Kuwait has traditionally relied on oil revenue to support its economy, but the landscape has shifted significantly over the past few years.
The global push towards sustainable energy forced the government to launch its New Kuwait 2035 vision to drive economic diversification.
This ambitious national strategy focuses on developing infrastructure, revamping regulations and releasing the private sector in Kuwait.
Strategic Foundations and Legal Reform in New Kuwait 2035
The New Kuwait 2035 vision was announced in 2017 and has seven key pillars of development.
One of the critical tenets is a sustainable and diversified economy, alongside effective governance, quality healthcare and a solid knowledge-based society.
The implementation strategy involves macro-level legal reforms with specific investment tools.
Kuwait liberalised foreign investment regulations, allowing international organisations to operate inside its borders and bid for contracts without needing a local partner.
The government also established the Kuwait Direct Investment Promotion Authority (KDIPA) to evaluate, license and support investment proposals in numerous business sectors.
The KDIPA can grant tax holidays of up to a decade, custom exemptions and incentives designed to make the business environment more conducive for innovation and capital inflow.
The Middle Eastern nation also created a privatisation programme focusing on eight projects involving utilities, logistics and energy.
Kuwait plans to privatise four government sectors, saving around US$2.7 billion in expenditure using a Public-Private Partnership (PPP) model that allows citizens to buy shares in PPP companies.
Mega-Infrastructure Projects
The Gulf nation is taking physical transformation seriously, committing over US$6bn to improve infrastructure in 2025/26. Over 90 projects have already started.
Spearheading the project is the magnificent Madinat Al-Hareer (Silk City) on the northern coast. The captivating urban centre will have residential, commercial and cultural zones.
Silk City’s Sheikh Jaber Al-Ahmad Al-Sabah Causeway is one of the longest bridges in the world, connecting the city to Kuwait City and opening new commercial routes for the entire Gulf.
It is designed to be Kuwait’s entry point into China’s Belt and Road Initiative, with plans for a financial centre, a free trade zone and a port complex in the works.
Kuwait is also constructing a Mubarak Al-Kabeer Port on Boubyan Island. It is a maritime logistics centre that serves the Gulf and connects it for business with Central Asia and Europe.
The Gulf Railway Project has also been approved to connect Middle East countries, linking critical economic zones and reducing freight costs.
Meanwhile, Kuwait is furiously pushing the Al Dibdibah and Al Shagaya Renewable Energy Projects towards the finish line.
The goal is to secure 1,600 MW of solar capacity via public-private partnerships and meet the target of 30 percent renewable energy generation by 2030 (rising from 1% in 2023).
Gambling is he Lost Chance in Diversification
While Kuwait has been pondering several lucrative avenues to bolster its revenue streams, it has refused to consider legalised gambling due to religious conservatism.
The United Arab Emirates (UAE) has started regulating commercial gaming to bolster its tourism economy, and many people believe Kuwait is missing out by not following suit.
Many Kuwaiti nationals are already visiting foreign-regulated gambling platforms to play iconic casino games such as roulette and blackjack.
The best online casino in Kuwait welcomes Arab players, but operates under a license issued in an overseas gaming jurisdiction. This costs Kuwait valuable tax revenue.
They government could capitalise on the gambling interest to bolster their diversification bid. This would boost non-oil revenue and help Kuwait become a tourism centre under Vision 2035.
Housing, Healthcare and Technology
The Kuwaiti government has ignored gambling to focus on urban infrastructure and social services.
Kuwait has almost 100,000 housing applications pending, and passed a New Housing Law, allowing foreign investors to build residential districts via PPPs. The result has been remarkable.
The country registered a 34% year-on-year increase in real estate transactions last year, reaching US$12.1bn. The Kuwait government postulates that it only needs US$811 million in PPP housing projects to meet demand.
The government has also shown renewed interest in healthcare, investing heavily in digital records, telehealth and refurbishing hospital infrastructure.
Kuwait’s per capita health spending grew to one of the highest among Middle East countries (US$2,292 in 2023). Attracting private firms and international hospital brands is also on the agenda.
The nation has a blossoming ICT sector which was valued at US$22.5bn in 2023. Experts predict that the industry will rise to US$40bn by 2028.
Kuwait is powering this ascent by investing in artificial intelligence (AI), cloud computing and 5G applications, especially in finance, education and public administration.