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UNIVERSITY OF CALIFORNIA - LIBRARY OF THE UNIVERSITY OF CALIFORNIK.HR

Market Profile—KUWAIT

Foreign Trade

Imports.-$831.0 million (10 months 1973); $886.2 million 1972. Leading suppliers (1972) Japan, 16%; U.S., 14%; U.K., 10%. Major imports: vehicles, textiles and clothing, electrical machinery and appliances, iron and steel, cigarettes, and foodstuffs. Exports.-FY ending March 1973, approximately $3 billion, of which 96 percent crude and refined petroleum. Oil export 1,074 million barrels. Major oil markets: Italy, Japan, U.K., France. Other domestic exports (about $53 million), principally chemical fertilizer, building materials and shrimp, and reexports (about $125 million) go mainly to neighboring countries. Trade Policy.—Liberal. Most items duty exempt or assessed 4 percent ad valorem. A few assessed 10 or 15% ad valorem. No exchange controls on imports. Commercial importing restricted to Kuwaiti nationals and firms. Trade Prospects.-Construction and oil industry equipment, special machinery for new industries, water treatment equipment, medical supplies, consumer durables, foodstuffs, cigarettes, and consulting services.

Minerals.-One of world's largest known oil reserves. Production about 3 million barrels per day. 90% of production from Kuwait proper, mainly by Kuwait Oil Company (owned half each by Gulf and British Petroleum). Neutral Zone production shared jointly with Saudi Arabia. Total capacity 3 refineries about 500,000 barrels per day. Industry.-Non-oil industries include fertilizers, fisheries, building materials, and chemicals. Water desalination capacity 52 million imperial gallons per day. Development Program.—No formal development plan in effect. Development expenditure in FY 73-74 budget allocated (million dollars): public works, 168; electricity and water, 111; posts, telegraph and telephones, 23; other, 5.

Basic Economic Facilities

Foreign Investment

Chiefly in oil. U.S. interest large in two producing companies. Investment Prospects.-Investment welcomed, but limited to minority participation in industrial and commercial concerns. Law prohibits foreign ownership of financial institutions.

Transportation.—About 700 miles paved roads; over 150,000 registered vehicles. General cargo ports at Shuwaikh, one mile west of Kuwait City, rated annual capacity 1.5 million metric tons, and Shuaiba, capacity 900,000 tons. Oil port (KOC) at Mina-al-Ahmadi, south of Kuwait City, accomodates new giant tankers (326,000 DWT); smaller oil port at Mina Abdulla. International airport served by nine international carriers. Kuwait Airways, Government-owned, operates in area. Communications.-Radio (AM and FM) and TV Government-owned. Radio broadcast over 120 hours weekly; TV broadcast 54 hours weekly. Telephone services. International links available. Satellite ground station in operation. Power.-Production 3,295 million kwh in 1972, 581 billion cubic feet natural gas produced 1972; 227 billion utilized for industrial purposes, remainder flared.

Finance

Natural Resources

Currency.-Kuwaiti dinar (KD) equals US$3.38. Money supply January 1974 $502 million. Domestic Credit and Investment.-Five commercial banks. Savings and Credit Bank and two investment companies comprise rest of banking system. Central Bank commenced operations April 1969. About two-fifths of GNP saved; 40% invested in Kuwait, 60 percent abroad. National Budget.—1973–74 (FY ending March 31): revenues $2.1 billion (86% oil revenue); expenditures $1.5 billion (25% allocated for development and land acquisition). Substantial proportion of revenues being put into State reserve. Balance of Payments.-Consistent surplus due largely to oil income. Net official and banking foreign assets January 1974, $4.3 billion.

Land.—6,200 square miles. December 1969 agreement with Saudi Arabia partitioned 2,500 square mile Neutral Zone south of Kuwait in approximately two equal halves. Flat, rolling desert. Climate.-Intensely hot in summer; milder climate November to April. Average rainfall less than 4 inches annually. Fisheries.—Plentiful supply in territorial waters. Shrimping an important industry.

Population

Economy

GNP.-Estimated at $4.2 billion end of FY 1972–73 (over $4,000 per capita); over half derived from petroleum sector, about one-third from government expenditures. Agriculture.-Nil; only 1% of land cultivated.

