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Kuwait

In: Business and Management

Submitted By nbartram
Words 584
Pages 3
In 1981, my father, who was a British citizen, moved my family to the country of Kuwait. He had secured a job as the head mechanical engineer for Kuwait Oil Company. My mother, who was a high school English teacher, struggled to find a job during the first year in Kuwait as there weren't that many British expatriate schools with openings. She set about to open up her own business, where she ran a Montessori type daycare during the daytime, and provided English tutoring as a second language in the evening hours. Back then, she was able to have her business and charge money without many regulations and laws, as long as she had a Kuwaiti citizen sponsoring her activities within the country. When my family left Kuwait 10 years later, very little had changed. For this activity however, I went back and researched if any laws had changed as far as it pertained to foreign nationals operating businesses within Kuwait. I found that they had.

The basic premise for carrying out business in Kuwait is identified in the Articles (23) and (24) of the Kuwaiti Commercial Code. Article (23) of the code states that non-Kuwaiti citizens may not pursue any commercial activities in Kuwait, unless they have a Kuwaiti partner; this partner's share must not be less than 51%. Article (24) sets forth that any foreign company may not establish a branch in Kuwait and cannot pursue its commercial activities in Kuwait unless having a Kuwaiti agent. On April 22, 2001, Kuwait's Parliament enacted Law No. (8), regulating foreign capital direct investment in Kuwait, in an attempt to lure foreign investments. By allowing foreign ownership up to 100% of business entities in certain sectors, this law draws an exception to the general rules governing doing business in Kuwait by foreign investors. This has led to many international businesses wanting to seek out Kuwait as an investment ground.
In regards to the kind law based system Kuwait operates under, Article 2 of Kuwait's constitution identifies Islamic Sharia as a main source of legislation. This is also known as theocratic law: a system of law based on religious teachings. Additionally, and according to the United Nations, Kuwait's legal system is a mix of British common law, French civil law, and Egyptian civil law too.

In regards to the risks of doing business in Kuwait, after spending time there and based on its history, I would argue that the risk of terrorism continues to be a threat. Terrorists issue statements about carrying out attacks in the Gulf region almost daily. Also, political tensions between the executive and the legislature have long been a feature of Kuwaiti politics and relations between the two have not always been smooth, making the country somewhat unstable in the formation, monitoring, and execution of its laws. The country does not also have a much diversified economic structure or policy. Most of its current business ventures center on the production and selling of oil. Doing business in this type of environment is risky should the industry fail. This was seen very quickly during the Iraq invasion of Kuwait in 1990. Last and probably why I wouldn’t conduct business there have long been the concerns about Kuwait’s record on the treatment of domestic workers and other workers from third world or developing countries. The Kuwait government has committed to eradicate such activity; however, I still have friends who live in the country who report on the current occurrence of such activities.…...

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