Instructor: Ahsan Shah

Course: International Business

Name:M.Umer Razi

TRADE AND BUSINESS ACTIVITIES:

Foreign trade has always been a top priority for Kuwait's economy. Before the discovery
of oil, merchants developed large transshipment and export businesses that, along with
the sale of pearls to foreign dealers. The discovery of large quantities of oil provided a
new and increasingly important export because Kuwait needed only small amounts of oil
products domestically. . even after the discovery of oil, Kuwait's merchants continued to
develop transshipment and reexport businesses with neighboring countries. During the
Iran-Iraq War, goods for Iraq passed through Kuwaiti ports. Oil, however,
overwhelmingly dominated Kuwait's exports .

Kuwait's significant foreign-exchange earnings from oil exports and investment income
largely removed any constraints on imports in the pre-invasion period. Almost any
commodity could be imported, and most import duties were modest. Imports for Kuwait's
high-income economy were mainly finished products because of the small domestic
manufacturing sector (food and live animals, crude petroleum,gas,chemical fertilizers,
machinery and transportation equipment etc).

These imports came predominantly from Asian countries, followed by those from
European countries(Britain,Egypt,india ,Pakistan,Netherland,saudi Arabia,Usa and
Japan)). Imports of all kinds came primarily from Japan and the United States. After the
Persian Gulf War, imports from the United States increased dramatically . Huge oil
revenues, paid in foreign currencies, freed Kuwait for the most part from balance of
payments worries.

. In the 1960s, the government began placing funds in the Kuwait Fund for Arab
Economic Development (KFAED), established in 1961. The best known of Kuwait's
investment organizations and one that was used as a model by other oil exporters,
KFAED functioned as both an investment and an aid agency, providing loans for specific
projects, often on concessionary terms. KFAED's charter was changed in 1974, when
capitalization was increased to KD1 billion.

RELATION WITH NEIGHBORING COUNTRIES:

The boundary with Saudi Arabia was set in 1922 with the Treaty of Uqair following the
Battle of Jahrah. This treaty also established the Kuwait-Saudi Arabia Neutral Zone, an
area of about 5,180 km². (2,000 sq. mi.) adjoining Kuwait's southern border. In December
1969, Kuwait and Saudi Arabia signed an agreement dividing the Neutral Zone (now
called the Divided Zone) and demarcating a new international boundary. Both countries
share equally the Divided Zone's petroleum, onshore and offshore.

Kuwait's northern border with Iraq dates from an agreement made with Turkey in 1913.
the Amir of Kuwait requested assistance from the Saudi Arabian and British
Governments. Britain rapidly deployed troops, aircraft and ships to the area. In 1963,
after Qasim had been killed in a coup, Iraq reaffirmed its acceptance of Kuwaiti
sovereignty and the boundary it agreed to in 1913 and 1932, in the "Agreed Minutes
between the State of Kuwait and the Republic of Iraq Regarding the Restoration of
Friendly Relations, Recognition, and Related Matters."
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Instructor: Ahsan Shah
Course: International Business
Name:M.Umer Razi

RELATION WITH THE EXTENDED COUNTRIES:

Kuwait has depended on trade, and today exports total $13.5 billion each year in oil,
refined products, and fertilizers. Japan, India, the United States, South Korea, and
Singapore are the major recipients of their exports. Kuwait imports $8.1 billion a year in
food, construction materials, vehicles and parts, and clothing from the United States,
Japan, the United Kingdom, Germany, and Italy

Japan is Kuwait's major trading partner, with two-way trade reaching USD 10.53 billion
in 2009. As Kuwaits export prices to Japan outpaced growth in its imports, Japan's trade
deficit with Kuwait grew 19.5 percent from a year earlier to JPY 73.05 billion (USD
813.1 million) in May, marking the red ink figure for the 28th straight month, the Finance
Ministry said in a preliminary report. The figure widened for the seventh straight month.

FOREIGN POLICY:

Tariffs

Kuwait does not implement any custom duties on food ,agricultural items or essential
consumer goods or an import of some machinery, most spare parts and all raw materials.
The general administration of custom collects all 4 percent on general tariff on some
imports,which include the cost ,insurance value of goods.

Standards

Kuwait maintained high restrictive standards which hinder the marketing of US

exports .for example shelf life requirement for processed foods are far lower necessary
than to preserve the freshness in Kuwait than are abroad

EXPORT SUBSIDIES POLICIES:

Kuwait does not directly subsidize any of its exports, which consist almost exclusively
of crude oil, petroleum products and fertilizers.kuwait imports is almost 98% of the
country food products. Some local vegetables are grown by the farmers and are
subsidized by the government some of the vegetables are sold by neighboring countries.

CUSTOMS EVALUATION:
For perishables items arriving via air ,land or sea customs clearance is prompt and takes
about three hours to complete the clearance the importer presents its import license and
qualiy test certificate.

IMPORT LICENSE
Importers must obtain an annual report license from the ministry of commerce and
industry. The license authorize the import of any amount of goods from any country on
multi entry basis, during its one year term.

