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Kuwait Infrastructure Report Q3 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: June 2009 Product Code: R302-6520 Description With the Kuwaiti parliament having been dissolved amid questions about Prime Minister Sheikh NasserMohammad al-Ahmad al-Saba’s handling of the economic crisis, the current climate is still yet far fromstable. Kuwait’s ruler, Emir Sheikh Sabah Al-Ahmed Al-Sabah, issued a decree dissolving parliament inMarch. This was in response to Islamist lawmakers’ disapproval of the Prime Minister. The Emir lastdissolved parliament a year ago to end a row between MPs and the cabinet.Corruption has become a major factor in many infrastructure deals and this has had knock on effects interms of investment and construction. Plans to build the al-Zour refinery, for example, were scrapped bythe government on March 16. The US$15bn refinery is the second major foreign investment project thatKuwait has scrapped since December, when it put a stop to a US$17bn joint venture (JV) with DowChemical following parliamentary pressure. Parliament decided to cancel al-Zour after allegations ofcorruption in the award of contracts The decision to cancel al-Zour will have several implications. Firstly, it is a major blow to the companiesfrom Japan, South Korea and the US that have signed preliminary deals to participate in the project.Secondly, without al-Zour, Kuwait's ageing Shuaiba refinery will have to be kept in service rather thanscrapped in accordance with current plans. Thirdly, Project Kuwait (the plan to invited foreign oil majorsto invest in the Kuwaiti upstream) looks even more unlikely to proceed in the near term, as parliamentaryopposition to the project is likely to prevail against the government's moves to progress it. The government of Kuwait has also deferred the issuing of 300 new business licences to combatfraudulent businesses that it believes are creating turmoil in the country's financial markets. Thishighlights ongoing concern over corruption in Kuwait. Its score of 61.3 in the Institutions component ofBMI's Business Environment Index is particularly poor. BMI forecasts that the Kuwaiti construction industry will see very little growth in 2009, and will stayvirtually flat in 2010. Industry value will be US$2.39bn in 2009, but will see growth from 2011 onward,reaching US$2.95bn by 2013. For 2009, the real y-o-y growth in the construction industry value isexpected to be only 0.80%. Given the current economic difficulties in Kuwait, the construction industryhas grown in importance as a proportion of GDP, accounting for an expected 2.24% of total GDP in 2009 Table of Contents
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