Problems relating to Trade and Investment on Kuwait
23. Inefficient administrative procedures, regimes and practices |
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Issue |
Issue details |
Requests |
Reference |
| (1) Nebulous Offset Programme | - Relative to tender on public work project, other than oil and gas, contractor's satisfaction of offset obligation is mandatory requirement. It has a negative aspect of interfering with the competitive tender from having to satisfy the counter-trade offset requirement directly unrelated to the project itself. | - It is requested that GOK discontinues the offset programme. | - Law Concerning the Counter-Trade Offset Program' - Kuwait Offset Programme |
| (2) Adverse effect of Commercial Distributor Scheme | - For import of equipment and materials from abroad, appointment of 100% local enterprise as commercial distributor is a mandatory requirement. It is quite possible that a fair and competitive procurement is interfered with. | - It is requested that GOK takes steps to repeal the commercial distributor scheme. | - Commercial Code on Commercial Distributors |
| (3) Complex Acquisition Procedures for Licences and Approvals | - Hardly any coordination seems to exist by and among Ministries and Agencies so that in many cases contractors need to intercede over the complicated issues between the Competent Authority that issues Licences and Approvals and another Competent Authority acting as Contractor. | - It is requested that Ministries and Agencies streamline their internal adjustments as necessary. | |
| (4) Ministries and Agencies' Paucity in Observance of Contract Terms | - On a governmental project involving construction work, payment for 30% of the contract amount has delayed beyond the due date, while on a large project, the government compelled monetary burdens upon the contractor over an extended period. On the part of the party to the contract, namely, the government, absence of the spirit for observing the contract terms was noticed on some occasions, so that on another case where performance under the contract came to a standstill for reason of the government, the purchaser, the contractor was forced to absorb the burden in effect. | - It is requested that GOK takes steps to: -- deregulate the contract terms (particularly, the terms of payment), and -- observe thoroughly contract terms on the part of the governmental institutions. |
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| (5) Restricted Debiting of Headquarters Expenses | - In a construction project (under the all in contract, including procurement of design, equipment and materials, and construction) for petro-refinery, petro-chemical, natural gas treatment, liquid natural gas (LNG) plant, etc., in regard to debiting sales expenses arising individually per project, headquarters' general & administrative expenses, and engineering department's indirect expenses, taxation authority in Qatar allows maximum 3%, and in Kuwait 3.5% over the [sales amount less external purchase amount] and in Oman 3% over the sales amount or 3% over the headquarters sales and administrative expenses. In the process of performance in individual projects, while headquarters' and indirect departments' supports are indispensable, personnel cost and expenses for supporting the project, by far, exceed the foregoing deemed amounts. |
- It is requested that GOK allows debiting the cost incurred for individual projects on account of sales, general and administrative expenses, engineering (manufacture) department indirect expenses, at the level reflecting the real accrual of expenses. | |
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