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Instructor: Ahsan Shah
Course: International Business
Name:M.Umer Razi

EXPORT CONTROLS:
Only few items being exported from Kuwait require export license and generally there
are no import restrictions on Kuwait products. No duties are levied on goods exported
from Kuwait Foreign contractors need a letter of clearance from director income taxes

TRADE POLICIES

The United Nations Economic and Social Commission for Western Asia (UN-
ESCWA), headquartered in Beirut Lebanon is one of the five regional commissions
under the administrative direction of the United Nations Economic and Social Council.
UN-ESCWA promotes economic and social development of Western Asia through
regional and subregional cooperation and integration. It devises, promotes, and executes
development assistance activities and projects in tune with the needs and priorities of the
region of Western Asia.

a) ESCWA member countries must continue to integrate regionally and internationally,

and seek to encourage a policy mix of import-substitution and export promotion
policies;

(b) Given the growing competition from world markets, ESCWA member countries need
to continue to reform and further modernize existing trade policies. Improving the
information and communications technology (ICT) sector will play a vital role in
enhancing the markets and trade in the ESCWA region. While this sector has continued
to grow over the past few years, more efforts are needed in order to promote integration
with international markets;

(c) In order to succeed in their recent trade integration efforts and their new, outward-
oriented trade policies, ESCWA member countries need to encourage foreign direct
investment (FDI), which, in addition to increasing savings and employment
opportunities, allows for the transfer of technology and knowledge, and increase
productivity

List of Ambassadors

Dr. Fadhil Safar

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Instructor: Ahsan Shah
Course: International Business
Name:M.Umer Razi

Mr. Mustafa Jassem Al-Shamali

Nouria Subeih Barrak Al-Subeih

Mohammed Abdullah Hadi Al-Olaim

Ahmad Baqer Al-abdullah

GOVERMNET TYPES

Type: Constitutional hereditary emirate.Independence: June 19, 1961 (from U.K.).

Constitution: Approved and promulgated November 11, 1962. Branches: Executive--Amir (head
of state); prime minister (head of government); Council of Ministers (cabinet) is appointed by
prime minister and approved by the Amir. Legislative--unicameral National Assembly (Majlis
al-'Umma) of 50 elected members who serve 4-year terms plus all ministers, who serve as ex
officio members. Judicial--High Court of Appeal. Administrative subdivisions: Six governorates
(muhafazat): Al 'Asimah, Hawalli, Al Ahmadi, Al Jahra', Mubarak Al-Kebir, and Al Farwaniyah.

Political parties: None; formal political parties have no legal status, although de facto political
blocs exist. Elections: There are no executive branch elections; the Amir is hereditary; prime
minister and crown prince are appointed by the Amir. National Assembly elections were last held
May 16, 2009. Municipal council elections were held on June 25, 2009.

Suffrage: Adult males and since May 16, 2005, adult females who are 21, have been citizens for
20 years, and are not in the security forces. In June 2006, women participated as voters and
candidates in parliamentary elections for the first time.

THE VALUE SYSTEM OF PEOPLE

Ethnic Kuwaitis struggle to maintain their cultural dominance in an increasingly complex society.
dominant Kuwaiti culture is homogeneous, and adheres to traditional values developed in the
desert plains in accordance with the teachings of Islam. There is tension, however, between these
cultural norms and the other ethnic groups who reside in Kuwait. Most Kuwaiti workers have
government jobs, an opportunity generally denied to foreign nationals. Also, there are restrictions
against foreigners owning property and businesses. These social and economic gaps between the
nationalities and other ethnic group increase the friction between Kuwaitis and non Kuwaitis’
residing in the country.

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Instructor: Ahsan Shah
Course: International Business
Name:M.Umer Razi

DIFFERENCE BETWEEN THE TWO APPROACHES:

Now in the present the new prime minister who used to be a finance minister SHEIKH
AHMAD AL SABAH he wants to make kuwait a financial hub for international world like
Singapore and dubai because in dubai and Singapore security,political stability ,there
infrastructure ,there bank loans ,the schooling ,hospitals they are very good for investors so the
prime minister wants to make Kuwait same like those countries. They are revising all their
policies so they can attract the foreign investors and the second change that occur that recently
they passed a new labor law.

FURTHER CHANGE IN RELATION TO ALL ABOVE:

The further change in relation to all above the Kuwait is focus on agriculture sector so the percentile of
import goes down and changes of trade policies are also in the process

RECOMMENDATION:

The recommendation would be that Kuwait should have a good relation with the neighboring countries
from Saudi Arabia and Iraq more or less iran as well like the day Kuwait got independence Kuwait didn’t
had a good relation with Iraq specially so these countries should start doing business with each other.So
these should focus on the regionalization .kuwait has a 5 percent of agriculture so they should produced
goods from there so their imports become less. Their extended relations with other countries are quite
good specially the the high importers and exporters are japan and usa.kuwait should put custom duties on
consumer products and machinery as well

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