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	Kuwait		Info-Prod Country Guide
CHARACTERISTICS   INDICATORS   THE ECONOMY   INVESTMENT ISSUES   PROJECTS   PROSPECTS

Current and Projected Projects General A number of US companies have been invited to build a new 2,400-MW thermal power plant in Al-Zour, a result of intense lobbying by the US government. A project consultant should be appointed in early 1997, and tenders are expected to be announced in 1998. The Al-Zour plant, to be financed exclusively by the Kuwaiti government, will have an associated water desalination plant with forty-eight million imperial gallons of water per day capacity. It will boost Kuwait's installed electric capacity to 11,680 MW when completed. In the military sector, Britain’s GKN Defense won a four year contract to maintain the Kuwaiti Army’s Desert Warrior armored personnel carrier. GKN originally supplied the vehicles under a 1993 US$ 1 billion contract. The deal is part of a US$ 12 billion commitment undertaken by Kuwait to rebuild its armed forces in the aftermath of Iraq’s 1991 occupation. Build Operate Transfer Two consortia submitted proposals to rebuild the Shuaiba north plant, destroyed by the Iraq during the Gulf War, on a BOT basis in early 1993. The first consortium was led by Germany's Deutsche Babcock and the second by the US-based Wing Group, which included the Enron Corporation and the UK's Midland Electricity. Kuwait’s current electric capacity is 6,680 MW, but this will rise to 9,280 MW when the Shuaiba power plant is fully commissioned in 1999. Civil works for the project are being carried out by South Korea's Hyundai Engineering & Construction Company. Japan's Mitsubishi Heavy Industries won a US$ 1.6 billion contract to supply the boilers and turbines. Questions remain about the need for the Kuwaiti government to invest in a project of this size at the current time. Peak electricity demand in Kuwait only reached 4,550 MW in the summer of 1995. Even if current 7 percent growth levels are maintained, peak demand will not match installed capacity until 2009. Franchising Although the Kuwaiti market is relatively small, franchising offers profitable opportunities. The population of 2.2 million have high disposable income and a strong inclination to buy American goods. Additionally, labor saving services are in demand. At present, most franchises are in fast food, with McDonald's being a recent arrival. US fast food franchises are highly sought after by local companies, and most of the major US fast food companies are already established in the market. A local sponsor is required to establish such operations. American firms dominate the fast food sector with the following franchises: Hardee's, Kentucky Fried Chicken, Burger King, Chicken Tikka, Wendy's, Pizza Hut, Subway and Baskin Robbins. Light competition in this sector comes from Pizza Italia and Wimpy. Opportunities exist for franchises in other areas such as: automotive service centers, beauty salons, testing centers, dry cleaning/laundry shops and photocopy stores. An example of a new franchise is the ACE Hardware store that opened recently in Kuwait. The Kuwait franchise market is characterized as fiercely competitive. Japanese electronics and cars have a strong appeal to the Kuwaitis. Brands like National, Panasonic, Sanyo, Toshiba, N.E.C., Sharp, Toyota, Nissan, Datsun, Honda, and Subaru are examples of the heavy Japanese presence in the Kuwaiti market. Japan actually overcame the US in exporting to Kuwait in 1993. Similarly, British and German products and services enjoy a strong positive image in Kuwait. Average growth in all franchise areas is expected to reach 25 percent, and, in some subsectors, it may reach 60 percent. Some franchises may, however, lose their appeal within ten years. Kuwaiti citizens have a tendency to change tastes often because they are frequent travelers and well aware of the latest fashions in Europe and the USA Another major type of franchise in Kuwait is the car dealership, with almost all known automobile makes represented in Kuwait: Ford, Chrysler, GM, GMC, Cherokee Jeep (US); Volvo (Sweden); Mercedes, BMW, and Audi (Germany); Jaguar and Rolls Royce (UK) as well as the Japanese dealers noted above. Among clothes franchises, Kuwait has attracted the British firms Mother Care and British Home Store (BHS). The market is ready for foreign franchises in the clothing and lingerie areas. In education, the British Pitman Secretarial studies center has been in Kuwait for many years. An American educational center opened, and more educational and training firms could be accommodated in Kuwait. Previous Chapter Contents Menu Next Chapter

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