Suspension of expatriate licenses to hit Kuwait’s economy hard

• Economists questioned the impact on companies with valid contracts owned or co-owned by expatriates and wondered about the future of these projects following the Ministry of Commerce and Industry decision’s implementation.

• Dr. Issam Al-Tawari, chairman of the board of directors of Newberry Consulting, said the ministry’s decision affects the operations of existing companies, including the 45,000 businesses that could be impacted.

The Ministry of Commerce and Industry’s recent circular, which suspends all expatriate licenses and restricts their entry into companies unless their residency complies with Article 19, has faced widespread criticism from economists. They argue that the circular reflects misplaced enthusiasm and is a hasty decision likely to disrupt the business environment and economy in Kuwait, affecting companies of all sizes, according to Al Jarida newspaper.

Economists told Al Jarida newspaper that the circular was issued without specifying the suspension duration or providing a detailed implementation mechanism. They questioned the impact on companies with valid contracts owned or co-owned by expatriates and wondered about the future of these projects following the decision’s implementation.

They noted that decision-makers failed to consider Kuwait’s work environment and whether companies could adjust without causing confusion, highlighting the potential negative impact on the Kuwaiti labor market. They urged the ministry to reconsider and thoroughly review the circular, suggesting it be canceled temporarily for further study.

“The ministry’s new decision will disrupt the business market”

Saleh Al-Salmi, Chairman of the Board of Directors of the International Financial Investment Company (IFA), described the circular as a ‘bad decision’ and emphasized the need for greater clarity.

Al-Salmi criticized the ministry’s decision to temporarily suspend licenses involving expatriates, except for Article 19 residency, as poor and lacking clarity. He warned it will disrupt the business market and create confusion due to its ambiguous implementation.

He added that it will cause significant harm to both small and large businesses, particularly affecting individual companies and personal licenses issued by the Ministry of Commerce. Al-Salmi questioned whether these decisions are mandated by the state or if they are recent changes.

He noted that the private sector’s work system has been established for years and changing it overnight is difficult and confusing. Al-Salmi explained that any reorganization should be carefully studied and executed in a more disciplined manner to avoid causing confusion in projects.

He added that since the state’s establishment, the system has operated under long-standing rules, including limits on foreign or expatriate ownership to less than 49 percent. Such decisions, he warned, cause major disruptions in the business environment and create concerns about localization and investment.

He pointed out that while the state is supposed to facilitate the business environment, this decision contradicts that objective.

“The decision lacks clear mechanism”

Khaled Al-Abdulghani, a member of the Kuwaiti Industries Union, agreed, stressing that the circular to temporarily suspend expatriate ownership and partnership is wrong and will negatively impact industrial sector companies.

He added, “We do not know whether this decision was well thought out, but we should be given a chance to correct the situation. While a temporary suspension is not problematic, its impact on daily work life is very negative, especially since it affects everyone. The duration of the suspension has not been specified.”

He pointed out that such decisions should not be made without a clear mechanism or pre-proposed solutions. If there were issues with this matter, all solutions should have been proposed in advance, along with a clear outline of the steps to be taken and a deadline for resolving the situation.

He stated that the temporary suspension, as implemented, is not permissible, especially given the presence of interconnected companies. He described it as a wrong, vague, and ill-considered decision with negative repercussions likely to emerge in the near future.

He emphasized that any decision should go through several stages before being finalized. For the temporary suspension and correction, he argued that a grace period should be granted before implementing the decision, suggesting a period of three to six months, along with clear explanations of subsequent decisions and timelines.

He revealed that the decision impacts industrial companies, particularly those with foreign partners, as well as companies in other sectors. He described the decision as random and poorly thought out.

When asked about the fate of companies with contracts involving expatriates, he confirmed that it will create confusion in business operations. The uncertainty surrounding the impact on companies with foreign partners will likely lead to significant disruptions and halt many industrial sector interests.

“Sudden stops have a negative impact on all businesses in Kuwait”

Badour Al-Sumait, head of the Business and Professional Women Network, confirmed that this decision ‘disrupts many businesses.’

Al-Sumait said that the decision to suspend licenses due to the presence of a foreign partner is negative and disrupts many businesses. She stressed that any decision must be accompanied by appropriate solutions, as the need to issue a document or paper at every step creates bureaucracy. She noted that sudden stops have a negative impact on all businesses in the country.

When asked about the conditions regulating the process, she acknowledged that while it is within a country’s right to set its own regulations, the conditions of Article 19 must be clearly defined.

She added that the conditions should be realistic and not prohibitive, as some non-Kuwaiti partners are investors with the financial capacity to invest in Kuwait, which aligns with the state’s goal of attracting capital. The state aims to encourage foreign investors, localize funds, and increase non-oil revenues by attracting more investments. However, this decision contradicts that goal and hinders the development of the state budget through foreign investments.

Regarding the impact on small and medium enterprises, Al-Sumait emphasized that there will be significant effects. Many women-owned businesses with foreign partners, who have supported and added value to their ventures, will be particularly affected by this sudden stop.

“Ministry’s decision impacts Kuwaiti labor market”

Dr. Issam Al-Tawari, chairman of the board of directors of Newberry Consulting, called the decision ‘unsuccessful,’ noting that it affects the operations of existing companies, including the 45,000 businesses that could be impacted.

He explained that if there is a problem, the solution should not be to halt companies’ operations and interests, but to find solutions that are gradual rather than retroactive. He added that he believes the Ministry of Commerce and Industry may have relied on an interpretation of ‘labor force’ which he considers incorrect, arguing that ownership should be considered separately from management.

He noted that those with Article 19 residency are very few and typically involve significant capital, relevant mainly to large companies, whereas service companies, which support small and medium-sized businesses, do not require such capital.

He criticized decision-makers for not considering the realities of the work environment and the capacity of companies to adjust, stating that the impact of these decisions on the Kuwaiti labor market was not adequately studied.

Al-Tawari hopes the decision will be reconsidered, studied more thoroughly, or canceled. He stressed that if there are issues, they should be addressed with solutions rather than by suspension.