Supporting and empowering small and medium enterprises is key to achieving this. Decision-makers should think about the cost of their inaction to the state budget. We believe that failure to properly address the situation will incur a heavy cost in the long run.” 

On the one year anniversary of the global pandemic, the Kuwait Economic Society puts forth a comprehensive solution to assist an integral sector of the economy that has long suffered from the brunt of government delay and inaction. The policy paper can be accessed today through Kuwaitimpakt.com

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About KuwaitImpakt.com

This document was first published on Kuwaitimpakt.com ( @Kuwaitimpakt ), a platform purposely built to house original public policy papers, essays, and data-driven research on matters related to Kuwait’s economy. Our primary goal is to support authors and scholars by attracting a wider readership for their work. Our secondary goal is to build a library of quality home-grown intellectual and academic papers that advance and deepen the discussion on fiscal, economic, and business issues. 

Kuwaitimpakt.com is neither politically funded nor motivated, it is simply a gateway for intellectual exercises. Kuwaitimpakt.com is a non-profit initiative by Bensirri Public Relations.

Twitter / Instagram / LinkedIn: @Kuwaitimpakt

Copyrights:

Copyright © 2021 by the authors. All rights reserved. This document or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the author except for the use of brief quotations

Kuwait, 29 November 2020: KuwaitImpakt.com published today a new paper authored by 29 distinguished Kuwait University scholars titled “Before It’s Too Late: A Vision to Reform the Kuwaiti Economy”. The paper proposes alternative scopes of analysis for the existing economic imbalances in Kuwait and offers solutions for future economic reforms that enable development and safeguards the welfare status of Kuwait and its future generations.

The paper carefully investigates the foundations that led to the current instability and imbalance of the Kuwaiti economy. It identifies the dependency on oil, the fiscal imbalance, a weak educational system, and the inflated public sector as key factors. How the paper differs from the prevailing discourse is that, rather than examining the economy as a disconnected entity, it focuses on the symptoms and impact of these imbalances in all aspects of the socio-economic landscape.

The authors outline five structural imbalances in the Kuwaiti economy that were deepened by accumulating crises, including:

  1. Heavy Dependence on Oil Revenues accounts for 91% of Kuwait’s exports 
  2. Public Finance Imbalance exemplified by the accumulated budget deficits since 2015 amounting to KWD 28 billion
  3. Labor Market Imbalance caused by a bloated public sector, and a low skilled private sector dominated by cheap labor
  4. Poor student rankings on international standardized tests as a result of a Weak Education System
  5. Demographic Imbalance as a net result of other imbalances

“This is not the first time that the urgent need for economic reform has been floated,” said Dhari S. Al-Rasheed, PhD, a signatory to the paper, “but what we seek for this vision is a comprehensive treatment of the economic imbalance that targets the root of the problem rather than its symptoms. It isn’t suitable to deal with the economic sectors as separate units while neglecting the spillover effects of public policies among them.”

Shamlan W. Al-Bahar, PhD, another signatory to the paper added: “This is not the first time that the urgent need for economic reform has been raised and discussed. However, what we seek in this vision is a comprehensive treatment of the economic imbalance that targets the roots of the problem rather than its symptoms. It would be a mistake to deal with economic imbalances as separate units while neglecting the spillover effects of public policies across them. Our aim is not to propose short-sighted solutions that disregard their long-term effects, or superficially associating them to the state’s financial situation, so that the calls for reform are not contingent on the price of oil.”

‘Before It’s Too Late’ sets forth a corrective vision divided into five axes that should be taken as an integrated approach, it includes: 

  1. A private sector with added value to the national economy.
  2. Openness to neighboring regional markets by expanding trade relationships.
  3. Small and medium enterprises that expand the economic base and create national job opportunities.
  4. Defining the concept of “future generations”, clarifying the objectives of their reserve, and defining a general framework for the timeline and the circumstances that warrant withdrawing from it.
  5. Periodically assessing the use of state-owned industrial and agricultural plots to prevent subletting and use contrary to their intended economic objectives.
  6. Reforming social and consumer subsidies by allocating them equitably based on income level.
  7. Modifying the salary scale in the public sector to reflect the productive value of each job and achieve competitiveness with the private sector.
  8. Imposing a tax on businesses for employing foreign workers, and directing their revenues to incentivize and train Kuwaitis to work in the private sector.
  9. Increasing the research budget and raising the standards for obtaining it.
  10. Establishing a public commission to implement the immigration and residency policy and regulate the recruitment of foreign workers and their rights and obligations.

The paper was authored by 29 distinguished scholars who specialize in economic and business administration at the College of Business Administration at Kuwait University. They were at the academic frontlines during the 2008 economic crash, and have continued to monitor the influx of data and research that has emerged since and its continued consequences on Kuwait. Their ethos is based on concrete economic and scientific research that offers well-rounded and viable solutions.

