Kuwait and Qatar are two of the most affluent nations in the Middle East and the Gulf region with high income economies backed up by oil and natural gas export. It is imperative to note that while both the types of firms involve similar activities in terms of their business functioning, they are two entirely different concepts in the aspects of business environment.
Economic Overview
The organisation also reveals that Qatar today boasts the highest GDP per capita with $71,321. At the same time, Kuwait has a GDP per capita of $ 33,000 or so. These two are most important and have contributed a lot in Qatars and Kuwait’s GDP, which ranges 50% – 60%. Still, Qatar has done way much better than most of the other GCC countries to look for other sources of income apart from oil and gas.
There is a projected average yearly GDP growth rate of 3.4% for Qatar in 2023 while the growth rate is expectant 1.9% for Kuwait. Qatar being among the countries that rely on oil and gas has been in a process of investing billions of dollars in infrastructure as well as in commercial diversification projects for the post oil economies. It is however important to note that Kuwait remains to thisdate largely reliant in revenues from oil.
Business Laws and Taxes
According to the World Bank 2020 report, Qatar had an overall ranking of 83 on ease of doing business. It, therefore, takes about 8 days to start a business there. Kuwait ranked 97, this, however, if it takes 11 days to start a business.
In the past decade, Qatar has thoroughly focused on efforts that helped cut down bureaucratic red tape for companies. Suffice to say that Kuwait continues to experience a great deal of bureaucratic problems. In Kuwait the process of obtaining licenses may take considerable time.
Both Kuwait and Qatar have very low taxes as a strategy of encouraging foreign investors. Neither of the two countries imposes income tax on its citizens. But they do so by getting corporate taxes and taxes on international companies to boost up government income.
Access to Finance
It is easier to borrow in Qatar than Kuwait. According to the data, in 2020, Qatar’s positions in getting credit was 104 rd while Kuwait was ranked 152 rd. The costs associated with starting business is also relatively low in Qatar at $1,200 per income per capita contrary to $4700 in Kuwait.
Foreign Investment Control
However, as for Kuwait, it has drastically fewer percentage for restricted foreign ownership compared to Qatar, for example, there are no restriction on the foreign ownership in most sectors in Qatar except in banking, insurance and estate.
On the other hand, Kuwait restricts free foreign proprietory stake in many domains without a local partner. There are also check on the stock market in Kuwait wherein foreigners cannot fully own companies in the market. Therefore, there has been more ease to attract FDI in Qatar.
Infrastructure and Connectivity
Qatar has undertook massive investment in transport and technology sector with more airports and ports construction, road networks and communication technology. According to WEF’s infrastructure quality ranking, it was 19th out of all countries in the world. Kuwait’s infrastructure is good however outdated to cater for business purposes and it is an area that requires more investment.
Availability has also been supported by geography in Qatar as well. Located in the middle of the gulf region, it has become international hub for transport, logistics and commerce. Economically however Kuwait is less critically positioned in the Gulf, but a little farther up.
Labor Regulations
One of the major features of Qatar already influencing the business environment has been the large migrant labor. Qatar has faced a lot of criticism through its working conditions for guests workers or labor migration specifically those involved in construction of infrastructure for the 2022 World Cup.
But it also has more developed labor laws than Qatar has, at least on paper. While practical aspects of the labor relations have been discussed, both countries have started carrying out changes to their labor legislation concerning wages, working time, health care and other standards.
Corruption Perceptions
According to a Corruption Perceptions Index compiled by Transparency International, Qatar knows corruption a little better than Kuwait does. According to the Global Index of Freedom 2020 Qatar stands at number 30 among 180 countries, Kuwait stands at number 67. There is still a problem with the rule of law and a filterable lack of clarity of the government decisions and transactions in Kuwait.
At the same time, certain regulatory and economic advantages need to be mentioned, although there are still some certain vices because of the existence of an absolute monarchy in Qatar. Kuwait continues to offer great potential due to its richness and location close to such strategic markets like Saudi Arabia. Nevertheless, making it more competitive would entail simplifying regulations, procedures for local and foreign players in the next couple of years.