Infrastructure Industry_Kuwait.pptx

7/26/2019 Infrastructure Industry_Kuwait.pptx

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Kuwait Infrastructure Sector Investment Opportunity

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Table of Content

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No. Content Slide No.

1. Industry Overview (Infrastructure) 3

. Industry and !roduct Scenario "#$

Importance of Infrastructure "

%se of Infrastructure &

S'OT nalysis $

3. lobal *ar+et and Country Scenario oft,e Industry

-#11

Total evenue across t,e /lobe inInfrastructure

0

Trend in Sales cross t,e 'orld

Key 2evelopments 1

Infrastructure# Country Comparison 11

". Top Infrastructure Companies of Kuwait 1

&. eferences 13



Infrastructure Industry Overview

Infrastructure refers to structures5 systems5 and facilities servin/ a country5 city5 orarea5 includin/ t,e services and facilities necessary for its economy to function. Ittypically c,aracterises tec,nical structures suc, as roads5 brid/es5 tunnels5 watersupply5 sewers5 electrical /rids5 telecommunications5 and so fort,5 and can bede6ned as 7t,e p,ysical components of interrelated systemsprovidin/ commodities and services essential to enable5 sustain5 or en,ancesocietal livin/ conditions.

Infrastructure may be owned and mana/ed by /overnments or by privatecompanies5 suc, as sole public utility or railway companies. enerally5 most roads5

ma8or ports and airports5 water distribution systems and sewa/e networ+s arepublicly owned5 w,ereas most ener/y and telecommunications networ+s areprivately owned. !ublicly owned infrastructure may be paid for from ta9es5 tolls5 ormetered user fees5 w,ereas private infrastructure is /enerally paid for by metereduser fees. *a8or investment pro8ects are /enerally 6nanced by t,e issuance of lon/#term bonds.

:ence5 /overnment owned and operated infrastructure may be developed andoperated in t,e private sector or in public#private partners,ips5 in addition to int,e public sector. In t,e %nited States for e9ample5 public spendin/ oninfrastructure ,as varied between .3; and 3.$; of 2! since1&. *any 6nancial institutions invest in infrastructure.

ccordin/ to researc,ers at t,e Overseas 2evelopment Institute5 t,e lac+ ofinfrastructure in many developin/ countries represents one of t,e most si/ni6cantlimitations to economic /rowt, and ac,ievement of t,e *illennium 2evelopmentoals (*2s). Infrastructure investments and maintenance can be very e9pensive5especially in suc, as areas as landloc+ed5 rural and sparsely populated countriesin frica. It ,as been ar/ued t,at infrastructure investments contributed to moret,an ,alf of frica<s improved /rowt, performance between 1 and &5 andincreased investment is necessary to maintain /rowt, and tac+le poverty. T,ereturns to investment in infrastructure are very si/ni6cant5 wit, on avera/e t,irty toforty percent returns for telecommunications (ICT) investments5 over forty percentfor electricity /eneration5 and ei/,ty percent for roads.

ccordin/ to researc,ers at t,e Overseas 2evelopment Institute5 t,e lac+ ofinfrastructure in many developin/ countries represents one of t,e most si/ni6cantlimitations to economic /rowt, and ac,ievement of t,e *illennium 2evelopmentoals (*2s). Infrastructure investments and maintenance can be very e9pensive5especially in suc, as areas as landloc+ed5 rural and sparsely populated countriesin frica. It ,as been ar/ued t,at infrastructure investments contributed to moret,an ,alf of frica<s improved /rowt, performance between 1 and &5 andincreased investment is necessary to maintain /rowt, and tac+le poverty. T,ereturns to investment in infrastructure are very si/ni6cant5 wit, on avera/e t,irty toforty percent returns for telecommunications (ICT) investments5 over forty percentfor electricity /eneration5 and ei/,ty percent for roads.

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Industry = !roduct ScenarioImportance of Infrastructure

T,e importance t,at infrastructure plays in people>s everyday lives is often ta+enfor /ranted t,ou/, it is one of t,e bi//est issues t,at /overnments across t,e /lobeneed to address in t,eir public policies. Infrastructure investment in t,e developmentof communications5 IT5 roads5 sc,ools5 ports and ,ospitals is important to bot,economic development and ?uality of life.

Infrastructure is a +ey measure of a country>s position on t,e /lobal sta/e@ it is t,esecond pillar t,at is assessed by t,e 'orld Aconomic Borum w,en determinin/ t,ecompetitiveness of a nation (institutions5 bein/ t,e 6rst).

