Within the framework of the government’s approach to re-pricing its services, and in order to increase public revenues, informed sources revealed that the Public Authority for Industry (PAI) is studying a proposal that, if implemented, would lead to increasing the prices of industrial services and plots of all kinds by rates ranging between 16 and 40 percent, which is in line with the economic standards and principles and the requirements of competition locally and in the Gulf region, reports Al-Rai daily.
The study on re-estimating the rent for using plots and fees for services provided by the authority includes proposals and recommendations regarding fees for about 315 services, most of which are increased.
The applied fees included reductions such as those who obtain a “To Whom It May Concern” certificate, which was reduced from KD 6 to KD 5. The Shuaiba Industrial Zone is the largest area affiliated to PAI in terms of area. It is dedicated to manufacturing industries. Its area reaches about half the area of all the areas that include manufacturing industries in Kuwait, amounting to about seven million square meters. The study suggests increasing the allowance per square meter in ready-mix vouchers from KD 1 to KD 1.2. It was proposed to fix the allowance per square meter for banks and insurance companies in vouchers at KD 12 annually. As for the sites that the private sector undertakes to rehabilitate and operate, the proposed fees are according to the type of contract.
The study emphasized the importance of reconsidering the conditions for benefiting from industrial plots according to the prevailing logic in economic theories related to pricing and renting plots, while preserving the general principle that PAI is not a profit-making institution that seeks to maximize its net income, although it seeks to improve its financial balances to support its resources.
The efforts of PAI in this direction come as part of a broader government move that began with the Cabinet’s resolution No. 956/2021 regarding the depletion of liquidity in the general reserve. All government agencies were mandated to take the necessary measures to find radical solutions to face the deficit in the state’s general budget. Most government agencies submitted their perceptions regarding re-pricing their services to the Minister of Finance Abdul Wahab Al-Rasheed. The PAI’s proposal includes collecting a fee of KD 5 per square meter annually for commercial advertisements, provided the advertisement is placed on the advertiser’s buildings and plots.
The fee reaches KD 20 annually per square meter for investment advertisements. As for factory/craft licenses, the proposal referred to a fee of KD 30 for a factory or warehouse license in the new industrial areas, KD 10 for renewal, and KD 10 for re-examination for receipt. The licensing fee for main power plants was set at KD 500, and the same fee for refineries and petroleum factories.
According to the proposed alternatives to prices, PAI will achieve an increase of 22 percent in its revenues. The allowances for using coupons should be determined to be close to the intersection of supply and demand. The study noted that 74 percent of PAI’s total revenues in 2020/2021 were from plots, and that a maximum of 30 percent of infl ation is all that can be passed on to the beneficiary of the plot, and that 50 percent of the returns must be in exchange for benefiting from the beneficiaries of commercial plots, and the like on craft plot recipients. The proposal set a fee of KD 75 for the application fee for the quality mark, KD 150 for issuance of its certificate, and KD 50 for its renewal.
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