Kuwait's industrial prospective

Kuwait is on the brink of an infrastructure development plan that will on paper change the face of the country over the coming years. As MPs in Kuwait's National Assembly passed a US$108 billion package for infrastructure development in February 2010, it became harder for more cynical observers to deny that Kuwait is soon to experience a genuine infrastructure boom. BMIs more sober forecast in its latest Kuwait Infrastructure Report, however, demonstrates how instrumental the political environment will be in a year of anaemic growth of 0.53% in construction. The defining four-year development plan albeit reduced from US$129 billion leaves few sub-sectors untouched, with rail, power, oil, water, health and education all slated for investment as the government develops new ports and cities. The smooth implementation of the development plans will be paramount in a country where projects have been plagued by disputes between the executive and legislature. The cabinet promisingly approved the transfer of US$16.6 billion of the US$108 billion four-year package to the annual state budget for spending, which is effective from April. An additional US$10.8 billion was handed to the Ministry of Public Works in March 2010 for infrastructure spending. The litany of projects or at least those that come to fruition will lift growth Kuwait's construction sector up from US$2.54 billion in 2010 by about 1% year-on-year to 2014, according to BMI calculations. Moves were also made this quarter to expand gas supplies as some progress was seen on the joint Kuwaiti and Saudi Dorra offshore gas field. The Dorra field is an important one for Kuwait, as one of its few non-associated gas reservoirs producing gas independently of oil extraction and is being developed by Al-Khafji Joint Operations (KJO). Further gas supplies yet may come from the more unlikely source of Iran's South Pars gas fields via a new 577km pipeline. Kuwait and Iran stopped short of a final price arrangement during the latest in a number of talks on the pipeline, which will pump 8.5mn cubic metres of gas from Iran to meet Kuwait's increasing appetite. Meanwhile, wider Kuwait's banking sector sees a potential boon in the country's four-year development plan as it will help ease the current disincentive to further expose balance sheets to the construction industry. Industrial highlights Kuwait's national assembly has given first approval to a five year development plan that could see massive spending on public works early this year. The plan will involve spending of up to US$125 billion (KD37 billion) on oil and non oil projects, according to a Global Investment House. Amongst the plans awaiting funding are Silk City, a new town whose blueprint includes the world's tallest tower; a new container harbour and 25km causeway; a railway and metro system; and Project Kuwait, a complete overhaul of oil production infrastructure. Citing comments made by the minister of finance, Global believes that up to KD15 billion (US$51 billion) could be allocated for development projects this year. Kuwait Industries Union (KIU) has announced that it is considering establishing a centre for industrial development and preparing potential industrial leaders, in order to develop the national industrial sector. In a press release this week, KIU said that the centre will be the first of its kink in Kuwait and will provide raining for workers, will prepare future industry leaders, and will also offer consultancies for existing industries. Galfar's acquisition of Shaheen al Ghanim Roads & Bridges Contracting Company, a Kuwaiti infrastructure firm, sometime May 2010 extended Galfar's operations into Kuwait's growing infrastructure sector. The highly uncertain political climate does not currently justify a significant adjustment in growth forecasts. BMI sees the construction sector growing by just 1.39% in 2011 to US$2.6New Balance Mens Shoes