The government has proposed a law to privatize most of Kuwait’s industries, except for the Army, Police, and the Oil industry. The law would entitle the government to a 20% stake in the newly established companies, while a strategic partner would own 35%, employees own 5%, and the public would retain the remaining 40% stake. The law is being discussed in the parliamentary Financial Committee.

This law, if it passes and sees the light of day, is a huge step for Kuwait in the right direction, in our opinion. The new entities will be more efficient, specialized, lacking corruption, with clear goals, and accountable for their actions. Let us look at the Ministry of Electricity and Water Power as an example. If they privatize electricity, people will start to own up to their responsibilities and pay their bills. If they don’t, then the company will cut their electricity, unlike what is happening nowadays. This change will make people more accountable for the responsibilities and will improve people’s morality and ethical standards.

When Kuwait’s industries are put for sale, it will lead to a huge influx of foreign capital into Kuwait because 35% of these companies will be owned by specialized partners. A foreign electricity company might collaborate with a Kuwaiti partner to establish a Kuwaiti electricity company. The foreign companies will bring their expertise in that area, as well as their capital.

The government clearance of these industries that require routine work and constant Parliamentary headaches will lead the government to focus on more meaningful ventures, and work on establishing long-term plans and actually implementing them.

I previously wrote an article addressing the “then” significant issue of Kuwaitis laid-off from the private sector. The title of that article was a sarcastic one; “Want a one year PAID vacation? Get Fired NOW*”. Unfortunately, there are two major taboos in Kuwait: religion and populist demands. Examples of such populist demands span from debt forgiveness to the ridiculously spoiling laid-off benefits proposals.

Every few days (yes, our parliament is that active!) members propose a new populist demand. Sometimes it is sparked by a newspaper, an event, or merely a random insignificant person. The problem is that our government always falls pray for these demands and gives them extensive attention by simply making the critical assumption that everything brought up by parliament is a significant issue worthy of total consideration. These continuous parliamentary requests, among other things, distract our limited government and derail any potential progress in all fronts. Consequently, our priorities such as health care, education, and economic reform are never addressed.

A perfect example is the issue of Kuwaitis being laid-off the private sector. I was reading Al-Jarida newspaper and it states that only 350 individuals are enrolled in the newly enacted and highly debated laid-off Kuwaitis program. This constitutes a mere 0.035% of our population! Previously, parliament members were suggesting the number was at least 5000 individuals and gave the issue all their attention for over a month. There were never-ending meeting by the parliament’s finance committee and the government established a special committee of high-ranking ministers to solve this “imminent” issue. Was it an issue? Yes. Was it worthy of all this time and attention? Surely NOT. This time should’ve been more efficiently used to address fundamental economic issues such as establishing a “Capital Market Authority” which has been delayed for decades.

Will the parliament stop? No, populist calls give them votes. Will the government say “STOP IT” and start to lead? No. What happens next? Parliament wastes one or two more months discussing another moral hazardous issue: loans write-off proposal. And so it goes..

God bless Kuwait.

This may not be financial news or analysis, but we at Alpha Dinar are overwhelmingly touched by this accomplishment. Now we can proudly say that Kuwait has a complete democracy. Electing four women to the Kuwaiti parliament is a milestone in our democracy and a firm step in the progress and development of our country. Although this news isn’t financial, I firmly believe that it will have major economic repercussions. Voting for women is an evident social/political change that can pave the road for financial overhaul and openness. We can now see the light at the end of the tunnel that will transform our dependent mentality and socialist economy into accountable capitalism. Let us celebrate this moment and work hard for more to follow.