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Public Authority For Industry Industrial Exports Development Center

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The document of Export Strategy of and its Executive Programs was adopted by the Higher Commission in charge of the Industrial Exports Development Center supervision, chaired by H.E the Minister of Commerce and Industry in two sessions ��������������� ������������� Industrial Export Development Center- Public Authority for Industry under the Umbrella project ����������. Unite���������������� �������������������-���

TABLE OF CONTENTS

Description Page

INTRODUCTION

PHASE I: FACTS, FIGURES AND CHARACTERISTICS OF KUWAITI INDUSTRIAL EXPORTS I- Export Statistics ������ �����!�����"�������#$�������%�����&���'����(()-���� ���#$ ����-���'!���'�����*��'�����������-���-����� � II- Export Potentiality � ��+'������*��'�������,��'��'��� � �������������#$ ����+�� ����� � ���#$ ����������'���� III- Conclusions �

PHASE II: GLOBAL EXPORT STRATEGY PLAN I- World Status and Expectations II- General Orientations of the Export Strategy � ��#$ ����-���"��.�� � ���%��/�������,'01���������2 ���� � ���*���������������#$ ����,������� � ������������������������� � ��,��������� � 3��"���'�������!������ �������� � 4������������������%��/������5������!������'0����������������,������ � )����.�+���'�������������*�!���������%����������� III- Qualitative and Quantitative Objectives of the Export Strategy � ��6'����������701�������� � ���6'�����������701�������� IV- Developing an Export Environment ��, ������8������ ���&�������������!�����������'���� ���&��������� � ���*��'������ � ��%���� �������������,�� ���� � 3��#���'������������������������� � V- Stimulate the Kuwaiti Products Supply � ��%��ust of Operations � ���*����������������������� � VI- Foreign Demand and Marketing ��&�������������9�����'�����������/����%������ ������/��������������������������� � �

EVALUATION ��

INTRODUCTION

To determine the objectives for developing a comprehensive Industrial Export Strategic Plan for the State of Kuwait, it is necessary at first to review and analyze the characteristics of the Kuwaiti Industrial exports, its current status and its contribution in highlighting the different aspects, general directions and facts relating to the Kuwaiti economy, which is supported by the following two important documents : ��The Five Year Development Plan –�����������������������–������� �

This document clearly demonstrates the analysis of all the aspects related to the economic, social and educational fields, specifying in �������� ���� ����������� ����� ���� ������ ����-���3� ���� ���'��������� ����Kuwaiti vision. ������������ ��!�"#$� ���� ���%&�����������'���-��(�

Driven by the necessity to expand the national export base by increasing the value and the ratio of industrial products in the total national exports of Kuwait, four basic principles are therefore identified:

- The restructuring of the Industrial Sector, - The developing of an “ Incentive” system, - The consolidation of competitiveness capacities, - The encouragement of individual initiatives/efforts.

This document comprises tow phases : Phase I is focused on :

a) collecting and analyzing all information and data related to the local industry, highlighting the current opportunities and its contribution in the national economy, b) structuring the module for export development, c) Identifying the structural strengths and weaknesses (SWOT analysis) in the different sectors of the manufacturing industry, in order to conceptualize a clear strategy for developing practical solutions and initiatives to effectively achieve the expected specific growth.

Phase II deals with the comprehensive Export Strategy Plan and its implementation by connecting the necessary means in order to guarantee an adequate planning, provisions for readjustments whenever necessary. Considering the unsettled international economic outlook and the Kuwaiti contingencies, this is identified as the most difficult phase. Ministry of Planning – January ��� � Public Authority for Industry –�:'� �(((

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PHASE I

FACTS, FIGURES AND CHARACTERISTICS OF KUWAITI INDUSTRIAL EXPORTS

I – Export Statistics ) Analysis of the general External Trade Features –��� -��

The Kuwaiti external trade is characterized by the predominance of the petroleum/petroleum by- products and its effects on export revenues. This fact is clearly illustrated by the trade exchange figures of the past five years –� (()-������ ��� ��� �������� !���� ���� ���� ���� �!����� ��������� �!� ��0��� ;� ���� �$ ���� ������ �!� <'.���� ��� �������������� *����exports in� (()� ���'����� ��� <�� �;))� �������;� .����� ��� (((� ��� 1'� ������ <�� �;3(� �������;� ��= � ���.��� ����� >();� ���'������ !���� ���������� ���� ������ ��� ���� ���0��� ���/���� #$ ����� ��� ����� �������� <�� ;(�� �������;�3= � ���.��� ����� >((;� ����� ������ ����� ��������� ��� ���;� ����� .���� 3= ����� 3= � ��� � �!� �$ ���� �����'��� ����� ���� ����� ����� ���� ����respectively. This variable growth, subject to changes beyond the national control, is due to the fragility and over dependence on a single source for export revenues, has its effects on the national economy in general. Value in Millions - KD

Year Imports Exports Commercial Exchange

Commercial Balance

���� � �� � � � ��� � � ���� � � ���� � � �� �� �� � � � �� � � � � ���� � ��� � ����� �� � � � � � ��� ���� � � � � � � �� �� � � � �� � ��� � � � ���� �����

Source – Ministry of Planning

%��� ���� ���� �!� �$ ���� !��'���� !��� ���� ����� �����;� ����� (()-����;�shows on one hand the dominance of petroleum products and their derivatives and the share of manufacturing industry in the total national exports on the other hand

��)!��'(��*�+,�"-.*/��

%�0����������� �������������������$ ����!��'�����!����;����-oil exports and re-�$ �������������� �������!�(()-����� Value in Millions - KD

EXPORTS NATIONAL PRODUCTS

Year

Oil & By Products Others Total RE-EXPORTS TOTAL

EXPORTS �� �;4� � �;(4� 3( �;)) ��� �;��( �)� �;3� 3� �;3( ��� ;3) ��� ;))) 3� ;(� �� �;4) �4 �;)( 3� �;() �� �;�)3 ��) �;3� 3 �;34(

Source - Ministry of Planning

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It is very interesting to note, from the above figures, the small value of Other National Exports compared to oil exports. In spite of this situation, the share of Other National Exports in the total exports has been progressively increasing with each successive year.

%�0��� ?��� ������������� �he percentage share of each of the above

mentioned category in the total national exports. The highest percentage share of the of Others National Exports ever reached in ���� ������ ��������� �$ ����� .��� 4�= � ���� 4�3= � ��� ���� ����� (()� ����(((� ��� ������� ;� considered to be the peak performance period till date. This was possible due to decrease in the value of petroleum & by products exports resulting from the price slump in the global oil market. However the percentage share of the Other National Exports in� ���� ������ �$ ����� ���� ������� 0��.���� ��= � ��� 4�3= � �'����� �����period.

