Welcome to GulfBase Live Support
Two groundbreaking announcements were recently made in Kuwait — the first being the government’s launch of the “Kuwait Vision 2035”, which involves approaches that would, if implemented, bring about diversification of the economy, new job opportunities and significant reforms in public finance.
The second was the cancellation of Law No. 20 of 2016 pertaining to increases in the price of water, electricity and fuel, by the Parliamentary Finance Committee at the National Assembly (Parliament).
Earlier, Kuwait had raised fuels and energy prices as part of a Gulf-wide approach to cut excessive consumption and support the state’s budget through reducing subsidies. It was also a means to prepare the financial system for a post-oil era based on a modern taxation system.
Although such steps proved effective in the five other GCC countries and helped improve the their overall financial systems and curb excessive consumption, the Kuwaiti National Assembly is still standing in the way of implementing such a future-oriented approach, one that is vital to the country’s progress.
Fuel subsidy alongside others place a huge burden on the state budget and cost more than US$16 billion annually. Hence, they should be lowered to the minimum level to only aid low income citizens.
In the same way as the previous assembly criticised the financial, economic reform document, the current one is doing the same with “Kuwait Vision 2035”, which aligns with other GCC state strategies being implemented according to the financial and administrative capabilities. The Kuwaiti version includes 50 vital projects that would be carried out across key sectors. The $60 billion worth of projects will certainly achieve a paradigm shift in the economy, and as a springboard towards establishing a resilient infrastructure for building a less-dependent-on-oil-revenue economy.
The assembly in its capacity as a legislative authority is likely to criticise and attempt to modify some provisions of the document, which is acceptable. But what’s going on is an electoral race and attempts to satisfy voters more by cancellations than amendments, as can be noticed form cancelling the subsidy law for water, electricity and fuels.
Therefore, the parliament’s intransigence may hinder the implementation of some essential GCC financial approaches such as the application of the Value Added Tax (VAT) from 2018. Some MPs made it clear that they will not pass the VAT law in case the GCC put it forward, ignoring that fact that the application of such a tax is important to generate sizeable revenues for the economies collectively and to avoid difference in prices within the GCC common market.
So what’s important is to coordinate all Kuwaiti approaches with GCC counterparts for the good of the economy as challenges are now growing in parallel with uncertainties prevailing globally, including within the oil and gas industry.
Best of all, there is a social comprehension and acceptance to raise energy prices, annul and rationalise subsidies on some commodities as part of new frameworks that cope with the present.
Thus, the right thing to do is to review the economic reform document by the MPs or by specialised joint committees that include some MPs and experts in order to take professional decisions. They must consider the demands of sustainable development and global economic changes on the one side and the living conditions and the future of development on the other. The decisions should also consider diversifying the production base and sources of income, reducing excessive consumption and providing new job opportunities given that Kuwait is blessed with human and material potential that allows it to build a strong economy for the post-oil age.
Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.
Dr Mohammad Al Asoomi - Gulf News
Islamic Real Estate Investment Trusts (I-REITs) are increasingly becoming popular as an investment vehicle that is much more flexible and diversifying than direct exposure to real estate with similar
Former global energy competitors and geopolitical rivals in the Middle East and Central Asia, Russia and Saudi Arabia have been resolving their differences in order to build a long term strategic par
The oil market continues to get support from both expected and unexpected quarters. Yet the price level is stubbornly in a range previously forecast for some time now.
Since the beginning of
Earning interest, or Riba, is forbidden under Islamic law: “Allah allows trade, but forbids interest,” says the Qu’ran, the holy text that, along with the Hadiths and other scripture, underpin the Mu
As Saudi Aramco ponders the venue for what will be the biggest share offering in history — the planned $100 billion of equity due to be listed in a $2 trillion valued company — it has had no shortage