Kuwait pledges to get tough on corruption amid renewed FDI push

Kuwait, Opec’s fifth largest oil producer, aims to compile a detailed strategy by the end of 2018 for weeding out corruption, as it repositions itself as a hub for global business, the country's labour minister said.

“Last year, we started a strategy for enhancing Kuwait’s position on international corruption indicators, and we aim to finish this by the end of 2018 so that we can implement it as soon as possible,” said Hind Al Sabeeh, minister for social affairs and labour, who is also the economic affairs minister.

“This should give investors the confidence they need [to do business here],” she told delegates at the Kuwait Investment Forum in Kuwait City this week.

Kuwait has tumbled down the rankings in Transparency International’s annual Corruption Perceptions Index in the past five years, to 85th out of 180 in 2017 from 75th in 2016, according to the latest report published in February. In 2013 the country ranked 43rd.

Transparency International, the best-known campaigner against global corruption, suspended the Kuwait Transparency Society (KTS) – the organisation that serves as Transparency International’s local chapter – in 2015.

The 2017 ranking is of particular concern to Kuwait, which is seeking to diversify its revenues away from oil dependence.

Kuwait has struggled to regain its position since former Iraqi President Saddam Hussein’s 1990 invasion. With hydrocarbon revenues accounting for 90 per cent of Kuwait’s state revenues and the lowest oil breakeven price in the Arabian Gulf, there was little incentive to diversify the economy until the country slipped into fiscal deficit in 2015 for the first time since 1999.

Now, the government is working to fulfil ‘Kuwait 2035’, a blueprint for increasing private sector involvement in the economy and attracting higher levels of foreign investment across a range of sectors including ICT, renewable energy, housing, healthcare, transport and tourism.

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The perception of corruption is a potential barrier to achieving this. Last week, Kuwait’s minister of interior Sheikh Khaled Al Sabah suspended seven senior employees until further investigation, and the government formed a committee to reinstate a local Transparency International chapter – even though opposition MPs declared the proposal useless in the face of “rampant corruption”.

Ms Al Sabeeh told the Kuwait Investment Forum that a key plank of the Nazahe’d anti-corruption strategy is to digitise government services and business transactions.

Increased use of technology to oversee and keep records of payments made and actions taken would increase transparency and highlight any potential discrepancies.

“We will start the [initiative] this year to increase the number of services and transactions administered electronically by the government,” Ms Al Sabeeh said.

“This is one of the true mechanisms for fighting corruption as nobody can fight the system.”

The number of e-services provided by the government rose to 900 in 2017 from 789 in 2015, she added.

Kuwait is also getting more efficient at monitoring the establishment of new businesses in the country. Kuwait Business Centre recorded a total of 9,682 limited liability companies registered in 2017, up from 5,621 in 2016.