��)!��'�(�0�. ���1������ ���������!�2������!�"#$� ��

Year % Share of Petroleum

& by Products % Share of Other National Exports

% Share of Re-Exports

�� (��� 4� �� ��� (��3 4�3 �) ��� (�� �� � �� (��� 3�� �� �� (�3 4�� ��

) Exports –�3�����1�� ��%������� �������-��

In view of the above information, the analysis of the non-oil imports and exports may be conducted by calculating the income of the each industrial sectors in order to identify the components of the total commercial balance, depending on the number of categories and the units operational under each sector during the years –� ����;� ���� @��������� ������� �

��)!��'�(�2��-Oil Commercial Balance Millions of Kuwaiti Dinars

4� ������������ ��� �� �� KMD %

Exports ��� �4 ��) A� A����= Imports ;)3) �;�� �;�( A��44 A�4�4= Variance -�;�) -;) -�;) A��33 A����=

The focus should therefore be on the manufacturing industries of

national origin due to their capability to play an effective role in achieving the objective of increasing non-oil exports in order to diversify the export base and reduce the country over dependence on oil for revenues.

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To cover such exports in the analysis, it is necessary to evaluate each specific industrial sector, by related categories and by the products constituting such categories, each product’s contribution by value and volume to the total of the category, in order to determine the specific category’s importance/position and its contribution in the total national exports.

Notes : Industrial law� defines manufactured products as "transforming raw or primary materials into either finished or semi-finished or intermediate products. This function shall also include mixing, separating, forming and reforming, assembling, filling or packing of products, in case the work is mechanically done in the firm”. Therefore live animals, fresh produce (vegetables), which do not represent manufactured products are excluded along with the petroleum/petroleum by- products. Manufacturing Industries

a- Sector Specific :

The review of the commercial exchange of this sector highlights two important phenomena : ��%�����������'����! imports compared to exports ���,'��������������������������� �������'������������ ������������ ������������sectors except in chemical and petroleum by products. Kuwait Petrochemical Industries and Equate� ����'���!��� (= of exports of chemical and petrole'����������������� � �� � ��� �� �� ��� �

Commodities ��� �� �� �)���� Anhydrous Ammonia �� �� ��� �)������ Sulhpur, Sublimed Or Precipitated Or Colloidal Sulphur ��� ��� ��� �)����� Ammonia In Aqueous Solution �� � �� �� ������ Urea, Whether Or Not In Aqueous Solution ���� ���� ����� �(���� Low-������ �#�� �������� �����?%�����2 ������-����%������(�� �� ���� �� � �(����� B���������� �#�� �������� �����?%�����2 ��������(��7������� ���� ����� ����� �(������ Propylene Polymers Or Other Olefins In Primary Forms ���� ����� ���� �(������ Chloride-Vinyl Polymers -Other Primary Forms Halogenated Olefins - ��� -

Total ������� ����� ������

Consequently, net exports of manufacturing industries products indicated above are as follows:

��� ���

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Total manufacturing industries exports ���;�( �);3( ���;�)� PCI & Equate exports ��;�( ��3;(� ���;�4 Manufacturing industries net exports 44;� );3 (�;�3

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b- Region Specific :

Kuwait commercial exchange is characterized by the centralization of Imports and Exports towards two regions: Asia and Arab States. B�.����� ���� ����������� �!� ����;� ���� @� ����� ��������� ����� ��1���exports of Chemical Products are directed towards Europe, South-eastern Asia and India.

It is common attribute to deal and discuss in detail about trade with

the Cooperation Council of the Gulf Members and Arab countries, whereas fleeting quickly through other areas which attract really a small share of exports. Therefore as a complementary measure particular attention should be focused to establish trade links between Kuwait and the European Union which represents an interesting marketing zone for exports.

��)!��' (�5�66� 1��!�"#1���%�����������������"� �$��������� By Countries –����7���

Exports of

National Products Imports Variance –�8����

KD S. N° Country

�� �� �� �� �� �� Spain ;��� ;�)� ��;3( ��;�� -�;�4 -�4;)�4 Belgium ;(3 ;33 �;�) ��;444 -;3 -(;� � U.K. ;(� �;�(4 (;()( ��;�� -);�� -(;(�� � Italy ;(� ��) �;��� �;�4 -�(;��� -�;)�( � Greece (� (� �;�3( �;�) -�;4 -�;�� � Holland (4 �)� �);3� ��;�)� -�);�3� -��;4� � Germany 4� ��� ��);43� �;�(( -��);3(� -��;)3( France � 4 )3;4�� )4;(( -)3;4 -)4;(�� � Ireland 34 � 4;��4 (;3�3 -4;�)� -(;4� � Denmark � ��� ;4�� ;��) -;4�� -;��) Finland �� � �;��) ��;)4� -�;��4 -��;)4� Austria �) ;)4� );3�� -;)�� -);3�( � Sweden � ���� 3;�� �;4� -3;�� -�;4� � Portugal � � �;44( ;�() -�;444 -;�() � Luxembourg � � 3�3 33� -3�3 -33� TOTAL ����� ���� ����� ����� -������ - ����

* Source – Ministry of Planning

The interpretation of the commercial exchange between Kuwait and the European Union highlights the following two important features:

��It is revealing to consider oil incomes excluded from foreign trade. Therefore, the perception of trade balance is different with a persistent deficit rather than the usual surplus inflated by oil exports which masks the real situation. This perception facilitates the awareness to act. ��Existing potential to increase the value and volume of Kuwait industrial exports to EU markets, the current sparse and intermittent Kuwaiti industrial exports to the European Union indicate a strong possibility for further development.

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II – Export Potentiality

The main source to determine the total available industrial export capacity of the State of Kuwait should be from the operating manufacturing units in Kuwait. Hence data like the total number of operational industries, the total production capacity of each unit, current capacity utilization and spare capacity of each unit, will help in formulating a purposeful strategy for continues growth of industrial exports.

This data will also help to identify the export bid (supply), it’s total

available capacity to meet the external demand, it’s strengths/weakness/limitations, will help to explore the opportunities to identify and direct the exports to the most lucrative markets having a potential demand for such sectors/products and to plan – if required - to develop/upgrade the sectors/facility to meet the targeted market/s requirements. �– Current Industrial Structure

The industrial sector excluding oil and its derivatives represented ���= � �!� ���� ������ ������ ���'���� ��� ����� %�0��� ?(�� ���'�������� ����contribution of each sector.

��)!��'�( Value – US$ Millions – Current Price

Sector ��� �� Food & Beverage ��4 ��� Textiles 4 ) Wood and Wood products �� �� Paper and Print (� (� Chemicals �� �� Non Metal Mining Products �( Basic Metal Industries 3 3 Metal manufacturing (( () Other manufacturing industries �� �� TOTAL ��� ���

** Source – Industrial Bank of Kuwait

The field survey report on the Kuwaiti Industrial Sector conducted in ����;� ��8��� ���� ���-oil industrial sector, it is to be noted that the number of industrial licenses issued by various industrial authorities in <'.��������������(3;�.���������������0'�������!����.��?%�0�����9 ��)!��'�) Number of Industrial Units in Kuwait as per Industrial Survey –����

Number Sector Total Units � Food & Beverages �� �� Textiles/Garments/Leather �� ����� Wood/Wooden Products/Paper manufacturing (� � Chemicals and Petroleum By Products �) �3 Non-Metal Mining Products manufacturing �� �4��) Basic Metal industrial �44 �( Other manufacturing Industries ( TOTAL �� *Source Public Authority for Industry.

