Kuwait plenty in the pipeline

Kuwait is an important factor in the Middle East region today. With its long history of financial investment, locals are experienced with participation in the stock market and one of only two parliaments on the peninsula. Kuwait indeed has an identity of its own. The IMF forecasted GDP growth at 3.1% for 2010 and 4.8% for 2011, but multiple other sources held their projections for GDP growth under 2% until 2014. The years-long process of expanding the private sector and reducing the economy's reliance on the public sector will be helped by the coming privatisations, labour reforms, and updated laws regarding multiple areas of economic activity and unlocking entrepreneurial potential.

Taking stock of the latest spending on infrastructure, the Ministry of Public Works gave a boost to Kuwait's construction sector in December 2010 when it announced that billions of dollars worth of projects was currently under way, with even more set to follow in the New Year.

 The local construction industry has continued to benefit from the government's commitment to stimulus spending over the past 12 months. This is amply demonstrated by the latest figures from the Ministry of Public Works, released in late December. These show that government expenditure on construction reached KD2.84 billion ($10.02 billion) in 2009-2010, with 139 separate projects commissioned. This substantial investment is likely to be matched in the 2010-2011 budgeting period, with 132 projects currently on the books.

In light of the global financial crisis, the government has taken decisive action to see off the threat of a downturn in the local economy. From a sustained period of under-spending and significant budget surpluses, Kuwait announced a massive five-year development plan in February 2010. The KD30 billion ($106 billion) strategy marks a break from the last half-decade and is the first such plan in 20 years.

This all bodes well for the construction industry, which is likely to be the biggest beneficiary of the government's stimulus package. The details of how funds will be allocated had been patchy, but it is becoming clearer that infrastructure spending will be a primary concern. Beyond investment in hydrocarbons, health and education, the government is beginning to stress the importance of upgrading the country's transport infrastructure.

For example, in December 2010 the Ministry of Public Works announced that KD3 billion ($10.6 billion) has been allocated for road development projects. The roads department is working on 14 projects under this package, including the construction of new highways linking outlying communities, such as Al Khiran City and Sabah Al Ahmad City.

Such announcements should lead to a raft of tenders and contracts over the coming months. According to the ministry, a package of contracts for the second, third and fifth ring roads should be floated in the first quarter of 2011, and this will come as a welcome gift for contractors operating in the Kuwaiti market.

"In light of the global financial crisis, the Kuwait government has taken decisive action to see off the threat of a downturn in the local economy."

Future projects
As this suggests, the future course of the construction industry will most likely be charted by these lucrative government-funded projects. Supplementing the road-building agenda, contractors have two further large-scale infrastructure projects to look forward to. Firstly, the expansion of Kuwait International Airport is being mapped out and will be put up for tender over the coming two years, with construction scheduled to start in May 2013. Secondly, the development of Boubyan seaport, also known as Mubarak Al Kabeer, which began in September 2007, is ongoing.

Both projects should offer substantial packages for engineering and construction works. The airport will be expanded from a capacity of 7 millioNike