Kuwait’s long awaited insolvency law is expected to be passed “in the coming weeks”, the country’s minister of finance has revealed.
In an exclusive interview, Anas Khaled Al Saleh, who is also Kuwait’s deputy prime minister, told Arabian Business that MPs were due to vote on the final version of its new insolvency legislation and that the new law could be ratifed as soon as next month.
“It is now in parliament and we are working on it, probably one or two weeks [after the interview took place] it will be passed,” he said.
The legislation – the country’s first to help failed businesses recover from financial difficulty through restructuring rather than having to wind up leaving creditors out of pocket – was reported to be finalised at the end of 2014 but its enactment has been delayed, in part due to Kuwait’s semi-democratic parliamentary system.
In 2014, the former managing partner of DLA Piper in Kuwait, Abdul Aziz Al Yaqout, told Arabian Business that the draft law would allow companies at the brink of financial collapse to seek court protection and business rehabilitation, instead of liquidation.
Questioned over the delays, Al Saleh said: “I had the privilege of engaging with the World Bank [and other institutions] to draft [the insolvency law] and it took us a long time because it’s a really strong law to be implemented in a legislative environment such as Kuwait where we have a parliament who we have to talk with and a constitution to abide by.
“Elsewhere probably you could write something and just send it [for enactment], but we have to make sure it’s in line with the constitution guidelines. Now I’m telling you its in parliament and we will be voting on it in the coming [weeks].”
The UAE for the first time brought in dedicated insolvency legislation this year, and Bahrain, too, is finalising similar legislation. Such laws are considered crucial to making the GCC more attractive and sustainable for start-ups and overseas businesses.
Al Saleh said improving Kuwait’s business environment was a priority, with other such reforms including an amendment enacted this month to remove capital requirements for new businesses, and a decision to slash fees for corporate licensing renewals.
“We are doing everything possible to enhance our ranking in the World Bank’s Ease of Doing Business report [from 101st in 2016, compared to 26th for the UAE].
“This is all part of our [economic] diversification [strategy]. When we say we want our private sector to be enhanced and stronger we have to make sure that it has a good environment in which to work. This is a priority for us.”
However, he revealed that the country has shelved controversial plans to introduce corporation tax, arguing that it is too risky to introduce such a tax unless all of the GCC states did the same.
“We thought it was more important to work on our business environment, make sure that is strong and healthy, and then start thinking of imposing such as tax rather than destroying our competitive edge with competitors in the GCC,” he said.
“You can’t impose tax here unless it’s also implemented across the rest of the GCC because otherwise we will have a problem competing. So we are [delaying] it, we want to make sure it’s coming in at the right time.”