Size.-Estimated 850,000, more than half nationals of foreign (most Arab) countries. Language.-Arabic; English widely spoken. Education and Health.-Almost 140,000 in schools; 8 years compulsory. Kuwait University opened 1967. Literacy rate 50 percent. The government provides free education and medical services to its nationals. Labor.–Three-fourths of jobs held by non-Kuwaitis.

Contents

Japan has steadily improved its market posi-
tion in recent years with a sustained and effec-
tive competitive effort, and in 1972 supplied 16%
of Kuwait's imports. Japan has shown strong
gains in consumer goods, including automobiles
and appliances, and it is winning many public
works contracts. The United Kingdom is now
the third principal supplier, accounting for ap-
proximately 10% of Kuwait's imports, followed
by West Germany with about 8%. Three other
principal suppliers, each normally providing
from 4-6% of Kuwait's imports, are France,
Italy, and Lebanon.

-

Page
Foreign Trade Outlook.....

1
Introduction-Best Export Prospects
Market Profile ...

2
Industry Trends ...

6
GNP Development-Principal Growth

Sectors-Government Role in the Economy
Trade Regulations

7
Trade Policy-Import Regulations Tariff
Structure Shipping Documents Samples
and Advertising Matter – Advance Rulings on
Classification – Fines and Penalties Mark-

ing and Labeling
Distribution and Sales Channels ....

10
Major Marketing Areas, Distribution Centers

Distribution Practices Wholesale and Re.

tail Channels — Consumer Financing – Future

Marketing Trends – Franchising and Licens.
ing - Principal Buying and Merchandising Of.

fices Government Procurement

Transportation and Utilities

13

Shipping from the United States Port

Facilities and Shipping Road Transport

Airlines - Utilities - Natural Gas

Advertising and Research

14

Advertising Media Advertising Agencies

Market Research and Trade Organizations

Credit .....

15

Availability of Credit

Investment in Kuwait

16
Extent of Foreign Investment Government
Policy on Investment Forms of Business Or-
ganization Incentive Legislation Entry
and Repatriation of Capital — Industrial Prop-

erty Protection Taxation - Labor

Guidance for Businessmen Abroad .....

21

Entrance Requirements Regulations Gov.

erning Commercial Activity Language,

Business Hours, Holidays

Sources

of Economic and Commercial

Information .....

21

Kuwait Government Representation Trade

Organizations
Department of Commerce Assistance to
Exporters ...

22

Export Financing and Insurance Assistance..... 24

Bibliography

25

Owing to large increases in the posted price of
crude oil in late 1973 and early 1974, Kuwait's
foreign exchange earnings from this commodity

are expected to grow several-fold to between $7

and $11 billion annually in future years, depend-
ing on production levels and actual sales prices
realized. Revenues of this magnitude considera-

bly exceed Kuwait's absorptive capacity; even

with the most ambitious of development pro-
grams, Kuwait will still have a large capital sur-

plus which will be looking for investment outlets

abroad.

This new wealth is expected to lead to drama-

tic qualitative and quantitative changes in the
Kuwait market as it is expended to implement
major economic and industrial goals. These
goals are: (1) massive investment in petroleum
related installations and petrochemical indus-
tries to maximize income from a wasting asset;

(2) establishment of new basic metals industries

(steel and aluminum rolling) as well as other

basic and light manufacturing industries to

create more diversified employment and to sup-

ply local and neighboring Gulf markets; and (3)

the improvement and expansion of the country's
already advanced infrastructure and economic
welfare facilities. Foreign supply requirements
for these development programs, combined with

rising consumer demand as the income effects of

development spending reach the population,

should produce an import growth in excess of 20

percent annually for at least the next several

years. Execution of these programs will also re-

quire large-scale imports of technical and man-

agement services.