�

As per Public Authority for Industry estimates the total investment into the private industrial sector approximately amounts to around C,D���E������;�������0'�������!����.�9

����= �&����@�E�������� ����= �+������������������� ��(= �2 ��������2 ��������'��� ��= �����������'�������'!���'���� ����= �7��������'!���'�����*��'������

It is worth mentioning that Foreign Direct Investment (FDI) till date

has marginally contributed in the economic development efforts of the country�� B�.����� ���� &�*� -�.� ��9� �)����� ���'��� ��� � ���>����represents a positive turning point that may create future prospects and opportunities contributing to a dynamics build up for the development as a whole. (�.� �������"#$� ��5�6$�����

Diversification, nature, strength and the capacity of the non-oil industrial sector of Kuwait reflects the presence of the required export components to reach the foreign market. On analyzing the available ����� �������� ��� ���� �$ ���� ����������� ���������� ��� ����� �!� ���� (3��$������� ���'������� ?��� ��� *��'������� ,'��� ;� �����;� ��� .��� ���������������� ��� � ��� '����� ����� ���'��� � ������0'���� ��.���� ���� ����� national �$ ������ %�0��� ?�� ������ � ���.�� ���� !���'���� �!� <'.����� *��'���������� �������� %���� ����� ��� �������� !���� ��� '����� .����� ��-operated �'����� ���� *��'������� ,'��� ;� ����� ���� ����'���� ���� ��� '����� ������ �involved in the export activity.

Table ((�������1�9� ���)&������� ��!��� 9�&�–���� (Number of covered & exporting Units - per Activity)

Category Sector Total

Units Units

Covered Exporting

Units � Food & Beverage �� 3 � � Textiles/Garments/Leather �� 4 ����� Wood/Wood Products (� )3 ( �� Chemical & Petroleum By Products �) �� �( �� Non-Metal Mining Products �� �� 3 ���� Basic Metal Products Industries �44 �� ( �� Other Manufacturing Industries ( 3 � TOTAL � �� �� ��

*Source Public Authority for Industry.

The numbers displayed above indicates a weak export base, hence an urgent need to exert maximum efforts in this direction to adjust the current situation at the earliest. Hence the priority is to develop the required infrastructure and a platform, for bridging these gaps and to explore opportunities for achieving the targeted objectives. Given the kind of resources at its disposal, this task is not very difficult for the State of Kuwait.

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�(�"#$� ��$ �1��� ��

Conducive export environment consists of certain elements and contribution of the export authorities/organizations (both public and private sector rendering different services) with a view to create appropriate conditions for assisting export units in performing their activities. These elements are – government policies and procedures, rules and regulations and legislations related to the export activities.

Several interactive meetings have been held with manufacturing

units in order to identify the problems faced by them while exporting or/and this interaction with various public and private export authorities/organizations.

This direct communication resulted in the identification of the nature

and the events leading to export activities private/public export sector authorities/organizations involved is this operation and finding the solutions of the problems being currently faced. Recommendations are to be made to the relevant authorities for improving the conditions surrounding export activities in the near future.

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III- Conclusion

It is important to mention here that, taking into account the resources (time, effort and money) invested to rebuild the destruction �'!!����� �'����� ���� *��F�� ��������� ���� ���' ������ ��� ((�-(;� ����results achieved by the Kuwaiti industrial sector in the last ten years are commendable.

The future development is characterized by :

��supporting the existing potential and forging new partnership, increasing and attracting new investment, technology and know-how essential for the country, by the public and private sector authorities and organization responsible for developing the country's economy, ��intensifying efforts in order to face the challenges of the increasingly competitive industrial globalization and open market environment, ��identifying and resolving the problems/obstacles being faced while penetrating the lucrative markets and support system required to maintain its competitiveness & place in foreign market/s.

Without undermining the importance of efforts being excreted to

boost exports, some legal and government policies/regulations are still posing hurdles in benefiting from several capabilities existing in Kuwait. Some of the glaring examples, characterizing the Kuwaiti industry, which were highlighted during various meetings with some of the exporting industrial entities were :

a) lack of interest in investing in human resources i.e the skilled and experienced manpower required to market products in foreign market/s,

b) resistant to change from traditional management to modern management techniques,

c) planning activities without proper market research and studies.

There are no financial incentives in Kuwait offering export finance and export insurance against any export risks to local exports. Regarding the commercial information there are no organized plans to provide periodic updated information necessary for the exporting units to rationalize their decisions, to perform export activities.

As for the phenomenon facing the analyst, is the difficulty of

obtaining the correct and complete statistics related to the exports of the manufacturing industries of national origin. The available figures are limited to total volumes, without any sector classification/description, break up of products contribution, number of active units and their geographical reach. The lack of data & information limits the analytical capacity to suggest an appropriate specific time bound solutions leading to the achievement of the set objectives.

Segregating the exports of the State of Kuwait by oil and non-oil (manufacturing) sectors and analyzing the figures thus obtained signifies a vast difference between the two and even if the share of exports from the manufacturing sector are to grows it will still remain small compared to oil sector due to the narrow industrial base. Furthermore the manufacturing sector is not fully utilizing its installed capacity. The commercial deficit is permanent and on the higher side. This characteristic reflects on all sectors of the manufacturing industry, except in case of Chemical and petroleum by products which �� ������� �� ������ 0������� .���� �� ������ ������ �!� �= � ��� ����;� ()= � �����������(= ���������

The exports structure is characterized by a clear imbalance

between the sectors, with Chemicals and Petroleum by products dominatin�;� ����'������ !��� 43�4=� �!� ���� ������ �$ ����;� !����.��� 0 ���������� ������� .���� 4�4=� ������ ��� ������ ���� ���� �$ ����� ��� ���� !������ ���� �!� ������ %����� �.�� �������� '�� ��� ������;� ����'��� !��� )���= � �!�the total non-oil exports.

As for the geographical reach, majority of exports are directed

towards GCC markets, then to the Arab region, followed by the Asian countries in descending order of preferred markets. What can be noticed here is that the units exporting initially to the geographically surrounding regions are not really effected by cultural considerations and find it easy to venture in the neighboring markets often a reflection of the home market, while this should form a part of their primary strategy and the secondary strategy should be to jump the regional barriers to reach supplementary markets which represent real additional opportunities, particularly where the lawful context will make a distinction in more stability and more transparency in commercial procedures.

The industrial survey conducted i�� ����� �� �������� �� ��� � ���'�0���

step in the direction of identifying the role of the export development bodies in Kuwait. However this initiative lacks in the statistical support related to the active units and their role in developing the exports, which is the second most important aspect after the foreign commercial statistics to monitor the developments and to accurately interpret the situation either for developing the solutions/implementation of decisions or to take corrective measures at an appropriate time. The initiative taken by the Industrial Export Development Center – IEDC, to acquire currently unavailable information related to the export activities of the individual industrial unit’s, by designing and distributing a questioner, to all the local industrial units, with an intention to evaluate the available export capacities in a more subjective manner.

