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Kuwait: A market poised for a dramatic upturn

GAC's Henrik Althen is positive about Kuwait's logistics prospects.
Henrik Althen, business manager, logistics services, GAC Kuwait.
Henrik Althen, business manager, logistics services, GAC Kuwait.

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ost people I meet when travelling outside the Middle East don’t know much about Kuwait. Their knowledge is usually limited to the 1990 Iraqi invasion and the country’s oil wealth.

Occasionally, I’ll meet someone who knows a little more – like the fact that Kuwait is probably the hottest place on earth, you need to “hurry slow” to get things done, queuing and waiting are par for the course, and that there are perhaps more restaurants per person here than anywhere else in the world, but no alcohol.

But there’s a lot more to the place than that.

Since the discovery of oil in 1938, Kuwait has been transformed from a small walled town to today’s prosperous nation – all thanks to black gold.

And yet, on the surface, it doesn’t look much like a wealthy country. Most buildings and foundations are old and in desperate need of facelift (or even demolition), and the infrastructure – hospitals, schools, universities – needs developing to keep up with a population that is increasing every year.

For years, the private sector and local companies have been waiting for news of development plans – like children waiting for Santa Claus. However, even when urgent, creaking bureaucracy and differences of opinions between government agencies have kept progress to a snail’s pace.

Hopes were raised last year when His Highness the Emir of Kuwait took the first real steps, executing a 5-year development plan for the country. Due to conclude in March 2014, the 13-point plan is set to bring the country’s infrastructure up to date and bring benefits to citizens and companies alike.

The consensus in the business community is that this time, the plan WILL go ahead and bring positive results. Indeed, we are seeing a wave of reinvestment in warehousing and new operations being set up in. The place has a little of the feel of the Klondike Gold Rush about it – albeit driven by companies clamouring to offer their services to the oil sector.

The 5-year plan is the first stepping-stone towards the State of Kuwait’s vision for 2035, which aims to transform the country into a major regional financial and commercial hub and a magnet for investment. The driving force behind this will be the private sector at the vanguard of economic activity, boosting competitiveness and production efficiency, with the support of the state.

Through this plan, the Kuwaiti government aims to establish a new ideology for strategic planning to make that vision reality. Some development projects under the auspices of the plan include the following:

• Kuwait Petroleum Corp (KPC) has just announced it will invest approximately US $90 billion over the next five years in its oil and gas businesses as part of a longer-term programme that will see spending mushroom to US $340 billion by 2030.

• The Ministry of Public Works is floating a tender for a planned water desalination project that will be the largest in Middle East. This KD 300 million project is a matter of urgency as the current station is fast approaching maximum capacity. This project is just one of 550 new projects on the Ministry’s drawing board for the next four years, with a total infrastructure development cost of US $11.5 billion.

• In a bid to ease traffic congestion and improve access to remote regions, the government is investing another KD 3 billion (US $10.6 billion) in 16 road projects across the country in the next five years.

• A new commercial seaport on Bubiyan Island is due to be completed in four years.

• There are also plans to build two new airports near the new Bubiyan Island port, opening up new potential business for the country’s aviation sector.

• Many sports-mad Kuwaitis have welcomed the plan – as part of the nation’s ambitions to host major international sporting events – to build a 19,000 sqm indoor Olympic volleyball and basketball complex, including a stadium that can seat up to 5,000 and two secondary facilities with a further seating capacity of 1,840.

All these developments signal exciting times for businesses in Kuwait and the outlook for shipping and logistics is promising. Inevitably, the planned projects will create steady demand for specialised professional logistics services.

Global service providers with the infrastructure and expertise to handle logistics operations of any scale and complexity are well positioned to leverage these opportunities. These developments signal exciting times for businesses in Kuwait and the outlook for shipping and logistics is promising. Inevitably, the planned projects will create demand for specialised professional logistics services – and GAC Kuwait intends to play its role in the latest stage of the company’s transformation.

As part of a global organisation with extensive experience and resources, we have what it takes to meet the need for any kind of logistics – anything from delivering the bulkiest equipment for construction to setting up efficient supply chain systems to meet growing consumer demand. So, next time I meet someone from outside Kuwait, I look forward to telling them just how far we have come!

Henrik Althen is business manager, logistics services, GAC Kuwait.

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