Small scale manufacturing plants in Kuwait produce petrochemicals, fertilizers, ammonia etc. The growth of the manufacturing sector in Kuwait has not been ideal, as it was hard hit firstly, by the Iraqi invasion and then, the recession. The contribution of the manufacturing sector towards the GDP of Kuwait has ranged between 5-6% for the past few years, though it is projected to reach USD XX billion by 2021 at a CAGR of XX%. Greater exposure to trade, competition in the sector and diversification are factors affecting the growth of this market.
Diversification Driving Manufacturing Sector Growth
Numerous initiatives are being taken by the government to promote the manufacturing sector, like the passing of the Kuwait Development Plan. It was approved for almost USD 120 billion and is expected to simulate Kuwait’s economy and help in developing the infrastructure. The government recently announced that it is increasing the budget for the manufacturing sector by nearly USD 1.7 billion per year.
New free trade zones are being built in Kuwait. This will increase the need for building products giving an automatic push to the construction material manufacturing industries. Availability of low-cost labor acts as an add-on to the success of the manufacturing sector.
Land prices in Kuwait are elevated for industrial areas due to very high demand and low availability of resources. The news of more than 20 Kuwaiti factories deciding to relocate to Saudi Arabia because of the features and facilities it offers was also a major setback. Expensive electricity and energy, industrial production costs, unskilled labor, small market size and unavailability of resources are some of the major challenges faced by the manufacturing sector in Kuwait.
There are numerous opportunities in the construction material manufacturing industries in Kuwait. Apart from that foreign investors are being given a number of incentives which include a 10-year tax holiday and after that, a flat 15% tax for investing in Kuwait. Petrochemical is the biggest industry after oil and gas and offers great opportunities.
Key Deliverables in the Study