Private sector could catalyze economic diversification – Experts

KUWAIT, May 10 (KUNA) — Speakers at the “Diversifying the Economic Base in Kuwait” conference agreed Tuesday that the revitalization of the private sector is pivotal to economic growth through alleviating the burdens on the state.
The private sector can shoulder the responsibility of the state for providing a lot of services and economic activities particularly the industrial activities, they said.
They urged raising the percentage of the industrial sector in the GDP and encouraging the public to take part in the economic reforms through facilitating the launching of small and medium enterprises (SMEs).
Secretary-General of the Department of Planning and Development Dr. Khaled Mahdi said the economic development process requires effective management by the government and diversification of the economic structure.
In his speech to the opening session, he called for reconsideration of “the state hegemony over all economic activities and services,” and privatization of these activities in a way that could relieve the state of a lot of burdens.
Dr. Mahdi criticized “the lack of clear-cut timetables for many economic projects and development plans” which made the rate of achievement lag behind the increasing demand for government services.
On his part, Dr. Abbas Al-Megren, professor of economics at Kuwait University, said the lack of direct taxation resulted in financial imbalances and negatively impacted on the revenues of the state budget.
“Taxes are one of the main tools of the financial policy that enables the state to direct the private investment to specific development projects in a verifiable way,” he said.
“The components of the state revenues in Kuwait reflect a clear imbalance due to overreliance on oil revenues while non-oil revenues represent only 6.5 percent of the GDP,” Dr. Al-Megren said, citing figures of the FY 2014-2015.
Meanwhile, Bader Al-Humeidhi, a renowned economist and financial expert, highlighted the need of amending the laws relating to privatization and public-private partnership, besides stepping up the executive procedures in this regard.
In his address to the second session of the conference, Al-Humeidhi urged cutting the red tape facing the local and foreign investments to enhance the competitive edge of the country vis-أ -vis other economies in the region.
On a similar note, Mohammad Al-Shatti, an economist, said the public sector maintains hegemony over the economic activities.
“The Kuwaiti economy needs practical, radical and well-calculated solutions to ensure diversification of its base in the long-run and make the economy immune to risks of fluctuations of the oil prices,” he said at the third session.
The one-day conference is organized by Kuwait Economic Society. (end)

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