The Parliament of Kuwait has approved a legislative amendment that allows foreign companies to open branches and operate in Kuwait without the requirement of having a local agent. Additionally, it permits non-Kuwaiti companies to compete in public tenders. The approval came during a session on Tuesday, with 57 votes in favor and one against, according to the National Assembly website. The previous law, enacted in 1980, mandated that any foreign company operating in Kuwait must do so through a local agent, and it prohibited non-Kuwaitis from engaging in trade unless accompanied by a Kuwaiti partner with at least a 51% stake.
The Parliament also amended the public tender law to allow non-Kuwaitis to compete in these tenders, removing government authorities' power to limit public tender competitions to Kuwaitis only. Most Gulf countries have abandoned the local agent requirement for foreign companies, enabling significant activity for these firms in the economies of the UAE, Saudi Arabia, and Qatar.
Kuwait, a member of OPEC, with over 90% of its public revenues coming from oil, aims to liberalize its economy, reduce its dependence on oil, and increase citizen participation in the private sector. Former Minister of Commerce Fahad Al-Sharijan anticipates that the new law will enhance competition between local and foreign companies, positively impacting quality and pricing. Al-Sharijan told Reuters, "With this law, the market has opened up and competition has increased. Always having more options allows for higher competition (in prices) and better product quality."
The parliamentary Financial Affairs Committee, which prepared the law, stated in its report that the legal status of existing local agents will not be affected by these amendments, as agency contracts will remain in force, and the law does not apply retroactively. The explanatory memorandum for the new law indicates that the amendment will "open the market to everyone and promote competition in providing the best products and services to consumers at lower prices, which will positively reflect on the improvement of products and services offered and reduce prices in goods and services."
Al-Sharijan noted that local agents had faced criticism for the overlap of technical issues with social matters and "settlements," but the new law would refocus attention on "technical matters." He emphasized that "the Kuwaiti trader should not view this law as a hindrance. Now that matters are opening up and an external line is available, prominent and reputable traders can overcome such a law and bring in new global agencies."
