Kuwait – Choosing a Local Associate

Kuwait abounds with business opportunities for a skilful entrepreneur. However, unless you have the right local connections you are unlikely to be successful.

Kuwait has a rapidly expanding demand for technical expertise and labour, in both the oil and non-oil sectors … 1,100 projects worth about US$125 billion in total are due to be executed over the next few years.

Some of these projects are extremely large indeed. For example, a new business hub (Silk City) is to be built for an estimated cost of US77 billion, along with a container port and a 25km causeway.

Kuwait’s business-friendly government is also planning new cities linked by a new railway and metro system, as well as an enhanced infrastructure and improved services in health and education.

Around US$85 billion will be spent to raise production capacity and modernise facilities in the oil sector.

All these projects – whether small, large or mega – are providing plenty of opportunities for consultants, SMEs (small and medium-sized enterprises) and large specialised contractors from outside the GCC area.

The big question is: how can you get a piece of the action?

There are several ways.

You can set up shop in the KFTZ, Kuwait’s free trade zone, but this is only suitable for SMEs.

Large international corporations can get in under the Direct Foreign Investment law, but doing so requires the approval of the government, and is likely to take some time.

The best way is to find a local associate you can rely on.

In fact, unless you choose either of the first two ways to establish a presence in the country, you are obliged by law to have, as a minimum, a local agent (or sponsor) as your official representative in the state.

But finding one you can trust is not easy. Yet it is one of the critical factors for success.

Factors that must be considered in choosing a local associate, whether an agent or partner, are:

  • a potential  associate’s financial resources;
  • his overall business experience;
  • the extent of his current operations;
  • his experience in the proposed products or services;
  • whether the particular licences needed to carry on the proposed business are available or can be obtained easily; and
  • how control over business assets and day-to-day management will be exercised.

Business in Kuwait is more a matter of personal relations than anything else. Thus, one of the most important criteria in choosing a Kuwaiti associate is his wasta (personal connections) in the local business community and in government circles.

If a foreign firm’s products or services are directed at a particular business area or government department, a potential associate’s wasta with the main decision-makers in that field must be thoroughly evaluated.

This needs to be done carefully as many Kuwaiti individuals habitually present themselves as having more wasta than they actually have in a particular area and caution needs to be exercised in evaluating offers of sponsorship or association.

Best advice is that you should make several trips to the country and get to know some of the main decision-makers in the areas in which you are interested before choosing a Kuwaiti associate.

If this is not possible, you should hire a foreign-run consultancy with years of on-the-ground experience to provide introductions to and evaluations of potential associates.