'ell desi/ned infrastructure investments can raise economic /rowt,5 productivityand land values5 w,ile also providin/ si/ni6cant positive spill over to areas suc, aseconomic development5 ener/y eciency5 public ,ealt,.

Infrastructure properly desi/ned can reconnect t,e social fabric of communities =can inspire communities as well.

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robust infrastructure system ensures t,at we are able to move /oods andservices5 but also people in t,e most eDective ways possible. In order to attract

and retain ?uality 8obs5 communities need functionin/ infrastructure.



Industry = !roduct Scenario%se of Infrastructure Industry

Infrastructure to describe 69ed assets t,at are in t,e form of a lar/enetwor+5 in ot,er words5 7,ard7 infrastructure. Infrastructure as t,enetwor+ of assets 7w,ere t,e system as a w,ole is intended to bemaintained inde6nitely at a speci6ed standard of service by t,econtinuin/ replacement and refurbis,ment of its components.

Civil defence planners and developmental economists /enerallyrefer to bot, ,ard and soft infrastructure5 includin/ public services suc,as sc,ools and ,ospitals5 emer/ency services suc, as police and 6re6/,tin/5 and basic 6nancial services.

*ilitary strate/ists use t,e term infrastructure to refer to all buildin/and permanent installations necessary for t,e support of militaryforces5 w,et,er t,ey are stationed in bases5 bein/ deployed or en/a/edin operations5 suc, as barrac+s5 ,ead?uarters5 air6elds5communications facilities5 stores of military e?uipment5 portinstallations5 and maintenance stations.

%rban or municipal infrastructure refers to ,ard infrastructuresystems /enerally owned and operated by municipalities5 suc, asstreets5 water distribution5 and sewers. It may also include some of t,efacilities associated wit, soft infrastructure5 suc, as par+s5 public pools5sc,ools5 ,ospitals and libraries.

reen infrastructure is a concept t,at ,i/,li/,ts t,e importance oft,e natural environment in decisions about land use plannin/. Inparticular t,ere is an emp,asis on t,e 7life support7 functions providedby a networ+ of natural ecosystems5 wit, an emp,asison interconnectivity to support lon/#term sustainability.

In ot,er applications5 t,e term infrastructure may referto information tec,nolo/y5 informal and formal c,annels ofcommunication5 software development tools5 political and socialnetwor+s5 or beliefs ,eld by members of particular /roups. Stillunderlyin/ t,ese more conceptual uses is t,e idea t,at infrastructureprovides or/aniEin/ structure and support for t,e system oror/aniEation it serves5 w,et,er it is a city5 a nation5 a corporation5 or acollection of people wit, common interests.

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Industry = !roduct ScenarioS'OT nalysis

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Strengths

#2emand for domesticindustrial /rowt,# vail of Fow#cost5 S+illed:uman esources#Increasin/ investment inreal assets (CapacityA9pandin/) across Industrialsector.

Weaknesses #Outdated labour laws #Gascent e/ulatorysystems to c,ec+ misuse ofmar+et power by 6rms.#Inade?uate and poor ?ualityinfrastructure cost and timedelays.

Opportunities#rowin/ Competition#*a8or /rowt, t,rou/,outscorin/ opportunities#rowin/ number of overseasinvestment

Threats# Competition#!oor wor+in/ condition



lobal *ar+et = Country Scenario

Kuwait is promotin/ unprecedented levels of infrastructuredevelopment activity aimed at realiEin/ its lon/ term vision ofdiversifyin/ t,e economy and transformin/ Kuwait into one of t,eleadin/ ,ubs for 6nancial trade and lo/istics in t,e *iddle Aast.

T,e T,ird Kuwait *aster !lan focuses on improvement of t,ecountry>s infrastructure wit, t,e Kuwait development plans prioritiEin/infrastructure needs of t,e country wit, an earmar+ed bud/et of %S213 Hn for pro8ects across diDerent sectors5 suc, as roads5 ports andairport infrastructure5 water5 power and social infrastructure5 a metroand national rail networ+5 etc. T,ese initiatives are e9pected to provideopportunities for forei/n investment in Kuwait.

T,e planned up/rades to Kuwait>s aviation infrastructure aree9pected to support Kuwait>s initiatives to position itself as acommercial ,ub. T,ere e9ists potential to provide specialiEed facilitiesmana/ement (B*) services to maintain Kuwait>s airport facilities at parwit, /lobal standards and benc,mar+s.

