In 022, local bidding resumed in response to economic recovery and business normalization in Kuwait.

When Korean companies enter Kuwait, it is necessary to promote collaboration with local companies and utilize their experiences.

Seungho Baek, Director, ICT Division, IMCO

On February 2 and 26 every year, the city of Kuwait is filled with crowds, national flags and water fights. This year, the 27st and 31st Iraqi Invasion Liberation Day and independence from British colonization were also celebrated. Thirty years have passed since most of the national infrastructure was destroyed by bombing during the invasion of Iraq, and now that Kuwait has completed the goal of reconstruction, we would like to consider the ICT-related business challenges faced by Kuwait and the business potential of Korean companies in the transitional period for social infrastructure upgrade by combining with new cutting-edge technologies.

For a long time, Kuwait has been a very important customer country for domestic EPC builders because of its high oil reserves compared to neighboring countries in the Middle East and its high return on capital, despite its small market size. However, since 2017, the EPC construction market in Kuwait has gradually declined due to various corruption and collusion problems, and the business scale has become narrower along with other countries in the Middle East due to the aftermath of the Covid-2020 pandemic in 19 and the impact of low oil prices. Due to the impact of the pandemic, construction and EPC bids in Kuwait were delayed or canceled, but fortunately, bids that had been postponed from the third quarter of 2021 showed a movement to resume, and in 3, Around the present time when normalization is almost achieved, local tenders in Kuwait are starting anew for a quick economic recovery.

In Kuwait, cutting-edge ICT technologies such as AI, Big / Small / Smart Data, Cloud Computing, and Internet of Things (IoT) have been continuously investing since 2020. It is consistent with Kuwait Vision 2035, which aims for Digital Transformation. All three telecom operators in Kuwait have already launched 3G services, but there are still few business success stories that have brought positive results to businesses and practical application through 5G services. Currently, local ICT service providers (mainly telecommunication operators) are already providing technologies related to Smart Fintech, Healthtech, Fleet Management, IoT, and drones, but it is still difficult to access actualized and concrete end-user services, and it is still difficult to access The domestic application of service or Emerging Technology in Kuwait is far behind, and most of them have no choice but to rely on overseas technology due to the lack of related companies or experts. The most aggressive overseas company is China's Huawei, which opened a sole proprietorship through the KDIPA Act in 5 and is aggressively targeting the ICT market, and is particularly prominent in the 2015G communication market and IT infrastructure maintenance business. The will to develop the market based on the Chinese companies' capital strength, low labor cost, technology and local friendliness is producing good results.

Korean companies can enter the Kuwaiti market by establishing a corporation or branch based on the technological prowess of ICT solutions, but collaboration with Kuwaiti companies that can provide active local assistance is essential. However, before entering into a business-related agreement with a company that will become a local partner, it is necessary to check whether the company has the necessary qualifications for bidding or business operation. This is in order not to be frustrated with business progress after signing an agreement with a company that does not have the qualifications for business execution required by the communication standards or MOC (Ministry of Communication) in Kuwait. For example, bids related to ICT in Kuwait usually require a CATI (Central Agency for Information Technology) qualification. Depending on the type of solution, it is necessary to in-depth check whether Kuwait telecommunication standards and local companies' MOC, Kuwait Chamber of Commerce Industry and CAPT (Central Agency for Public Tenders) are approved and registered. Communication standards can be found at the following CITRA (Communication and Information Technology Regulatory Authority) site.

https://www.citra.gov.kw/sites/en/Pages/regulations.aspx

According to PwC data for 2021, projected global economic spending on AI in 2030 is estimated at $15 trillion. Neighboring Gulf Cooperation Council (GCC) countries, including Egypt, have estimated it to be worth $7 billion, or about 2% of this amount. This is a part where we can guess the demand and future market growth not only in Kuwait but also in the Middle East.

<Estimated Economic Expenditure for GCC Region in 2030>

[Source: PwC]

In addition to AI, Korea's leading ICT solutions with 5G Networks, Cloud and Data, Cybersecurity, Blockchain, and IoT technology verification and domestic performance can provide value to Kuwait's customer companies. The Korean Wave in the GCC countries will also have a positive effect, and the trust in the quality of 'Made in Korea' and the result of good solutions have a high position to establish themselves in the Kuwait ICT market.

As a success factor at this point, the most important thing is to make a reference in the Kuwaiti market. When carrying out the Kuwait EPC project, the pre-approval and registration procedures for product selection are very difficult, and the barriers to entry are rather high and conservative for new companies due to the preoccupation of global brands, ease of maintenance, and avoidance of close relationships with specific brands in the business. In the case of hardware equipment, even if the customer's vendor list is registered before the feasibility study stage and basic design and connection design in the process of EPC project execution, the customer approval procedure must be followed again in the EPC stage from the beginning. The experience, history, and negotiating power of the local company play an important role.

[Source: IMCO]

In the recent bidding process of CAPT (Central Agency for Public Tenders), ICT solution business is conducted in a different form from the lowest bid system in civil engineering and construction. In addition to price competition, the proportion of evaluation in the technology sector has expanded. As a Korean company, by actively promoting its technological prowess and success stories, it targets specific customers in Kuwait, secures related references first, and conducts business successfully. When trust is established to a certain extent, the opportunity to participate in the government and oil sector project bidding is natural, and the business rights in Kuwait can be gradually expanded. Kuwaiti companies are interested in Korean companies and have good evaluations for their technological prowess, but they are mainly large enterprises, and compared to other similar countries (China, Italy, Turkey, Singapore, Taiwan, etc.) It is not highlighted. Although the language problem is the biggest, I hope that you will have a good business opportunity in Kuwait, which has high capital and a desire to switch to advanced technology by actively utilizing global ICT-related talents and connecting them to business. It is expected that KOTRA Kuwait will serve as a stepping stone to advance into the local market in the Kuwaiti market, which may be vague for small and medium-sized enterprises.

※ Please note that the above manuscript is information prepared by an external expert and is not an official opinion of KOTRA and IMCO, the author's affiliate.

☞ Source: kotra overseas market news