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The current export environment in Kuwait is the outcome of the measures taken by the authorities to create a favorable environment, for the export entities to perform their activities with relative ease within the reasonable period of time. Regardless of the traditional procedures for export characterize by posing obstacles and delays in the process. There is a vast scope to enhance the general exports framework and to align it with the current requirements of Kuwait economy. It is an essential objective of the second phase which concentrates on the design of the elements of the comprehensive strategy of export for Kuwait with its orientations and its execution programs.

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PHASE II

Global Export Strategy Plan

I- World Status and Expectations No strategy can lay claim to success if it is conceived and executed

in conflict with local and international realities and without corresponding with the probable preferred expectations. Under the effect of rapid changes being witnessed by the world economy, due to opening of economies, both - oil as well as non-oil economies are facing fast paced challenges of complicated nature, which require reforms coupled with drastic measures related to the core systems, policies, disposal methods and economic restructuring to accelerate their economic growth. This requires the nations to accelerate their reforms to keep pace with the changes to maximize the benefit of such opportunities and avoid any pit falls and damages if the right directions and speed are not followed and maintained.

The analysis by the International Institutions specialized in the Arab

World, highlights the facts that Arab Commercial activity has been slow in keeping pace with the steadily increasing volume of the world commercial exchange. The Arab trade witnessed an average growth �!� �= � ��� ���� ��������� ����� ��� �������� �!� ���� F'������ �!� ���� ���.���registered by the world commercial society during the same period .����� ���'����� ��� 3= �� %���� ���������� ���'��'���� .��/����� �!� ����capacity of the Arab economies to benefit from such opportunities and pinpoints the obstacles shackling the Arab Commercial society to keep pace with the commercial exchange taking place at the global level.

Embarking on the free commercial course not only forces the Arab

economies to improve their competitive capabilities, but also to inculcate “quality culture” within the manufacturing sector and dissuade them from their mentality of finding short cuts to gain an “easy market access” by compromising on the quality to produce goods for mass marketing at a cheaper cost. The “quality culture” comprises system of policies and procedures prescribed by international standard bodies to be implemented by the management in the administrative and production sectors. Adherence to these systems will ensure “high quality” of production, required to compete in the global markets. Apart form this it also comprises of several other key factors - quality of service, order processing/delivery, flexibility of production to meet and fulfill export market requirements. Enhancing the competitive capabilities has nothing to do with the matter without improving the capability to attract finance resources by way of investments from local and foreign investors, including attracting cash flow technical and administrable skills to irrigate the economy.

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Analysis of the global Foreign Direct Investments – FDI, figures indicate that the Arab nations share in attracting direct FDI’S is very low compared to the percentage registered by the other parts of the world, such as South East Asia and Latin America. The final report of UNCTAD conference stated that Arab region has suffered a set back in attracting global investors in the past few years, where the net FDI ���������� 0 � ���� ���� ���0� ��'������� '�� ��������� ��� ���� ���� ����� .������� ����� = � �!� ���� ������ ���0��� ������� &�*�� %��� ������� ���������� !���this set back was not due to the lack of attractive investment opportunities but the lack of a stable legal and commercial environment suitable for investment.

This requires rectifying the procedures leading to weak production

structure, keeping in view the main linkage between FDI, manufacturing and exports. It is essential to brush aside all the obstacles obstructing the flow of FDI and to promote more transparency in the decision making process.

There are two options:

��Either authorities build ramparts with direct or hidden protections, this experimentation confirmed its unproductiveness , ��Or they act promptly, to avoid marginalization, by restructuring the economy, while preparing to face challenges. This option requires an explicit adhesion to an open and free trade, it cannot be carried out if it is limited to an apparent treatment, it rather requires the most comprehensive and thorough reform policy originating from a clear vision.

International Monetary Fund – IMF, in it’s last report entitled” World Economic Horizons”, projected the global economic growth to reach ���= � ��� ����� ���� ��= � ��� ����;� .����� ���� ���� ����� ��1�����������'��� ��� � ���>���� %��� !'��� ���������� ����� ���� ���� �!� C,� ������ �.�'��� ������������� ��� ����;� 0'�� ���� ���'��� ��� ����� �� ������� 0����� ���the global economy. According to the economic experts of the IMF, there is a substantial base to state that the global economy is now coming out of its sluggish phase. The global commerce of the ���'!���'����� ���'������;� ��� �$ ������ ��� ���.� 0 � ���= � ��� >��� ��d up to 4�)= ���>���

As for the US economy the Funds still predicts the revival of the

0���� ��� ����� .���� �� !������ ���� ����� �����'�� � �$ ������� B�.�����the US economy is facing the dangers related to huge trade deficit, probable collapse of real estate prices and a weaker dollar. The US deficit due to the high oil prices is projected to reach between US$ �� ��� 3�� E������� 0 � ���� ���� �!� ����;� .���� ���� �!!����� �!� *��F� .��� ����the tax drops beginning to show. This is worrying the economists, who are trying to find the solutions for the scenario when both the deficits - financial and the current balance are undermined with the anticipated steep drop in the dollar value.

��

On the other hand the growth expectations in Europe are deteriorating with the rising Euro and are further compounded by the *�&>,� ��.�.���� ��������� �!� ���� "������ #�������� ���.��� ��� �= �����������������#'���8�������.�������(= �!������� ���������

However the IMF predictions for the growth of East Europe

economies – Poland, Hungary, Czechoslovakia, is that they are expected to improve within the period preceding their admittance to the European Union. Strong growth is expected in the Asian continent with East Asian economies achieving the highest growth rate compared to the rest of the world, on top are the countries like South Korea and Taiwan, which are heavily dependent on exports. The emerging Asian economies are expected to grow by an average of ������� 3��= � ��� ����;� .����� ���� +������� ���.��� ��� �$ ������ ��� ����������� ���'��� ���.��� �!� 4�=;� �� ��!����� �!� ��)= � ����� ���� ��1������ ������� �!�)��= �

A sluggish growth is projected for the Middle East region, due to its

heavy reliance on the oil for revenues. IMF has sounded a serious warning for the Middle East countries to improve their economic performance and to seriously work towards reducing the unemployment ratio by creating more job opportunities, especially with the forecast of the oil analysts that the crude prices will continue swinging. The oil market is basically dependent on three factors: The situation in Venezuela and in Nigeria, the stock levels in the main countries of the Organization for the Economic Cooperation and Development and United States. A review of the projected global growth pattern indicates an expected increase in global oil demand forcing the Brent crude price to rise.