The 29 scholars behind this vision are: 

  • Nawaf M. Al-Abduljader, PhD
  • Abdulrahman M. Al-Taweel, PhD
  • Shamlan W. Al-Bahar, PhD
  • Dhari S. Al-Rasheed, PhD
  • Saoud A. Al-Thaqib, PhD
  • Barrak G. Al-Gharablli, PhD
  • Ahmed M. Ashkanani, PhD
  • Yaqoub A. Baqir, PhD
  • Mohammad N. Al-Marzouq, PhD
  • Sulaiman H. Al-Bader, PhD
  • Abdulrahman A. Al-Rifaie, PhD
  • Hessa H. Al-Aijan, PhD
  • Salman A. Al-Jazzaf, PhD
  • Saad A. Al-Nahid, PhD
  • Ahmed F. Al-Qassar, PhD
  • Abdullah S. Al-Awadhi, PhD
  • Mohammad I. Askar, PhD
  • Yousef J. Abdulsalam, PhD
  • Abrar A. Abul, PhD
  • Ali E. Dashti, PhD
  • Sayed M. Al-Mahri, PhD
  • Abrar R. Al-Hassan, PhD
  • Hussain A. Ali, PhD
  • Sarah E. Khalaf, PhD
  • Dalal S. Ahmed, PhD
  • Zainab M. Al-Bader, PhD
  • Mohammad J. Ghlom, PhD
  • Ebrahim K. Al-Ebrahim, PhD
  • Asma’a A. Al-Fadhel, Ph

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About KuwaitImpakt.com

Copyright © 2020 by the authors. All rights reserved. This document or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the author except for the use of brief quotations. This document was first published on Kuwaitimpakt.com ( @Kuwaitimpakt ), a platform purposely built to house original public policy papers, essays, and data-driven research on matters related to Kuwait’s economy. Our primary goal is to support authors and scholars by attracting a wider readership for their work. Our secondary goal is to build a library of quality home-grown intellectual and academic papers that advance and deepen the discussion on fiscal, economic, and business issues. 

Kuwaitimpakt.com is neither politically funded nor motivated, it is simply a gateway for intellectual exercises. Kuwaitimpakt.com is a non-profit initiative by Bensirri Public Relations.

Twitter / Instagram / LinkedIn: @Kuwaitimpakt

Journalist may contact: Fawaz Alsirri / fawaz@bensirri.com

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Ali Al-Salim writes for KuwaitImpakt.com on ways for Kuwait to build a more sustainable economy in the wake of declining oil prices and growing expenses. 

28 September 2020, Kuwait: Newly founded Kuwaitimpakt.com, a gateway for public policy papers in Kuwait, today released an essay suggesting new solutions to Kuwait’s fiscal woes. Titled “New Ideas for Kuwait”, Kuwaiti Author Ali Al-Salim proposes the replacement of all government subsidies with an annual basic income of around USD 50,000, paid to every citizen of working age, as a means to overcome the hiring burden for the government, and the economic and political bottlenecks of the existing system. He argues that the net result will move Kuwait towards a more sustainable economy, relieve the pressure on the government to accept every job application, and end wasteful spending overnight. 

In his paper, investment consultant Al-Salim takes stock of Kuwait’s fiscal and economic issues, asserting that consecutive budget deficits since 2014 have now entirely eroded Kuwait’s treasury. With oil income looking weaker and expenditures growing, the state’s budget figures simply do not balance and shortfalls are set to become larger. He says, articles in the Kuwaiti Constitution guaranteeing government jobs for nationals have over the years created a bloated public sector, and any government plans for economic reform are usually met with objection by Kuwait’s elected parliament.

Al-Salim proposes fresh solutions to Kuwait’s long-standing problems, his proposals are unconventional to say the least. He puts forth an argument that the Kuwaiti government should utilize existing stipend schemes to provide all adult citizens with unconditional annual salaries of USD 50,000 per adult under no time commitment, a scheme commonly referred to as Universal Basic Income in economic circles. Al-Salim argues this process will optimize wealth distribution in compliance with the Kuwaiti constitution without the need to create any more jobs in the bloated public sector. This new incentive, he argues in his paper, should make way for new structural reforms for the government to undertake that include privatization, market liberalization and subsidy overhaul.

“With a lighter burden to create unproductive clerical jobs, it alleviates the pressure on the government to absorb citizens into ministries already suffocating from bureaucracy,” says Al-Salim, stating that his proposal is an “effective and feasible solution for Kuwait is to streamline the oil-revenue distribution mechanism.”

In “New Ideas for Kuwait” Al-Salim puts forth a radical solution to Kuwait’s chronic economic problems, pushing the reader to explore new possibilities with minimal political backlash from existing political structures, a win-win situation for a country facing great uncertainties.  

About the Author

Ali Al-Salim (@alialsalim) has been an investor and advisor for close to 20 years. His interests include Gulf capital markets, economics, SMEs, entrepreneurship, and corporate governance. His background incorporates experience working at large investment companies both in Kuwait and the United Kingdom. For the past 10 years he has co-managed a successful consulting practice in Kuwait, advising primarily international clients. A frequent commentator on Gulf finance and economics, he spends his time between Kuwait and Dubai. 

The essay “New Ideas for Kuwait” by Ali Al-Salim may be downloaded from KuwaitImpakt.com

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About KuwaitImpakt.com

KuwaitImpakt.com is a platform purposely built to house original public policy papers, essays, and data-driven research on matters related to Kuwait’s economy. Our primary goal is to support authors and scholars by attracting a wider readership for their work. Our secondary goal is to build a library of quality home-grown intellectual and academic papers that advance and deepen the discussion on fiscal, economic, and business issues. Kuwaitimpakt.com is neither politically driven nor motivated, we are simply a gateway for intellectual exercises. KuwaitImpakt.com is a platform by Bensirri PR, Kuwait.

Journalist may contact: Fawaz Alsirri / fawaz@bensirri.com

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