KUWAIT, (Reuters) – Kuwait wants to diversify its economy away from oil, attract more investment, speed up the sale of state firms and ease land ownership rules to prepare for the post-oil era, a top government body said.
The major OPEC oil producer wants to control spending amid rising inflation in the next five years, the country’s top planning council said in a 2009-2014 policy strategy plan, according to a copy obtained by Reuters.
The Gulf Arab state wants to emulate the success of neighbours Dubai and Bahrain which have become regional financial centres and popular tourist destinations, but setting up a non-oil economy is still in the early stages.
Kuwait’s ruler dissolved parliament last month to end a prolonged crisis between deputies and government that has stalled many economic reform projects.
Under the 5-year plan, Kuwait wants to boost its non-oil economy, which currently accounts for less than 10 percent of state revenues.
Kuwait also wants to attract more foreign investment by becoming a financial hub and continue privatizations after parliament approved the sale of loss-making Kuwait Airways [KA.UL] early this year.
“A gradual governmental withdrawal from direct participation in economic activities and the state monopoly to own land … A speeding up of privatization,” the policy paper proposed, adding that the private sector would also get more access to land.
More than 90 percent of land is owned by the government.
The cabinet vowed last year to bring down property prices, a main contributor to inflation which hit 6.7 percent in November, driven by a 12.6 percent jump in housing prices.
In an apparent reference to inflation, the paper calls on the government to “rationalize” spending amid a cradle-to-grave welfare state that looks after citizens.
“Aiming at diversifying and developing state revenues and to rationalize expenditures and a proper surplus usage,” it said.
At the same time, the plan calls for huge infrastructure projects such as improving the airport, roads, phone lines, power plants as well as the ailing state health system.
While the policy paper, which the government is to discuss with the private sector, makes proposals for almost every sector from energy and real estate to education and health, it does not contain a concrete action plan or detailed time frame.
Naser al-Nafisi, General Manager of Al-Joman Centre for Economic Consultancy, said he was doubtful much would be done unless parliament and government became more cooperative.
“This is just talk on the paper. If they (the government) achieved 25 percent of this, that would be good,” he said.