The necessity to take these predictions into account dose not

prevent to take precaution towards them and keeping the ability to rationalize, especially that these sources often have their own opinions, interpretations and expectations characterized by pivoting around narrow interests. Joseph Stiglitz� does not hesitate in criticizing the IMF, considering it as, only a servant to advanced financial markets and industrialized countries, which responds only to the interest of the financial markets and the advanced industrialized nations ignoring the real concerns of the developing countries. He also added that global commerce was neither proportionate nor fair and is under the control of developed countries. The South opens its borders but withdraws the financial aid package, while the North continues to ban the imports from the South and maintains the aid package to protect its industry. The withdrawal of the IMF from

���������������������������������������������� !�"����������#��������$%&�������������-��'�%���(� !�"��� ����%����� � ���'���%��&%����"#$��!��������������-�)���� !� became Chief Economist and Senior Vice-���%� ���� !�*��%�+��,��������)-��������%����������������by rejecting a world system in which economic and trade rules are only implemented if they benefit the wealthiest industrialized nations. His book Globalization and Its Discontents��*�*���� ���-���������!������ ����� %��� ���.����(��(��

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intervening in the capital markets is another clear example of its subordination and this withdrawal has resulted in creating sever financial instability in developing countries, it is discovered that this dose not contribute to the financial growth. Joseph Stiglitz conceders the IMF’S aid program as catastrophic: Indonesia, Thailand, Korea, Russia, Brazil & Argentina represent six un-successful programs in six years. It is too much. He maintains that persons handling the financial management at the IMF are the ministers form the industrialized nation's and mainly represent the interest of this financial group.

In context of such turbulent, Kuwait economy is currently passing

through a decisive and a crucial phase related to its future. It highlights two main assets: an appropriate regional environment and accessible capacities. The here timing conditions prevailing in the region are characterized by the disappearance of a huge problem which curbed the situation for the past ten years; all sectors were affected including the economy. It imposed an explained cautious and a hesitant approach which generated negative repercussions especially on Kuwait Economy. Hence the new scenario sets a wide stage for taking new initiatives, reforms, dismantling and disposing off polices and procedures proving to be an obstacle in growth, shed the hesitation, postponement and excessive “go-slow administrative bureaucracy” to confidently look forward for an enhanced future. Conceiving a “Global Export Strategy Plan for Kuwait” may be considered as a contribution and a response to these requirements. II- General Orientations of the Export Strategy

Developing a strategy is based on an integrated orientation supported by a clear view of the future, accordingly defining the objectives and goals to achieve this vision and being aware of influencing factors. The adapted strategy should distance itself from the common platform to have the capacity for being more flexible and innovative in its approach to provide for any contingencies.

) Export Led Growth.

The current argument related to the preferential strategy of import substitution or export lead growth will lead to a serious developmental policy being subjected to an academic-theoretical deadlock, which most of the time has negative repercussions. In fact, the two strategies are not opposite but complementary to each other and could be applied either consecutively or simultaneously on a case to case basis.

In view of the above information, the strategy defined should

therefore aim to accord a special provision to the industrial exports, as this sector forms a vital element of the national economy. It is high time that this sector should be developed and accorded the importance it deserves.

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Developing a strategy to increase the export performance with efficiency and success requires the adoption of a complete global method, proven by irrevocable tests, incorporating a number of related and consistent elements in its performance and results. Addressing the export activity of a manufacturing unit which represents the last stage of chain (starting with the industrial production, management approvals, quality control, workman ship, storage, distribution...) Each element of this process cannot be considered separately from the others as a single element is unable to interact without influencing and being subject to influence of the other factors. A transformer action of the export function must be associated in same time with the progress of the other factors to achieve the assigned goals. ����������(�����% ����%�����"#$� ���� 9�1��

The export strategy requires as much integration as possible between an assimilating global vision and the procedures and services being offered by the concerned entity /entities, focusing on two major fronts/issues: ��The first issue relates to the necessity of compiling a list of all the necessary procedures/ services related to the export activities to either establish new or depute a single authority to control all such activities. Minimize various hurdles currently being faced by the exporters by reducing the bureaucracy i.e the involvement of multiple government bodies/departments, which are either overlapping each others area of authority or those which the industrial sector feels, should not be involved, as they are not directly related to the process. A classic example of such phenomenon is the industry related multiple government bodies, despite the presence of Public Authority for Industry. This has resulted in creation of duplicated and complicated procedures, due to the multiple views being expressed by each individual body; as a result the industrial owners lobby has developed a negative impression about all such bodies/departments. ��The second issue relates to guaranteeing of a complete coordination and co-operation between the related ministries and concerned bodies/associations in any field, taking into consideration the challenges and the dynamics required to create such an organized and an authentic co-operation, with the main emphasis to be laid on the effectiveness and achievement of the set objectives rather than of isolation, veiled protection of one’s own interests and hunger for power. �(�<��� 6����%�. �� �����

The above mentioned analysis highlights the peculiarities characterizing the manufacturing sector in general and the foreign markets in particular. In light of the above data, the appropriate

��

methodology that should be followed is very clear now – determine the priorities, filter and identify the potential products for exports, identify the potential markets and gradually resort to achieving the set objectives. Creating an ability to compete within the manufacturing sector will insure continues and a healthy competition in the very near future as well as on long term basis, helping them at the same time to increase their sales in foreign markets.

The priorities related to short, medium and long term time frames

are sequentially interrelated with each other and denote the following : Short Term – relates to Export capable industrial units in terms of production and experience. This category if appropriately supported will in a short term, lead to register a real growth at the export level. Medium Term – relates to the industrial sector with a potential of export and will need a deeper and a wider support, to enable it to achieve results in the field of export in very near future. Long Term – relates to the significantly important industrial sector/products, this sector needs to be encouraged and supported by providing it with more opportunities to export. �(���!�1��9��&�

To determine the fields of priority for intervention into - concerning sectors, products and targeted markets, in order to concentrate the efforts, maximize the use of the available means; reinforce the benefits of the encouragements and stimulants about to be proposed in order to have a positive impact on the activities to be directed for the achievements of the pursued goals. �(�= ������������+11�6$!���6�������

In order to increase the exports of the manufacturing industry, the ������ ������� ���� ����� ����-���3� ���'��� 0�� !����.���� %��� ������������� ����� 0��������� ����� ��� ���3� .���� ���� ���� �� ������������ �!� ����application of the strategic elements which would further continue and be followed through in t�����$��!���� ���� �������������!�������4-���� �(�<��� 6����%��������:������/�!����������.�)!�1�����. �9������1�� �

There are numerous readily available theories on the functions and the roles to be assigned to the private and the public sectors in moving the country's economy. The decades of total state dominance and the enormous size of the public sector bleeding the economy, has prompted the recent change of view, which provides the much needed new lease of “life” by minimizes the state role in the economy and privatization of the loss making public sector units. The public sector is exposed to lot of controversies related to it’s existence, with some

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lobbies in favor of it’s liquidation in one way or the other while some defending to retain it’s existence. However a small lobby feels the necessity to retain and develop the strategic industries by finding appropriate solutions for the problems being faced by it.

Such theories have emerged from realties, characterized with

strong central controls over the management of economy, which has inculcated a culture of sluggish bureaucracy and red tape-ism leading to a creation of painfully slow decision making administration.