3

Table 1.-U.S. Trade with Kuwait, 1971–73

(In thousands of dollars)

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83,763 111,262 119,235 83,173 108,140 117,107 4,813 4,338 7,403

236 104 241 1,693 1,359 2,351 938 881 1,640 527 217 256

228 538 799 1,443 247 320 522

67 77 109 447 392 953 5,384 8,509 11,610 5,321 8,402 11,537

84 321 479 772 863 408 535 264 353

876

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666

194 252 284 32,485 46,932 38,089

Commodity
Exports, including reexports

Total ....
Domestic exports-Total
Food and live animals ..

Meat, fresh, chilled frozen ..
Cereals and cereal preparations

Rice, rough, brown, milled
Barley..

Preparations of cereal, flour, starch, etc.
Fruits and vegetables.
Sugar, sugar preparations and honey
Coffee, cocoa, tea, spices and mfgrs.

Animal feeding-stuff
Beverages and tobacco

Cigarettes
Crude materials, inedible, except fuel
Petroleum and petroleum products

Lubricating oils and greases ...
Oils and fats-animal and vegetable
Vegetable oils and fats, fixed except

hydrogenated Chemicals

Organic chemicals
Inorganic chemical elements, oxide,

hydroxides, etc.
Pigments, paints, varnishes, etc
Medicinal and pharmaceutical products
Perfumery, cosmetics, etc. n.e.c.
Soaps, cleansers, polishes, etc..
Synthetic resins and plastic materials .

Chemical products and materials, n.e.e.. Manufactured goods by chief material

Rubber manufactures-finished, n.e.c.
Rubber tires and tubes.
Paper, and paperboard .
Textile yarn, fabric, and articles

Textile fabric woven, except cotton.

Made-up textile articles
Nonmetallic mineral manufactures.
Glass ...
Iron and steel

Iron tubes, pipes, and fittings
Nonferrous metals

19,589 21,141 31,234

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Commodity Office machines and parts Metalworking machinery Construction and mining machinery,

n.e.e. and parts Heating and cooling machinery and

equipment and parts . Pumps, centrifuges, etc. and parts Mechanical handling machinery and

equipment and parts Electric power machinery, switch

gear and parts Telcom, equipment, n.e.c. Electric household equipment and

appl. and pts. Electric ignition equipment—int.

comb. eng..... Electric measuring and controlling

appar., n.e.e.
Transport Equipment
Passenger cars, trucks, etc.,

all fuels ......
Motor vehicle and tractor parts

and acces. n.e.e.
Vehicles exc. road motor vehicles

and parts
Aircraft and spacecraft and parts
Ships, boats, and floating struc-

tures
Plumbing, etc., fixtures, fittings
Travel goods, handbags, etc.
Clothing (exc. fur) knit, elastic

fabric art. etc.
Prof. photo, etc-goods; clocks, etc.

Photographic and cinematographic
supplies

Scientific, optical, etc. apparatus
Sound recorders, musical instru.

ete. Printed matter Articles of artificial plastics,

n.e.e.. Baby carriages, toys, sports goods,

etc. Office and stationery supplies,

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254

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n.e.c....

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Special category
Other domestic exports
Reexports

General Imports—total. Shellfish, except prepared

Manufactures of metal, n.e.c.

Structures and parts
Metal containers for storage and brass .

Tools for use in hand, machines
Manufacturers of base metal, n.e.c.
Machinery, nonelectric ...
Power-generating machinery exclud-
ing electric and parts

Steam-generating, power boilers,
parts and accessories
Engines and jet gas turbines

590 3,122 2,128 36,092 49,034 64,943

or canned .....

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ete.....

421

Petroleum, crude and partly

refined Petroleum products

Jet fuel and kerosene
Distillate fuel oils
Residual fuel oils

Pitch asphalt, etc.
Special transactions not classified

by kind ..... Other imports.

847

934

Int. comb. engines, excl. air

craft and pts. Agricultural machinery.

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Source: U.S. Department of Commerce, Bureau of the Census

Best Export Prospects

The major opportunities for American companies will be in the export of technology and in design, construction, equipment supply, and management of the many large public works and industrial projects to be undertaken. Some $3.5

billion in petroleum related and petrochemical projects and basic metal industries have been identified as likely to be implemented over the next several years. Additional tens of millions of dollars will be spent to expand existing industries and develop new industrial enterprises in a variety of fields. These project developments

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