‘Expat license suspension is disruptive to Kuwait’s business environment’

KUWAIT CITY, Aug 7: The Ministry of Commerce and Industry’s recent circular, which suspends all expatriate licenses and bars their entry into companies unless their residency complies with Article 19, has faced extensive criticism from various economists and industry leaders. The circular has been described as a poorly considered measure, characterized by misplaced enthusiasm and a hasty implementation that is expected to cause significant disruption to Kuwait’s business environment and economy, reports Al-Jarida Daily.

Many economists have voiced concerns about the circular, arguing that it was issued without specifying the duration of the suspension or providing a clear mechanism for its implementation. This lack of clarity raises questions about the future of companies with valid contracts involving expatriate owners or partners. Economists worry about the potential chaos and negative impact on businesses of all sizes —whether small, medium, or large — due to this abrupt policy shift.

Economists have noted that the decision-makers did not fully consider the practical realities of Kuwait’s work environment. They highlighted the absence of a detailed study to support the circular and its potential ramifications for the Kuwaiti labor market. The critics have called for the Ministry to reevaluate the circular, conduct a thorough analysis, and potentially cancel it for further consideration.

Saleh Al-Salmi, Chairman of the International Financial Investment Company (IFA), condemned the circular as a “bad decision.” He stressed that the measure lacks clarity and could lead to significant market imbalances and confusion. Al-Salmi emphasized that the sudden shift could severely impact both small and large companies, particularly those with expatriate partners or personal licenses. He questioned whether such decisions are imposed as final or if they represent a recent shift, stressing that abrupt changes to a long-established system are likely to cause considerable confusion.

Al-Salmi advocated for a more disciplined and transparent approach, suggesting that the circular should have been subject to a more rigorous review before implementation. He highlighted that Kuwait’s existing laws, which limit foreign partners to less than 49 percent ownership, are already in place to address concerns about foreign involvement. The circular, according to Al-Salmi, undermines the state’s efforts to facilitate a favorable business environment and could deter investment.

Khaled Al-Abdulghani, a member of the Kuwaiti Industries Union, echoed these concerns, criticizing the decision for its negative impact on the industrial sector. He noted that the lack of a specified grace period for adjustment and the absence of a clear implementation mechanism contribute to the confusion. Al-Abdulghani argued that such decisions should be accompanied by proposed solutions and a detailed plan for addressing potential issues.

Badour Al-Sumait, head of the Business and Professional Women Network, expressed concern that the circular disrupts numerous businesses, particularly small and medium enterprises. She argued that any regulatory change must be accompanied by practical solutions to mitigate negative impacts. Al-Sumait highlighted that the decision conflicts with Kuwait’s goal of attracting foreign investment and increasing non-oil revenues, as it could deter investors and hinder economic development.

Dr. Essam Al-Tawari, Chairman of the Board of Directors of Newberry Consulting, criticized the circular as “unsuccessful” and disruptive to the operations of existing companies. With approximately 45,000 companies potentially affected, Al-Tawari argued that halting business operations is not a viable solution to any underlying issues. Instead, he suggested that solutions should be gradual and well-considered.

Al-Tawari also questioned the rationale behind the decision, indicating that it appears to be based on a potentially flawed interpretation of labor regulations. He pointed out that the number of individuals with Article 19 residency is relatively small and primarily involves large companies. Smaller service-oriented businesses, which support many small and medium enterprises, do not require large capital investments and are disproportionately affected by the circular.

Overall, the circular has sparked widespread criticism for its lack of foresight and inadequate consideration of its effects on Kuwait’s business landscape. Economists and industry leaders are calling for a reassessment of the decision, urging the Ministry of Commerce and Industry to provide clarity, propose practical solutions, and possibly cancel the current directive for further study.