Therefore the next stage requires activating the role of private

sector and assigning it with the responsibility to develop the appropriate small and medium size industries required to cater to the demand of the local and foreign markets and the overall exports of the manufacturing sector. (�New Communication and Information Technologies

The controlled and positive utilization of new information and communication technologies and its deployment in servicing the country's economy, represents an advantageous action for the economy, in all the countries. Hence, it is necessary to develop communication infrastructures, renovate and diversify services and propagate the information culture among all components of the civil society.

Programs which concise with the export strategy must be

characterized by a gradual realization, the encouragement of the initiative spirit, the existence of a favorable environment and essential structural means which will indeed contribute to the implementation of many innovating projects.

Hence, the required support to build the trust can be promoted

through the following initiatives:

- Conducting a wide spread campaign targeting the consumers and the establishments interpreting the benefits from the electronic commerce.

- Developing the trust of the consumer regarding the quality of the services offered to encourage frequent use of internet.

- Developing an energetic management / a management expertise to play an important role in developing the electronic exchange and commerce.

Based on the above, procedures and activities, which can help

create a similar effect on both, the public and the private sector should be studied and performed.

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III – QUALITATIVE AND QUANTITIVE OBJECTIVES OF THE EXPORT STRATEGY

The determination of the objectives is based on the results of phase � ��������� ��� ���� ���� ���� �!� <'.����� ���'strial exports; it depends on the means available in light of the concluded results of the analysis. This step conformed at an objective way to fix a whole set of targets which represent homogeneous elements in the current environment prevailing in Kuwait, realizable if the necessary conditions previously mentioned in the general instructions are made available. The assigned objectives, which are proposed according to their nature on the short, medium and long terms, will be approached in details through executive programs which will be used to apply the strategy in facts. (�>��!�����9��*);�1��9��

a) On the National Level *);�1��9�� 2�?� @� ��� ��� ��9�!�$� ���� ����1���1&� ��� ���� �#�����%� �#$� ��capacity in the manufacturing sector and increase their contribution in the national economy.

The analysis of statistical data, highlights as well as demonstrates the fact that the ability to export, dose exists within Kuwaiti manufacturing sector, hence it becomes a priority to support and guarantee their progress to strengthen their contribution in national economy. Achieving this object will depend on the interpretation of the plans developed on the lines like – incentive schemes for the exporters of the manufacturing sector, simplifying the export procedures to ease the export activities. This object may be considered as primary criteria for the success of this strategy and a window to include other products. *);�1��9�� 2�?� @� "#$�����%� ���� ������ &A�� �#$� �� )���� )&�attracting FDI’S in product and service sectors, exclusively for exports, enabling the local industry to diversify and expand it’s product base, which, as evident from the analysis of the non-oil export ����� �!� ���� ���'���� ���� ���� �$ ������� '����� ?�3� ���'���� ���������(�= � �!� ���� ������ �$ ���� �����'�� ���� 0������� ��� � = � ���� ��� �'�� �!�(��� �'������0�������'��������'���� ��$ ����;�����'������ ���� ������� *);�1��9�� 2�?� �@� "���)!�����%� �� .� 6������ . �% �6� ��� 1�!!�1��Data for Periodic Analysis The program is to include a regular follow up of the analytical results related to the foreign trade statistics concerning the manufacturing sector. It is proved that foreign trade statistics are only produced annually; therefore so prevent any sustained and regular analyses about the evolution of export and importation flows. The achievement

�

of this objective will make it possible to have an instant access to the data to evaluate fluctuations and undertake corrective measures on time. The foreign trade statistics are an essential tool to claim, to act and to decide. *);�1��9�� 2�?� �@� "����1��%� ���� %��% �$��1�!� ��1�� ��� ��������industrial exports; This program should run in parallel with the enhancement of the local industrial base. This strategy aims to take an initiative of pushing the exports beyond the neighboring Arab and the GCC Block markets, especially to get involved in exploring the European Eastern Europe and the Asia markets. This operation requires identifying sectors with extended range of products and organizing multi dimensional activities to introduce such products under the “MADE IN KUWAIT” theme. *);�1��9�� 2�?� �@ Supporting and developing new information and communication technologies: The role and use of information technology is constantly increasing in this new world economies or the modern economies, which is the latest term of reference for the techno savvy developed nations of the world and is now a forth integral element of the other three traditional elements of production – namely the manpower, capital and the raw material. Therefore this objective imposes itself either on the level of surrounding and support structures or at the level of SMEs. To achieve this objective it requires developing and implementing programs related to network establishment, creating on line procedures, providing timely updated and accurate information related to export activity and introducing the electronic trade mechanism within the means used for marketing. *);�1��9�� 2�?� �@� <�9�!�$��%� ���� 2������!� 3��$��� � /���� 1��� ���the field of Export Development. The human factor represents the indispensable stimulating power to execute and make any creative reformative project succeed. The question now is weather to develop such pool at the administrative level or at the industrial level, the aim is to provide human resource capable of clearly understanding the role, needs and the importance of industrial exports in the total national economy and is convinced to spread the awareness to develop an export culture in addition - is determined the sincere and efficient use of this mechanism to work in the direction of establishing a solid base to construct the export edifice. *);�1��9�� 2�?� �@� "#������%� ��$$� �� ��� ���� ������ ��!� "#$� ��Development Center Developing the strategy does not necessarily guarantee the success of it’s implementation, which exclusively depends upon the operational capability, expertise, effective leadership quality, specialization acquired by experience in the export field of the implementers and

�

supervisors. Hence the suitable structure which will be able to plan, develop and implement the export strategy and to evaluate its performance, best suited in Kuwait is the Industrial Export Development Center, which was specifically established for this purpose under the direct supervision of Public Authority for Industry. The objective is to promote IEDC, under the supervision of the Public Authority for Industry – PAI, enabling it to efficiently perform it’s mission both locally and internationally. b) On the level of manufactures *);�1��9�� 2�?@ Implementing and executing an integral program for the development and growth of the real export capacity of the operational industrial units, is to enable them to comply with the objectives set at the national level and to it's expansion thereto. *);�1��9�� 2�?� @ Implementing and executing a program to encourage the manufacturing units having an unexploited potential to export. To achieve this objective requires monitoring the manufacturing units export performance over the current and coming �.�� ����� ����� ����;� ���;� ���3� ��� ������! � ���� '����� .����� ����� �������initiated or increased their exports, compared to others during this period. *);�1��9�� 2�?� �@ Implementing and executing programs for exploiting and developing the possibilities of the Kuwaiti Industrial sector participation in the Electronic Commerce (�>���������9��*);�1��9���@

These quantitative objectives are related to the balance period of ������ ����� !��� ���� �'������ !���� ���� ���� ?����-���-���3�� �!� ��� State of Kuwait. A proposal could be presented to approach the export section which is more accurate for developing the projections details in the next five-year plan –����4-��� *);�1��9�� 2�?� @ Doubling the number of the exporting industrial units. %��� �'������ ���'������� ���' � ��� ������ �!� ��� units which export regularly. This number should be maintained and further consolidated; the focus from now on should be to double this number during the ��$�������� ������!������'������ ���;��������������3� *);�1��9�� 2�?� @ Accelerating the annual growth rate of Kuwaiti *��'������� �$ ����� ��� ������ ��� )= � ��� �=;� .����� ��� ��� �����������number based on the analysis of the actual exports figures achieved ���������!������ ��������� *);�1��9�� 2�?� �@ Increasing the use of the production capacity of the exportin�� '����� !���� �'������ ��= -�= � ��� �����'�� 3�= � �!� ����installed capacity.