T,e *inistry of Alectricity and 'ater (*A') anticipates an

investment of appro9imately %S2 & Hn to meet t,e electricityproduction capacity tar/ets of &5 *' set for &. T,e privatesector is e9pected to play a ma8or role5 leadin/ to lon/ termopportunities for forei/n investors

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Total evenue across t,e lobe Infrastructure development is critical to deliverin/ /rowt,5 reducin/

poverty and addressin/ broader development /oals. To contribute tot,ese impacts5 t,e 'orld Han+ roup (roupJ) ,as made a sustainedeDort to scale up its support for infrastructure since 3. In B15 t,eroup emer/ed as t,e lar/est multilateral 6nancier for infrastructureLtransport5 water5 ener/y and information and communications

tec,nolo/y (ICT). It now represents "3 percent of t,e roup>sassistance. Several e9ternal trends are s,apin/ t,e infrastructurea/enda of t,e future. Fac+ of access to basic infrastructure servicescontinues to undermine livin/ standards in low#income countries (FICs)and some middle#income countries (*ICs). spirations for /rowt, arefuellin/ t,e e9pansion of infrastructure networ+s across countries.Burt,ermore5 t,e more systemic development c,allen/es of today>sworldLfrom social stability5 to rapid urbaniEation5 climate c,an/e5tec,nolo/ical c,an/es and /lobaliEed issues suc, as food and ener/ycrisesLcall for more comple9 and interconnected infrastructure

solutions (Bi/ure 1). Tac+lin/ t,ese second#/eneration issues willre?uire actions by and across sectors. T,ese actions can potentiallyaccelerate /rowt, and s,ift clients towards a more sustainabledevelopment tra8ectory. In 15 t,e roup positioned support forinfrastructure as a strate/ic priority in creatin/ /rowt, opportunitiesand tar/etin/ t,e poor and vulnerable. *aintainin/ t,e roup>s level ofen/a/ement in infrastructure in bot, FICs and *ICs and respondin/ tot,eir very diverse needs wit, roup resources sub8ect to medium#termconstraints will re?uire a balanced approac, wit, a si/ni6cant level ofambition in terms of adaptability5 innovation and levera/e. In followin/

t,is approac,5 t,e public sector will remain central to t,e delivery ofinfrastructure services as a provider or enabler.

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Trend in Sales across t,e 'orld

a!ro risk en"iron#ent shi$ts% MGo normal> is t,e new normal # %ncertaintyis everyw,ereN in une9pected election results and political up,eaval@ in risin/protectionist sentiments@ in disruptive and fast#movin/ tec,nolo/ical advances@and in /eopolitical and social up,eaval. Simply put5 t,e stable conventional wisdomt,at once underpinned infrastructure plannin/ and investment seem to no lon/erapply.

Co#petition $or in"est#ents heats up% Increased ows are bein/ drivenby institutional investors ea/er to put t,eir capital to wor+. Hut it is also bein/impacted by increased investment activity by multinational and soverei/n sources(suc, as t,e frican 2evelopment Han+ roup (2H)>s frica& Investment Han+for Infrastructure) w,ic, often prioritiEe ob8ectives ot,er t,an pure return oninvestment (OI) and t,erefore tend to distort capital mar+et ows and returns.

&o!using on the larger 'ene(ts to un!log the pipeline% many/overnments are startin/ to reco/niEe t,at L by strivin/ to ta+e a minimalistapproac, to ris+ or to ac,ieve structural and contractual Mperfection> L t,ey ,avein fact been missin/ t,e point and5 in doin/ so5 ,ave been ma+in/ pro8ects morecomplicated5 less attractive to investors and slower to ta+e to mar+et. Simply put5t,ey ,ave been puttin/ too muc, focus on bein/ clever rat,er t,an reapin/ t,elar/er rewards .

Te!hnolog) ro!kets up the in$rastru!ture agenda% Interestin/ly5 muc,of t,e demand for tec,nolo/ical advancement is bein/ driven by t,e consumers. Int,e developin/ mar+ets5 concerns about t,e aDordability of conventionaltec,nolo/ies are drivin/ adoption of newer approac,es. In t,e mature mar+ets5

consumer desire for more control over t,eir infrastructure use is drivin/ demandfor more sop,isticated services.

