FIRST NOD FOR BILL TO BOOST DIRECT LOCAL, FOREIGN INVESTMENT

KUWAIT CITY, May 1

Kuwait plans to increase service charges on foreigners, media reports said Wednesday, triggering the ire of the main labour union which also blasted the government for deporting hundreds of expatriates.

State Minister for Cabinet Affairs Sheikh Mohammad Abdullah Al-Sabah said in comments published Wednesday that the government has sent a draft law seeking to raise public services charges on expatriates.

"The state spends 6.0 billion dinars ($21 billion) a year on subsidies for services like electricity and water ... two-thirds of which ($14 billion) go for expatriates," the minister said in remarks carried by Al-Rai newspaper.

He said that all neighbouring energy-rich Gulf states have raised charges on expatriates and the government cannot follow suit because of a 1992 law that bans it from raising charges without legislation.

The minister's remarks come amid government threats to deport large numbers of expatriates and after a senior traffic official said that 213 expatriates had already been sent home for committing "grave" traffic offences.

Last month, Minister of Social Affairs and Labour Thekra Al-Rasheedi said the country plans to deport around 100,000 expatriates a year for the next 10 years to reduce the number of foreigners by one million.

She did not say what measures would be adopted to put the plan into effect.

Kuwait has 2.6 million expatriates who form 68 percent of the country's 3.8 million population.
Kuwait's main labour union blasted the oil-rich Gulf state for measures targeting expatriates.
The government is adopting "unilateral and random measures against expatriate workers," Kuwait Labour Union said in a statement marking Labour Day.

Head of the expatriate manpower office at Kuwait Labour Union Abdulrahman Al-Ghanem said the measures against expatriates will be a "black page in Kuwait's human rights record."
MP Khaled Al-Shatti called on the government not to adopt "oppressive measures" against expatriates or "humiliate" them.

Meanwhile, the National Assembly approved a law that encourages direct local and foreign investment, in its first deliberation on Wednesday. The bill seeks the formation of an authority in that regard; through which investors of all nationalities can obtain licenses to directly invest in the State of Kuwait as well as to obtain benefits and merge existing investment entities.

According to Article 2, The 'Authority to Encourage Direct Investment' aims to "attract both foreign and local direct investment, improve and facilitate the investment environment and remove obstacles hindering investors". It also aims to "create employment opportunities for nationals, increase local production and professional skills and diversify sources of national income".

Article 3 identified the authority's targets, while Article 7 outlined rules to prevent conflicts of interest in the authority's administration.

Article 11 stipulates on "the Cabinet to form and renew the list of direct investment needed in the country, based on local policies and requirements of the development plan". 

Article 12 stipulates the investment cases that are subject to the provisions of this law: 

1. A Kuwaiti company of the variety listed in the Commercial Companies Law, for the purpose of direct investment. Foreign stake in the company can amount to 100 percent of its capital in accordance to the principles and rules of the Companies Law.

2. A branch of a foreign company given license for the purpose direct investment. The concerned minister issues the principles and rules that organizes the relationship between the foreign company branch and official authorities, with regards to the necessary transactions to begin work.

3. Representative offices with the sole objective of studying markets and production capabilities, which do not practice commercial activities.

Article 19-25 stipulates the guarantees that are enjoyed by investors, among which is the "protection from confiscation by the state" and the "freedom to transfer assets and investments abroad".

Moreover, Article 27 outlines benefits for investors such as "exemption from income tax and other taxes for a period of not more than 10 years", "partial or full exemption from custom tax and fees", "the use of foreign manpower for the investment, according to law's provisions on the minimum national labor that must be available".

While discussing the law, a number of lawmakers noted observations on "insufficient infrastructure and facilities to attract foreign investment". There are also restrictions on certain nationals on the basis of state security issues, they noted.

MP Saadoun Hamad questioned the government on its plans to reduce expatriate labor by 100,000 a year and at the same time encourage foreign investment. MP Yaaqoub Al-Sane said there must be a quota for national labor within the law, proposing a quota of 30 percent national labor in all investment projects.

The direct investment bill was approved by 43 out of 46 MPs, with one rejection and two abstentions.
Meanwhile, MP Saad Al-Boos called on the government to present viable solutions to the issue of national unemployment during Thursday's special session in that regard. He said that "it is not acceptable that thousands of Kuwaiti youth remain without work while at the same time the government is hiring vast numbers of expatriates."

Al-Boos added that, according to a National Assembly study in 2008, approximately 20,000 Kuwaitis are suffering from unemployment -- 44 percent of which are female and 55 percent are male. He said that this indicates that the unemployment rate is on the rise.

The National Assembly further approved a draft bill to grant allowances to the children of Kuwaiti women and Kuwaiti children of employed expatriate women, in its second deliberation.

Article 3 of the Children Allowance Law was amended to include children of Kuwaiti women who are married to non-Kuwaitis. According to the law, the couples and their children must be permanent residents of Kuwait.

The law states that Kuwaiti women will be allowed to receive social allowance when married and only if the spouses did not receive the allowance. The same procedure applies on female nationals with children whose spouses did not receive the allowance.

Employed female expatriates with Kuwaiti children are allowed to benefit from the law, provided that their Kuwaiti spouses did not receive the allowance. They will also be allowed to receive the allowance if they have their Kuwaiti children in their custody. The bill was passed with 42 in favor and 9 against.

Minister of State for Cabinet Affairs Sheikh Mohammad Al-Abdullah Al-Mubarak Al-Sabah called on the National Assembly reconsider the law, requesting two weeks for the Cabinet to debate the bill.

The National Assembly also unanimously approved four international agreements. The first agreement is between the governments of Kuwait and Romania on obtaining the rights of land ownership for diplomatic missions and consular offices.

The second agreement is between the governments of Kuwait and Japan and aims to encourage and protect investments in order to create favorable conditions for the development of financial and economic cooperation between the two countries.

The third agreement approves the charter of the International Renewable Energy Agency (IRENA) which aims to support the increasing international demand for the use of renewable energy for sustainable development. The fourth agreement is related to an electrical network connecting the six neighboring states of the GCC to share the power generated from electrical plants in each of the countries and encourage further local productivity.

The National Assembly further approved in its first deliberation amendments to a law pertaining to the supervision of commodity trading and prices.

© Arab Times 2013