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IV- DEVELOPING AN EXPORT ENVIRONMENT

A general economic requirement with factors like promotion of export culture among the manufacturing sector encouraging them to participate in this activity or in the field of the foreign trade operations of the units and/or departments are some of the important element required for the export growth of any country.

The environment surrounding the export activity constitutes number

of factors which can either positively or negatively affect its overall performance, including the manpower employed in this field. (��$�1��!�B�����

According a special status to exports in Kuwait Economy requires a provision for providing minimum factors which can effectively help in achieving this objective. Thus the primary requirement is to establish either a special cell or department or organization to facilitate the task of the people involved in the export field, this cell/ department/organization shall then form the central axis for the development and implementation of the other appropriate factors required for the growth of the export activity in the State of Kuwait. This would not only eliminate the duplication but will also assist in avoiding multiple or unnecessary interferences from the departments/positions with common characteristics. This situation is a cause of current prevailing confusion and resentment among the exporters.

Hence the decision to establish an Industrial Export Development

Center, under the supervision of Public Authority for the Industry offering the required assistance, support, services and all the facilities related to the export activity under one roof, was a step in the direction of simplifying the export procedures for the local exporters.

(�C�1�!������%�$ �1��� ��

The investigations into the export circumstances and the accompanying procedures revels the presence of number of obstacles and difficulties faced by the Kuwaiti industrial units both within and outside the country. In order to simplify this, it is recommended to introduce an "Electronic one-stop window " and "Rapid Intervention Bureau". a) Electronic one-stop window

Basically a web site - electronic portal referred as one-stop window to simplify all administrative procedures. This system allows the Kuwait exporters to process part or majority of the procedures on line through Internet, i.e developing distant services, in other words encouraging the exporters to dispense away the paper documents.

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The system aims to facilitate the export procedure through the

established network of data and information exchange and is based on the prevailing new technologies related to the electronic exchange of information.

This system enables the exporters to process all their export

related documents at one place, cutting short the time, efforts and visits to various government departments involved by the exporter, which otherwise completes the procedures.

b) The Rapid Intervention Bureau

Sometimes the exporter or export operations may faces some sudden un-expected difficulties during the process associated with the terms of the deal. These difficulties might be beyond the control of the exporter and he/they may not be able to or be capable of finding a solution to the problems like transport, shipping, Customs, particular document/s, etc, which requires fast intervention to solve the issue, at a short notice. A Rapid Intervention Bureau, is thus required be established, being primarily responsible for providing consultations, instructions and if need be to contact the concerned departments for resolving the issue within the shortest possible time.

On the other hand the Center shall constantly take care of the

several procedural issues related to the foreign trade operation of the local export units and regularly discuss with them about their concerned sphere of activity related to both or either - local and foreign to find the solutions. �(�C����1��%

Financial participation plays an vital role in developing exports, helping the exporting units, particularly the small scale industries, by providing them pre-export finance at competitive rates. Therefore it is recommended to support the efforts being made by the competent authorities for providing the means and mechanism to encourage Kuwaiti industrial SME'S to meet the foreign demand. �(����� ��1�

The higher value of risk elements associated with the export sector poses obstacles for small and medium-sized enterprise. It is therefore recommended to open the door for the discussions to find appropriate solutions for providing protection against the potential international trade risk, to this category of exporters.

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�(�� ���$� �������7����$$��%

Absence or shortage of direct and economic sea links, expensive, inconsistent and irregular road transport facilities coupled with complicated procedures and lack of services at the ports are some of the additional burdens loaded on the shoulders of the local industry.

It should therefore be a priority, to conduct a complete study which

will interpret the concerns and the interests of the local exporting industrial units, to identify the problematic areas for further discussion with the concerned departments/organizations to find their solutions. �(�"�1�� �%�6����7�3���9������

The existing binding agreements, restricts the types and conditions of support which a WTO (World Trade Organization) member country can extend to its establishments and industries; this has limited the availability of the substitutes for the member countries to support their industries. However it is possible to take advantage of the referred permitted exceptions. Direct support can be extended for the projects with a purpose of scientific research and the results of such research can be utilized or implemented in the industrial operations.

There are also procedures for supporting and protecting the local

industries against unfair practices resulting from dumping activities and the rising incidence of the unjust polices of the industrialized nations to support and protect their industries. But all these procedures are approved through a specific process of notification mechanism of the WTO. V – STIMULATE THE KUWAITIS PRODUCTS SUPPLY

The stimulation of Kuwaiti product/s supply will result in implementing higher levels of Export field, which will depends on:

��Diversifying and determining the priorities on the level of sectors and products having the potential of export. ��Identifying and determining the priority market/s on the basis of the geographical factors. ��Directing the support and incentives in line with these priorities along with the necessary factors and environment to improve the performance of Kuwaiti industrial exports in the foreign markets.

Export process is neither self neither produced nor separated from

the bunch of operation which precede and follow it and help in contributing to the achievement of the objectives. It is therefore logical to follow a determined cycle starting from the investment, to manufacturing and production and then to the exports whereas it has to match with the targeted market/s requirements in terms of

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specifications, quality and price in addition it should have a provision to provide for the product to be conceived and designed for export and not be limited to the export of surplus production in its current form and shape.

On the other hand, to ensure appropriate marketing of these

products abroad, it is necessary to work towards increasing the capacity in relation to the demand of the targeted market/s. hence the principle to meet the foreign requirements should be applied instead of seeking to sell a stored product.

The suggestive strategy is applied on the basis of matching the

products with the targeted market/s in order to develop them and enhance their position in such market/s. This strategy deals with all the aspects which shall be adopted to ameliorate the production capacity. These objectives are achieved by selecting the activities having an added capability to direct the exports in line with the trend prevailing in the specific market/s. (��� ��������$� �������

One of the results derived from the analysis of the two categories of the Kuwaiti establishments in the manufacturing sector, which represents the available supply on one hand and the potential supply on the other hand. Consequently, the action which interests these two categories found expression through the application of an Upgrading Program, a modernization plan for export industry and the supply of the appropriate means making it possible for the concerned industrial companies. This allows the concerned establishments to overcome the obstacles and effectively contribute towards achieving the objectives of developing the exports.

Company's globalization is a new economic alternative generated by internationalization of trade, distributing the potential production all over the world, by twin requirements: opening up and continuous upgrading.

