Kuwait

As Kuwait moves to ramp up oil production, it is preparing to take advantage of rising demand in Asian markets and stable oil prices. However, there are concerns that the country could be draining off its hydrocarbons reserves quickly and spending too much on subsidies and social support schemes and not enough on investments.

In recent weeks, the Ministry of Communications (MoC) has ordered Kuwait’s internet service providers (ISPs) to reduce their pricing by at least 40%. While this move could boost the number of users, some industry participants say that it is the ageing, government-owned, fixed-line communications infrastructure and lack of a clear regulatory framework – and not elevated pricing – that is limiting market expansion.

The government has announced plans to increase allocations to a key investment fund although there are still questions on how this move will affect state spending at home. The decision to strengthen the investment fund comes at a time when the government is also seeking to boost the domestic economy through its latest five-year National Development Plan (NDP).

The construction industry in Kuwait is poised for significant growth on the back of major government investment in infrastructure projects and social facilities, according to data published in August. However, the continuing lack of an approved 2012 budget has effectively meant that the government cannot sign off on any new projects.

Whilst the economy is surging on the back of higher-than-forecast oil prices that are swelling the state coffers, concerns remain over the state’s long-term prospects.

News that the government is seeking a transaction advisor for a new public-private partnership (PPP) schools project signals further opportunities for investors in Kuwait’s education sector.