Destination Kuwait: Hopes pinned on New Kuwait 2035

Travel & Tourism is one of the largest economic sectors in the world. In addition to generating nearly 10 percent of global economic activity, the sector provides millions of jobs and contributes billions of dollars to the GDP in countries around the world.

According to the World Travel & Tourism Council (WTTC), which has reported annually on the economic impact and social importance of the sector for the past 25 years, direct, indirect and induced travel and tourism grew by 3.9 percent in 2018. The sector contributed a record US$8.8 trillion to global GDP and provided jobs to nearly 320 million people around the world.

As a dynamic engine of employment opportunity, Travel & Tourism (T&T), which already supports one in every ten jobs on the planet, was responsible for creating one in five of all jobs created around the world in the last ten years. The report projected that with the right policies, investments, regulatory conditions and government support, the sector could create over 100 million new jobs worldwide in the decade ahead.

Sadly, all these glowing growth figures, revenues generated and employment opportunities are not likely to shake the authorities in Kuwait out of their stupor. As it had in the past, in 2018, the country continued to under-perform in this crucial sector of the economy and the prospects of Kuwait becoming a destination of choice for international travelers remains a distant dream.

The latest Travel & Tourism Competitiveness Index published by the World Economic Forum, Kuwait ranked a dismal 100th among the of 136 countries listed in the index in 2017. Kuwait trailed even other Gulf Cooperation Council (GCC) states, with the UAE occupying pole position in the GCC with a 29th ranking on the global index followed by Qatar in 47th place. Bahrain came in at 60th position, followed by Saudi Arabia in 63rd and Oman in 66th rank.

According to WTTC report, which evaluated 185 countries and 25 regions in the world, the T&T sector’s total contribution to the GDP in Kuwait, which was KD2.1 billion or 6.0 percent of GDP in 2017, notched a growth of 6.6 percent to register KD2.2 billion last year and is projected to rise by 4.8 percent per annum to reach KD3.6 billion or 6.4 percent of GDP by 2028.

However, over 88 percent of the sector’s contribution to the GDP in 2017 came from domestic spending, while spending by international visitors was limited to 12 percent.

Last year, the country attracted 3.34 million international visitors to the country; this is expected to increase narrowly to 3.7 million foreign visitors by 2028. Domestic spending which was KD1.6 billion last year is expected to rise to KD2.6 billion by 2028, while foreign spending which stood at KD245 million last year is projected to rise to KD380 million in the decade ahead.

Traveling is an attractive prospect for many Kuwaitis. Usually, during the cooler winter months, many Kuwaiti families vacation outdoors in tents spread across large camping sites in the desert, where they spend time engaging in traditional pastimes. Many families also have the luxury of owning beach-front chalets where they spend the summer months.

Clearly, there is strong domestic demand for tourism but the lack of venues prompts many to travel abroad. Domestic outbound travel expenditure which was KD3.7 billion in 2017 grew to KD3.9 billion last year and is expected to reach over KD4.9 billion by 2028. The scale of this outbound market suggests the huge untapped potential for growth in the domestic tourism industry.

Obviously, there is an urgent need to boost both domestic and foreign T&T spending and increase their total contribution to the GDP. However, industry experts lament that there are many challenges to the development of tourism in Kuwait, including the lack of tourism infrastructure, the shortage of tourist attractions, and weak support for private players in the T&T sector. The weak international visitation to Kuwait over the past decades was mainly due to inaction by the government to promote international tourism.

While  there  have been several attempts  to expand international and domestic tourism in  Kuwait, mostly from the private sector, the overall political and economic landscape in  Kuwait  has resulted in several major challenges for the development of the T&T sector. In particular, there is a lack of public-private partnerships between the private sector and  state owned enterprises, which have been instrumental  for  the development of the tourism industry, and in particular infrastructure, in places like Dubai and elsewhere in the region.

The biggest hindrance related to the revitalization of tourism in Kuwait is the lack of  tourist attractions in Kuwait. There are very few natural attractions in the country and its man-made attractions are nothing very impressive. Kuwait lacks the iconic attractions of the ancient world found in Jordan and Egypt, or the modern attractions found in the Uae or Qatar, or the natural beauty of destinations like Oman.

Once you have visited the iconic  Kuwait  Towers,  the  Liberation  Tower,  Old  Souk  and  Grand  Mosque in Kuwait City, you are left with pretty much with the standard tourist draws that you find elsewhere in the region, including an abundance of shopping malls, amusement parks,  swimming pool complexes, and resorts. Of late there have new investments especially in the form of museums and cultural centers and outdoor parks that offer a respite from traditional fare. But the international traveler is always looking for a unique experience, which Kuwait fails to provide.

In addition, onerous visa procedures restrict citizens of most nations, with the exception of a privileged few, from entering the country easily. Another issue related to large scale tourism developments is land ownership. In Kuwait, about 90 percent off the country’s real estate is owned by the government, thus any private sector developments that  require  land, must secure it through government channels.  Due to questionable development agreements in the past, the land has become highly  politicized and any large land deal has to be vetted through a wary parliament.

Happily, in recent years, there has been a renewed focus on developing the tourism industry in Kuwait, as part of a wider push to diversify the economy and gradually wean the market away from its dependence on oil revenues. Since the abrupt fall in oil prices in mid-2014, many of the  GCC nations started to move towards diversification,  privatization,  liberalization and deregulation in order to support long-term economic growth.

As part of this diversification process, there was a growing awareness that the development of the tourism industry was central component to unshackling the economy from oil.   Hope for a revival in tourism is now pinned on the New Kuwait 2035 strategy that is expected to open up the country to visitors and global investments, especially for the proposed Silk City project across the Kuwait Bay in northern Kuwait, and for tourist projects on Failaka Island.

The  New Kuwait plan includes the reduction of the ‘red tape’ surrounding starting and operating a  business, and increased access to land and capital for startups. Additionally, the plan supports the auctioning of government land and to engage the private sector in the development of public land.  The plan also calls for increased privatization to reduce public sector employment growth,  salaries, and expenditures. We hope the new strategy will prove a winning one for Kuwait.

-Staff Report