The New Kuwait 2035 strategic plan, which reportedly has already spent over US$60 billion on various development projects and expects to spend a further $100 billion on upcoming schemes, envisions transforming the country into a financial and cultural hub in the region by the year 2035.
Many of the mega projects outlined in the plan, including in energy, infrastructure, construction, health, housing, education and information technology are under-construction or in various phases of pre-tendering and tendering.
Among ongoing mega projects are the Mubarak Al-Kabeer Port on Boubyan Island, which when completed would become the largest port in the Middle-East; the Al-Zour Oil Refinery and Petrochemical complex, described as one of the largest refineries in the world, and the 36-km long Jaber Al-Sabah causeway across Kuwait Bay.
The causeway, touted as one of the largest infrastructure projects in the region, will on inauguration link Kuwait City to Sabbiyah area to the north-east, while a spur of the bridge will lead to Doha in the north.
Meanwhile, the planned Silk City, a 250-square-km urban development to the north of the capital, considered one of largest marine-front projects in the world, and converting five islands off the Kuwait coastline into economic and recreation zones, are other mega projects in the pipeline.
Some other ongoing or planned projects include expansion and construction of a new passenger terminal at Kuwait International Airport, and the Kuwait National Railroad project that will provide internal rail connections and eventually extend to become part of the pan-Gulf railway network. In addition, there are several major and minor projects that are in various phases of development, including in constructing new cities, hospitals, colleges, power and desalination plants, and renewable energy complexes.
Though Kuwait has the financial resources and reserves to self-finance many of the projects envisioned in the New Kuwait plan, it is constrained by the fact that over 90 percent of its annual revenues are dependent on unstable global oil-prices. The unpredictability and volatility of international oil prices — which, for instance, fell from a high of $110 in June 2014 to a low of $36 in February 2016 — has meant that Kuwait has experienced financial crunches that delayed funding to several ongoing projects.
However, rather than dip into the country’s copious sovereign wealth to make up for shortfalls in revenues and funding projects, the government has opted for deficit financing and borrowing on domestic and international debt markets. By leveraging its solid financials and strong ratings from international agencies — based on the country’s wealth fund of around $600 billion and its investments abroad that are managed by Kuwait Investment Authority — the government was able to successfully sell $3.5 billion of five-year bonds and $4.5 billion of 10-year debt on the debt market in March 2017. According to bankers connected with the sale, orders for the issue totaled a massive $29 billion.
The government is also keen to encourage greater private sector participation, in both funding and implementing, many of the construction projects envisioned in the New Kuwait plan. Several ongoing and upcoming projects in transport, real estate development, renewable energy sources, power, water and solid waste management are being planned under the public-private-partnership (PPP) format.
In addition, the government is increasingly looking at enhancing foreign direct investments, both individual and institutional, to support the country’s growth and development. The recent Sino-Kuwait Investment Forum that was held in Shanghai, China, should be seen in this light, and reflects Kuwait’s keenness to attract foreign investments and cooperation for its development plans.
The one-day investment forum held on 22 November, was jointly organized by Kuwait’s Ministry of Finance, the Kuwait Investment Authority (KIA) and the Kuwait Direct Investment Promotion Authority (KDIPA). The event witnessed the participation of a high-level delegation from Kuwait headed by the country’s Finance Minister and Chairman of the Board of Directors of Kuwait Investment Authority (KIA) Dr. Nayef Al-Hajraf, and which included the CEO of Kuwait Petroleum Corporation, Nizar Al-Adsani, the Managing Director of KIA, Farouk Bastaki, and the Board of Trustees member of Silk City and Five Islands, Amran Hayat. On the Chinese side, high-profile representatives from around 400 leading Chinese companies, including the Director General of China Constructions Company Yang Chu Sin attended the forum.
The gathering discussed investment opportunities available in Kuwait, including in oil, construction, housing, infrastructure, information-technology and other related sectors. The forum also helped highlight the specific attractions of Kuwait market — in a region that already sees significant foreign investments — as well as efforts exerted by the government to enhance the business and foreign investment environment, especially the recent developments in the regulatory and legal framework.
Speaking at the forum, Dr. Hajraf said the visit by His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah to Beijing in July of this year and his meeting with Chinese President Xi Jinping, catalyzed existing Kuwait-Sino relations and gave an added impetus to ongoing cooperation between the two sides in all fields. He added that the forum held high potential for strategic economic partnership between the two countries and that “it could propel bilateral ties between Kuwait and China to new levels, while providing an opportunity to examine the many investment potentials in both countries, and opening doors for Kuwait’s burgeoning private-sector to work with Chinese companies”.
For his part, Al-Adsani said that KPC has planned a large number of gas and oil projects, as part of its 2040 strategy, and he hoped that Chinese companies would take part in executing them. He pointed out that KPC planned to spend $100 billion as part of this “expansion strategy”, including in new explorations, drilling and developing oil fields.
Earlier this year, while speaking at the Kuwait Investment Forum, which was held in Kuwait City in March, the Chairman of China Council for the Promotion of International Trade (CCPIT), Jiang Zengwei, said that China stood ready to help Kuwait develop a diversified economy. He added the CCPIT was eager to enhance cooperation in various fields, including in projects that fell within the framework of the China’s Belt and Road Initiative and Kuwait’s Vision 2035, such as the Silk City and Five Island Development Project in Kuwait.
Interestingly, ahead of the investment forum in Shanghai, the Head of the apparatus for developing the planned Silk City and Boubyan Island, Faisal Al- Medlej, and China’s Vice-Chairman of the National Development and Reform Commission, Ning Jizhe, signed a memorandum of understanding on forming a mechanism for development of cooperation for Silk City and the Five Islands. Though Kuwait has categorically denied reports of leasing the five islands to China, it is clear that Chinese presence and investments in the development of New Kuwait is expected to increase in the coming years.