THE TIMES KUWAIT REPORT
Decision by the United Arab Emirates last week to further liberalize its visa and residency programs for foreigners, is yet another step undertaken by the Emirates to enhance its appeal to global investors and attract billions of dollars in foreign direct investment (FDI). The new measures are also expected to encourage more entrepreneurs, skilled workers and global talent to relocate to the UAE.
In what is seen as one of the biggest overhauls of the UAE visa residency system in years, on 5 September, the UAE Government formally ratified the Golden Visa scheme. The scheme was first announced by UAE Vice-President and Ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum in May, 2019. “The Golden Card is our way to welcome all those seeking to be a part of the UAE’s success story and looking to make the Emirates their second home,” said Sheikh Mohammed while announcing the project.
The Golden Visa scheme aims to give exceptional workers in the fields of health, engineering science and art, as well as foreign investors, the opportunity to establish deeper roots in the country and allow the nation to benefit from their expertise. The focus is on attracting and retaining global talents and skilled workers, boosting the country’s competitiveness and enhancing flexibility of its job market, while fostering a greater sense of stability among UAE residents and families, noted a government statement issued on the occasion.
As per the new amendments, entrepreneurs can avail of a Golden Residence, if they own or are a partner in a start-up registered in the country in the category of small and medium enterprises (SME) that generates annual revenue of not less than Dh1 million. Real estate investors can obtain a Golden Residence when purchasing a property worth no less than Dh2 million ($540,000), with foreign investors also entitled to obtain the Golden Residence when purchasing one or more off-plan properties of no less than Dh2 million from approved local real estate companies.
The new system will also make it easier for skilled professionals currently working in the UAE and earning salaries of over Dh30,000 ($8,000) or more a month to gain a Golden Visa. The Golden Residence enables the holder to sponsor family members, including spouse and children regardless of their age, and to sponsor domestic workers without limiting their number. There is also no restriction related to the maximum duration of stay outside the UAE in order to keep the Golden Residence valid.
Along with the new Golden Visa, the government also announced a series of other changes to entry and residence visa rules that regulate criteria for those seeking long-term residence in the Emirates. In some cases, these entry permits will now facilitate the entry of skilled and talented people from around the world without the need for a sponsor or host to grant an entry visa.
Meanwhile, in sharp contrast, in mid-August, the Ministry of Interior (MoI) in Kuwait issued verbal instructions to its Residency Affairs Department in all six governorates to stop issuing new family and visit visas to expats until further notice, The decision reportedly comes as part of plans to revamp and restructure visa procedures and align them with those on offer by neighboring states, and to meet the country’s needs and serve the best interests of its people.
Incidentally, the new directives by MoI come in the wake of an agreement in late March by the National Assembly’s Committee for Interior Security and Defense to accept the proposals submitted by the Cabinet to amend laws governing the residency of foreigners and citizenship. The new amendments were expected to improve the country’s investment climate and attract foreign investors.
The proposed amendments to Degree No-17 of 1959, which governs the residency of foreigners in the country, would grant foreign investors and individuals owning real estate in Kuwait a residence permit for periods not exceeding 15 years, subject to renewal. The articles of the bill include raising the maximum residency period for expats working in the country to five years, with the provision that would enable foreigners to renew their residency permits for further five-year periods.
It would also permit foreigners visiting Kuwait to temporarily reside in the country for a period of up to three months, and to obtain a renewal of their temporary residency for a period not exceeding one year. Furthermore, the amendments would permit the children of a Kuwaiti woman married to a foreign national to obtain a residency permit for a period of 10 years that could subsequently be renewed. Currently, the Kuwaiti law on citizenship grants Kuwaiti citizenship to a child only if the father is Kuwaiti as per Article 2 of Royal Decree No. 15 of 1959.
In addition, the proposed amendments to the same decree on Kuwait citizenship stipulates that a foreign female divorcee or widow of a Kuwaiti citizen who does not have children from him,could still obtain Kuwaiti citizenship after 18 years of marriage. Under the current law of citizenship, foreign women who are divorced or widows of Kuwaiti husbands must have children from them to obtain Kuwaiti citizenship. The amendments would also allow a Kuwaiti husband to naturalize more than one wife in accordance with the stipulated conditions and controls.
Finally, the proposed amendments would prohibit Kuwaiti citizens ‘from exploiting the recruitment or facilitation of the recruitment of a foreigner’, by creating fake employment positions to obtain residency permits for expatriates. It would also prohibit getting financial compensation from foreigners for the visas in lieu of paying them wages, or getting financial compensation from them to renew their employment residency permits, and unjustifiably refraining from paying wages to expats workers in Kuwait.
