2006 (MILLIONS OF DINARS)
SOURCE: based on data obtained from:
Arab Planning Institute (API) http://www.arab-api.org National Bank of Kuwait (http://www.nbk.com
Kuwait Central Statistics Office (2009) Statistical Review – Department of Publications and Dissemination.
As for the Kuwait Stock Exchange, it has also witnessed clear growth in the numbers of registered companies and in its market value in recent years. The market, one of the biggest and most active in the Gulf and Arab region, had a market value reaching about 16.7 billion dinars in 2006 (6.7 billion in 2002). As evidence of the outstanding performance of the financial sector, Kuwait recently secured a risk grading of AAA, the highest valuation level given by the leading agencies of international credit classification (such as Standard and Poor‘s, Moodys, Capital Intelligence, the Fitsh Group and Investment Information).
Despite these positive developments, growth in the financial sector and the realization of a positive rate of development in the next five years is conditional upon the sector‘s ability to confront the challenges which might impede future success. Kuwait has responded to this with ―The Kuwait Report 2020:
Transforming Kuwait into a Commercial and Financial Centre‖. This included 23 important initiatives for transforming the country into a specialist, regional financial centre. In this context the most important priority lies in dealing with the administrative and organizational obstacles which confront the sector, and in developing a legislative environment (including updating the legal framework for business operations, and implementing the principles of ―good, organizational,
Item 2002 2003 2004 2005 2006
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management practice‖°. It also includes the establishment of the ―independent body for the financial markets‖ which will organize and oversee the market in a way that enables Kuwait to achieve the international standards laid down by the International Commission for Financial Markets, and thereby raise the level of competition in the banking sector.
The commercial sector has continued to play a limited role in the economic activity of the State. According to the available data, the contribution of the wholesale and retail commercial sector to non-oil GDP was around 8.5% on average. Data from the Kuwait Chamber of Commerce and Industry shows that this sector recorded significant growth in value during the last two years, and resulted in a rise of expenditure which exceeded the billion dinar barrier for 2005 and 2006 (1.01 and 1.09 billion respectively). Furthermore, the wholesale and retail sector (plus restaurant and hotel operations) absorbed the largest part of the workforce in the Kuwaiti economy - the number of workers in this sector reaching around 481 thousand at the end of 2006 (which is equivalent to 45.4% of the total workforce).
These developments are a reflection of the recent rise in economic growth rates and the resultant rise of the individual‘s share of GDP (due to an increase in demand for consumer goods). They are also a reflection of the availability of an independent, civil judiciary to resolve commercial disputes. In this context, Kuwait has striven in recent years for more trade openness, and for a greater strengthening of commercial relations with a number of states (both regionally and globally). In 2005 custom tariffs on imports originating from the member states of the Greater Arab Free Trade Organization were revoked and in the same year a number of bi-lateral agreements were signed with a number of states to avoid tax duplication (South Africa, South Korea, Singapore, Malaysia and Hong Kong).
During this period, Kuwait also signed a general framework agreement for trade and investment with the USA as a first step towards developing free trade agreement between the two countries.
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In their entirety, these measures are initial steps which will contribute towards strengthening Kuwait‘s strategic geographical status, allowing it to perform a pivotal role in commercial goods trade. However, facing up to the challenges which confront the commercial sector are imperative in order to achieve Kuwait‘s vision as a commercial centre. The most important of these challenges is in the area of logistics. The initiatives aim to achieve greater development of the commercial infrastructure; including warehousing and Customs depots, an increase in frozen storage capacity and facilities to preserve and handle perishable goods. The plan is also expected to monitor the commercial sector so as to eliminate commercial cheating and manipulation and to guarantee the protection of the consumer. The organizational and legal environment will also require form, especially the laws restricting commercial activity, the obstacles which stand in the way of issuing licenses to companies, and the full gamut of customs procedures.
4.15 RECORDED RESULTS OF KUWAIT‟S COMPETITIVE ABILITY
Competitiveness is considered as one of the components for analyzing the health of an economy‘s performance. By using a group of indicators we can measure the degree of economic policy effectiveness and the government‘s capability of enabling national, economic entities or regional partnerships to resist foreign, competitive pressure within the Kuwaiti market. These indicators can also measure the ability of these economic entities to penetrate neighbouring and international markets. The latest global competition reports indicate that Kuwait‘s position on the business competition index - which lists the states of the World-wide report for competition - is 44 out of a total of 126 states for the year 2006-2007. Similarly Kuwait occupied the eighth position in the report of 10 states (amongst those states sampled by the National Kuwaiti Competitiveness Commission; Table 4.17) after Qatar and the Emirates. The business competition index is based on two important elements for measuring competitiveness; the competency of the companies and the quality of their strategies on the one hand (abilities of the private sector) and the extent of the quality of the business atmosphere nationally on the other.
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