Se!urit) 'e!o#es a #ainstrea# issue% Avery /overnment5 re/ulator5owner and operator s,ould be worried about t,e security of t,eir infrastructure.iven t,e siEe and fre?uency of p,ysical attac+s5 natural disasters and cyber#attac+s on critical infrastructure and in public spaces over t,e past few years5 it isclear t,at t,ere is an ur/ent need to reduce t,e vulnerability of infrastructureassets and to protect citiEens and users.

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Key 2evelopment in Infrastructure Sector Kuwait<s 6ve#year plan (w,ic, runs until ) will be t,e ma8or /rowt,

driver in lendin/ opportunities and pro6tability. T,e Gational ssembly passedt,e plan in Bebruary 1&5 w,ic, envisa/es spendin/ of about %S211$bn on&1 development pro8ects.

T,e /overnment5 wit, a supportive parliament5 ,as been able to pro/ress onlon/#stalled infrastructure development pro8ects and implement increases in

public capital e9penditure. Capital spendin/ was K'2.$bn for t,e 6scal year toSeptember5 up 1$; y#o#y. It is currently at 3; of t,e full#year bud/et5 6vepercenta/e points above t,e 6ve#year avera/e.

T,e *inistry of Alectricity and 'ater (*A') anticipates an investment ofappro9imately %S2 & Hn to meet t,e electricity production capacity tar/ets of&5 *' set for &. T,e private sector is e9pected to play a ma8or role5leadin/ to lon/ term opportunities for forei/n investors.

T,e Kuwait overnment is considerin/ alternative sources of ener/y to meet

/rowin/ demand. Kuwait aims to /enerate at least 1; of its electricity (or over5 *') from renewable sources by .

T,e development of a national railway and metro networ+5 wit, pro8ectvalues of %S2 1 Hn and %S2 - Hn respectively are inte/ral part of Kuwait>splan to up/rade t,e public transportation sector

Over a period of si9 years (#1")5 over %S2 1"0 Hn of infrastructurepro8ects were funded t,rou/, pro8ect 6nance in t,e CC. Over -; of t,esepro8ect 6nance transactions were in t,e utilities sector wit, KS and %nitedrab Amirates attractin/ -; of total pro8ect 6nance lendin/ amon/ CCcountries. :istorically5 t,e lac+ of private sector participation in infrastructure,as ,indered t,e /rowt, of pro8ect 6nance in Kuwait.

:owever5 t,is scenario is set to c,an/e wit, t,e Kuwait overnmentadoptin/ !!! models especially in core sectors suc, as power and water.!ro8ects wort, over %S2 3&0 Hn are e9pected to be implemented over t,e ne9t1& to years5 presentin/ an attractive5 ,i/,#/rowt, mar+et for pro8ect 6nance.

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Infrastructure # Country Comparison

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ovt. Type

Infrastructure PualityScore (Hy

H*I)

Saudirabia

%nitaryIslamicbsolute*onarc,y

&.&

%.S !residential

System5Bederalepublic5Constitutionalepublic

&.0

Indonesia

%nitaryState5!residential

System5Constitutionalepublic5epublic

3.-

Gepal Bederalepublic5Bederation5epublic

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Top Companies in Kuwait in

InfrastructureFist of few Companies

K,ara6 Gational

Combined roup Contractin/ Company

l/,anim International eneral Tradin/ = Contractin/ Company

%nited ulf Construction Company *us,rif Tradin/ and Contractin/ Company

,madia, Contractin/ and Tradin/ Company

Kuwait !ortland Cement Company

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infrastructure##to#our#economic#and#social#developmentQ

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,ttpNQQsiteresources.worldban+.or/QIGTIGBQesourcesQTransformationt,rou/,infrastructure.pdf

,ttpsNQQwww.+pm/.comQHQ!TQAstudosRnalisesQarti/osepublicacoesQ2oc

umentsQforesi/,t#emer/in/#trends#1$.pdf ,ttpNQQwww.p,otius.comQran+in/sQinfrastructureR?ualityRcountryRran+in

/sR11.,tml

1

http://www.compasscayman.com/chamber/2011/04/20/The-importance-of-infrastructure--to-our-economic-and-social-development/


http://kdipa.gov.kw/wp-content/uploads/2016/02/KDIPA-Investment-Guide-2016.pdf


http://siteresources.worldbank.org/INTINFRA/Resources/Transformationthroughinfrastructure.pdf


https://www.kpmg.com/BR/PT/Estudos_Analises/artigosepublicacoes/Documents/foresight-emerging-trends-2016.pdf


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