(Last updated: 25 Aug 2009)

Current business situation

The Department of Foreign Affairs and Trade (DFAT) provides advice for business travellers and tourists going to Kuwait. This is regularly updated, and should be checked before planning travel.

Country facts

Capital city:	Kuwait
Surface area:	18,000 sq km
Population:	3.4 million
Official language(s):	Arabic
Head of State:	Emir HH Sheikh Sabah Al-Ahmed Al-Jaber Al-Sabah
Head of Government:	Prime Minister HH Sheikh Nasser Al-Mohammed Al-Ahmed Al-Jaber Al-Sabah
Australian exports to Kuwait:	A$501 million
Australian imports from Kuwait:	A$487 million
Kuwait's principal export destinations:	Japan, Republic of Korea, Singapore
Kuwait's principal import sources:	USA, Japan, Germany

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)

Economic climate

Kuwait has an open economy with proved crude oil reserves of about 94 billion barrels. This is 10 per cent of the world’s known reserves. The oil sector makes up:

• 40-50 per cent of GDP
• 90 per cent of export earnings
• 70 per cent of government income

Kuwait has progressively marketed its oil products to Europe and Asia where it has numerous gas stations and refineries. The Kuwait Petroleum Company carries out the production, processing and marketing of oil and is rated in the Top 10 international oil companies.

Kuwait lacks water and has practically no arable land. This prevents the development of agriculture. Fish is caught locally but most food and water is imported.

Per capita income is high and therefore Kuwait can provide its citizens with extensive health, educational and retirement benefits. However the bulk of the workforce is non-Kuwaiti and is living at a considerably lower level. The per capita military expenses is one of the highest in the world.

To boost production capacity Kuwait has begun foreign investment policies in the countries oil sector. Oil prices have a key impact on the Kuwait economy.

For the latest key economic indicators and statistics, please see the Department of Foreign Affairs and Trade country economic fact sheet

Political climate

Kuwait is a constitutional monarchy and is ruled by Emir Sheikh Jaber Al-Ahmed Al Sabah of the Al Sabah family, with family members controlling key portfolios in the Council of Ministers.

There is a parliament, last elected in 1992, which has limited legislative powers. Political parties are forbidden. In 2004 Kuwait’s cabinet approved a draft law to allow women to vote and run in parliamentary polls moving them forward to full political rights.

Women make up more than half the Kuwaiti population, serve as diplomats, run businesses and help steer the OPEC member state’s vital oil industry. Only five per cent of the country’s decision makers are women yet 70 per cent of college graduates are women in Kuwait.

In May 2004, a Kuwait Ministry Department advised that all music shows and practices forbidden by Islam (of which it named one) that involved women entertainers, were to be prohibited to safeguard public morals.

Trade relations and statistics

The Gulf Cooperation Council (GCC) is a political, economic and defence alliance, established in 1981 by Kuwait, Bahrain, Qatar, the United Arab Emirates, Oman and Saudi Arabia. The alliance is moving towards a federation based on common cultural roots. The GCC was set up as a means to establish a gulf common market. The six members control 45 per cent of the world’s oil reserves.

During the Gulf War, the GCC states offered rhetorical support to Kuwait, but only token military assistance. Kuwait’s relations with nations that supported Iraq, including Jordan, Sudan, Yemen and Oman remain strained. Palestine Liberation Organisation (PLO) support for Iraq during the war also had an effect.

The six countries of the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) have announced the formation of a Customs Union that is currently being phased in over the next few years. Reports have indicated that the Union will eventually eliminate all fees, taxes, customs and other obstacles to trade between the member countries. A standard tariff of five per cent will then apply to most imports from countries outside the GCC Customs Union.

A preliminary assessment of the Customs Union, based on available reporting indicates that:

• The standardisation of customs requirements and procedures will benefit exporters active in multiple GCC markets.
• The tariff will eventually be applied at any port of entry to the customs union, which will positively impact on exporters of transhipped goods - who may now pay only one customs duty. 
• The tariff of five per cent is significantly lower than that currently applied in some GCC markets, but is also higher than that applied in others, with mixed implications for Australian exporters.

It is likely that many goods currently exempt (particularly basic foodstuffs and manufacturing inputs) will maintain their duty-free status (where it currently exists). Though some goods currently exempt from duty may have a five per cent duty imposed on them.

A list of products will be exempt from the maximum five per cent tariff to protect local GCC industry. Restrictions on passage of certain products through GCC countries will also apply. For example it is currently a requirement for meat products exported from Australia to Saudi Arabia be shipped direct (with transhipment through Singapore only being allowed).

Australian exporters will not be disadvantaged vis-à-vis competing with international suppliers. GCC country suppliers will enjoy a five per cent tariff advantage vis-à-vis Australian and other overseas competitors in those product areas where competing GCC suppliers exist. Very few products from Australia compete with GCC countries and so Australia’s competitive position - even if a duty is applied - should not be affected to any significant degree.

There remain a number of issues yet to be resolved between the six member states. In the short-term, exporters are advised that import requirements and procedures for many GCC markets remain unaffected. Transition periods of two years or more exist on a range of industries. Transition periods also exist for the implementation of general product, and food safety standards, with a genuine common market not anticipated until 2007.

In the longer-term, Australian exporters will be required to develop greater brand recognition and uniformity in and between GCC markets and will have to guard against pricing disparities between GCC markets which might trigger competition among different GCC agents and distributor.

The Customs Union will promote trade and investment in the Gulf countries and is expected to continue to provide opportunities for Australian exporters. It is also recommended that exporters check with their customers in GCC countries, and shipping agents to verify customs requirements.

Kuwait is also a member of the United Nations.

Kuwait has set up a free trade zone of around 900,000 square feet at Al-Shuwaikh Shipping Port, to help promote its role in regional trade.

Kuwait is one of the principal areas for Australian dairy products, meat and grains. To maintain the momentum of bi-lateral trading relationships Joint Ministerial Commissions are conducted between Kuwait and Australia.

Please see the Department of Foreign Affairs and Trade country economic fact sheet for key trade statistics.