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(Last updated: 15 Mar 2011)
Trends and opportunities
The market
Kuwait is forecasting a GDP growth rate of four per cent during 2014-2019. This is predicated on a number of conditions. First, oil and gas output is expected to continue to rise up to 2019. Crude production is expected to rise from 2.59 million barrels a day (b/d) in 2009 to 3.60 million b/d by 2019 (with 3.28 million b/d available for export), while gas will rise from 13.7 billion cubic metres (bcm) to 26.5bcm (all for domestic consumption) over the same period.
With oil prices stabilising this is expected to keep the economy moving even if consumer spending and investment growth has slowed.
Following several years of plentiful infrastructure and real estate projects, the repercussions of the global financial crisis have given the industry a pause for thought. The construction sector in Kuwait grew at a CAGR of 13.3 per cent from 2002-07, but its contribution to the overall economy was less than two per cent of GDP in 2007, which is minor compared to the rest of the region.
(Source: Business Monitor International, Kuwait Infrastructure Report Q2 2010)
Market drivers
Increased government spending on infrastructure – Kuwait's National Assembly passed a US$108 billion package for infrastructure development in February 2010.
The development of Kuwait – Kuwait plans to spend about 16 billion dinars in the fiscal year starting April 1, 2010 one-third more than the current year as oil prices rise. The emirate, which expects to spend 12.1 billion dinars in the current fiscal year, posted a budget surplus of 2.74 billion dinars last year as it benefited from higher oil sales.
(Source: Marcopolis, ‘Strong recovery of Kuwait economy’)
Opportunities
Services opportunities
These include, but are not limited to specialist rail and roads consultancy, transport and logistics, including ports, water management, green building expertise, facility management, project management and construction contracting and specialist sub-contracting.
Engineering and architecture firms should note that the downturn has diminished the pipeline of construction projects coming on-stream and made conditions for the numerous firms very competitive. New entrants in design and engineering are likely to struggle in the current environment.
Product opportunities
These include, but are not limited to heavy machinery, a wide variety of building materials and products including sustainable solutions, water saving devices, systems for building automation, air-conditioning and security, cutting-edge solar and wind energy solutions and swimming pool equipment.
What makes Kuwait an attractive place to do business?
- It has a sound economy, a youthful population, a well-established and managed banking system, excellent infrastructure, and a sophisticated business community familiar with Western practices.
- Australia's profile in the Kuwait is high. There is increasing recognition of Australian companies and capabilities. Around 40 Australian companies have established themselves in the Kuwait.
- Australia's advanced engineering and building-services, innovative products, ‘can-do’ approach and ability to deliver are ideal for Kuwait’s huge infrastructure programs.
- The Kuwait Government is continuing to promote capital development projects in areas such as building and construction, power, desalination, manufacturing and industrial zones. These initiatives represent opportunities for Australian firms as they are significant in value and number.
Competitive environment
Kuwait is strategically located between India and Europe and not far from South East Asia. It has typically been a trading hub, so competitors from Europe and Asia are numerous. Australian companies comment that there is a general preference for cost effectiveness over quality.
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