The proposed amendments to residency and visa rules would however need the final approval from the country’s contentious parliament, where voices have already been raised against several conditions stipulated in the amendments. Moreover, less than two weeks after the Cabinet submitted the residency amendments, the government tendered its resignation on 5 April, citing rising disputes with deputies, and ahead of a no-confidence vote tabled against the former prime-minister.
The cabinet’s resignation, which was followed by dissolution of parliament, came barely three months after its formation. Kuwait is the only Gulf Cooperation Council (GCC) state with a fully elected parliament, which enjoys wide supervisory and legislative powers granted by the Constitution. Over the years the deputies have not shied away from wielding these powers, often without restraint and irrespective of its consequences on the country.
Repeated disputes between elected lawmakers and an appointed government have resulted in several cabinet resignations and parliament dissolutions over the last decade. The political instability has thwarted urgently needed fiscal reforms, discouraged investments, and hindered the country’s growth and development relative to its peers in neighboring GCC states.
Ease of relocation to a country for individuals and organizations through simple and effortless residency and visit visa procedures are often considered a crucial criteria to attracting global investors and investments to a country. Though efforts in this direction in Kuwait have now been stalled until the swearing-in of a new parliament, after elections slated for the end of September, the importance of laws that facilitate entry and residency have been highlighted by local and international experts.
The need to ease entry and residency permits was also underlined in an annual report on enhancing the investment climate in the country. Despite scant media coverage, and its seeming insignificance to those elected and selected to run the country, the Sixth Annual report by the Kuwait Direct Investment Promotion Authority (KDIPA), which is responsible for promoting and regulating foreign direct investments in Kuwait, is of import to everyone who has a stake in ensuring the continued welfare and sustainability of the country and its economy.
The executive summary to the sixth iteration of the KDIPA report covering fiscal year 2020-21 notes that despite the unprecedented disruptions caused by the COVID-19 global pandemic locally and globally, the authority introduced several proactive measures that helped to attract and approve over KD163 million in direct investments during the review period. The report also noted that during this period the authority granted tax exemption certificates to several licensed investment entities, on the basis of their performance. These tax exemptions facilitate long-term residency permits to investors of these firms.
However, it needs to be pointed out that notwithstanding the diligent efforts of KDIPA, foreign direct investments have played only a relatively small role in Kuwait’s overall economy. with the cumulative approved direct investments from the inception of KDIPA in 2015 to the end of March 2021 totaling around KD1.2 billion and FDI stock amounting to only around 11 percent of the country’s GDP in 2019. In contrast, according to a report from the United Nations Conference on Trade and Development (UNCTAD). FDI stock represented 78 percent of Bahrain’s GDP and nearly 30 percent that of Saudi Arabia.
Also, the same UNCTAD report noted that of the $37 billion global flow of investments to West Asia in 2020, an overwhelming large chunk of $20 billion was directed to the UAE. The report pointed out that the Emirates continued to liberalize its FDI regime with the promulgation of the 2020 FDI Decree, which further facilitated foreign investment by extending some of the free zone incentives to the broader economy.
To grab a larger slice of a shrinking global FDI market and compete effectively with regional markets vying for investments, Kuwait will need to attract ‘quality FDI’. Although the KDIPA has been doing a fairly commendable job in this regard, it needs to proactively promote the country as a distinctive destination that seeks value over volume in investments. It needs to seek out and attract global investments that add quantifiable value to the economy, enhance the skill base and contribute to creation of productive jobs in the local market.
The country also needs to ensure the transfer of technology, knowledge and know-how that boosts competitiveness of domestic firms and enables them to successfully engage in global markets. And to achieve all of this while operating in a socially responsible way and in an environmentally sustainable manner. To achieve these investment goals, Kuwait cannot continue to depend on reactionary measures designed to catch-up with offers and incentives made by neighboring states.
The country needs to drive proactive and forward-thinking strategies and tailor policies that overcome domestic imperfections, and implement measures that achieve its long-term objectives. Global investments should be geared to, and directed towards, driving the diversification of the economy away from its overreliance on oil revenues, encouraging greater private sector participation, and offering meaningful jobs to national youth, while allowing it to compete effectively with regional neighbors who have ambitious investment attracting strategies of their own, but are also not encumbered by parliamentary limitations.
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