Kuwait option for the integration of its economy with world

economy, is to launch a firm upgrading program with a view to reinforce the competitive potential of SMEs, to encourage industrial partnership and to reinforce the socio-economic environment of the firm.

a) Available Supply: Consolidating and Developing the Exportability

The analysis highlights the features of active Kuwaiti offer through

active establishments, the exported product and the destination of the foreign market/s. Actually the established industrial units' currently �$ ������� ���'��� ��� ��� � ��$������ � ���� ��� � ���' � �����

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importance as a strategic interest to enhance their production for establishing and further developing their exports.

2 ���� ��!������� ��� ���� �$ ����� �!� ������ '����;� �� ����� �$ ������

���'���� ���'������ !��� (3�3= � �!� ���� ������ ���'������� �$ ����;� .����extracted from the total exports of the manufacturing industry in the ��������;����!����.�9

�1����!��'(�. ���1���"#$� �����11� ���%����������1��

Sector Number of

Products

Total Value Total Sector

% of total

value of products

/ total sector

% total value products / total exportation

Chemicals and oil derivatives 3 ��)�(��43 ����(��� ((�= 43�( Main Metal Industries ( ���(����� ����3��) (��)= 4�� Food and Beverages � ��((�443 ����)(( )�)= ��( Non Metallic Mining products � ��33��3�3 ������) (3��= ��� Wood and wood products � (�4��� ����(�4 (���= ��( Textiles and Leather 4�(4��) )��3����3 (��= ��� Other manufactured products (4��(� 3��3���� �= ���

The primary export destination of the above mentioned products is to the Gulf and the Arabian markets, followed by some Asian markets with some negligible exports to few of the European markets. b) Potential supply: finding SME'S bestowed with Exports capacities

Kuwaiti manufacturing sector also consists of units that are only active in the local market and have established their presence. However they have not yet attempted or had no opportunity to go to the foreign markets, either, they are contended because their needs are met by servicing the domestic market requirements or they do not have self-confidence about their capability to venture into the export field. There is also a peculiar characteristic known as "Cocooning", which due to the management's in-capability to handle the intricacies or aversions to risk associated with the foreign market, leads the industry to remain within its confines.

However the conducted studies and the surveys carried out by the

Public Authority for Industry revels that these manufactures have capabilities. If they can managed efficiently, they can realize their capabilities for their advantage .

c) Expansion of the industrial base : Investment and partnership

Investment accomplishes a major role in economic life, it is

considered as a specifying factor in growth and productivity development and forms an efficient dynamic element in national income. For these reasons, the volume and distribution of investment

��

indicates the direction of decrease or increase. The link between such direction or decrease in capital accumulation, stocks, labor and income cannot be disregarded if development processes are treated seriously and practically. The following chart shows the phases of expansion of the manufacturing base :

For these reasons, it is advisable to attract direct foreign investment, to develop partnership (joint venture) and avoid overlapping of interests to guarantee penetration through the designated distribution channels. The chart shows the element and dimensions of the manufacturing strategy export led growth. - Indication assessments

The export stimulated by implementing the Upgrading Program and driving Direct Foreign Investment forward allows the specification of quantitative estimate as an indication, by mentioning the results of the manufacturing industries e$ ����� !���� ())� ��� ����� ���������� ��� ����following table :

Expansion of the industrial base

Direct Foreign Investment

Supply the local market

Partnership: New projects- interwoven interests

Rationalization of imports

Kuwaiti investment

Production

Export : Guarantee of marketing abroad by exploiting distribution channels within the framework of Partnership

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��)!��2�?���Manufacturing Industries Exports

Year Manufacturing Industries Exports Growth rate % �� � D ��� �?E�� ��� �� �?�E�� �� �� �?���D �� � �E��

Source : Ministry of Planning %��� �������� ���� � ���.��� ����� ��� ;4=�� 7�� ����� ���'� ����;� ���

���'��� ���.��� ����� �!� �$ ����� ��������� )= � ��� �������;� �������� ����proposed programs are applied.

��)!��2�?���C� �1�����%��������#$� ��% ����� ���� 0 Value in Millions –KD

VI- FOREIGN DEMAND AND MARKETING

The stimulation of Kuwaiti products supply with its components is accompanied and followed by the necessity to stimulate marketing activity specific to foreign market and consumer requirements in relation to the Kuwaiti industrial products currently available in such market/s, along with a possibility of developing additional products for export to meet foreign demand. (�C� ��%����6���@�. ���1�������6� :������ %��

Analyzing the statistics of the non oil Kuwaiti exports revels that ��� � �� ���'���� �� ��������� (3�3= � �!� ���� <'.����� ���'������� �xports ��� ������ %��� !������� ������� !��� ���� �������� ���'���� ���'��� 0��specified to determine the latest opportunities and identify the features of competitiveness before determining the appropriate method to penetrate the three categories of targeted markets.

#$ ����� �!� �� <'.����� ���'���� ���/��� .���� ���� �$ ������ ���/����

indicate the opportunity to further expand the exports to increase export revenues, which requires a plan for a detailed study to evaluate the of availability of the SME'S capacities through the Upgrading Program. This program will specify the potential of each enterprise. Within this framework, the support of Kuwaiti industrial exports is

� Manufacturing industries net exports exclude exports by Petrochemical Industries Company-PIC and Equate which are to be considered for Upgrading Program.

�� ��� ��� ��� ��� National Exports ��� �� ��� � ��� Manufacturing industries exports ��� ��� � � �� ��� Manufacturing industries net exports� �� �� � � �

��

distinguished by consolidating presence in traditional markets, expansion to promising markets and discovering new markets.

a) Traditional markets

Traditional markets for Kuwait are the established areas where it is essential to pursue the efforts of export including the support required to promote the presence of Kuwaiti products, especially in the Gulf and Arab States. b) Promising Markets

The European Union represents a promising market for Kuwait's industrial products; it is highly recommended to create a platform, as a long term investment which will reap profits at a later date. It is no doubt that it is a difficult market but rules of the game are clear in a large part. The intentions are not to make quick profits but to ensure a presence of the products, improve their competitiveness and acquire the latest of know how, establish contacts and build relations with this market. Local industry will benefit by utilizing its production capacity in full, enabling it to reduce the production costs and an opportunity to create profitable joint ventures. The markets like Iran and Iraq should be considered as promising markets.. c) New Markets

Penetrating new markets is based on the analysis of the country/region specific political, economic, trade and policies/procedures data to identify opportunities, the emerging markets and to plan the strategy for establishing a presence in the identified market/s, this should be done by the Local Industrial representatives, under the supervision of the Industrial Export Development Center.

New emerging markets – India, Pakistan, Thailand, Scandinavian

Countries, Eastern European markets, Asian Islamic Republic (including former member states of USSR), should be focused on and their data analyzed in detail to identify the opportunities and the possibilities for the Kuwaiti industrial products in these markets. �– Marketing and Promotion Activity

National economy dose not prosper only just by building industrial infrastructure, it also requires a support system to insure a secure and a regular import market/s. Hence methods and mechanism like - detailed market studies, participating in or organizing trade fairs and exhibitions, exchange of trade delegations and other promotional campaigns to support the "Made in Kuwait" products in the targeted market/s should be aggressively pursued to achieve the set objectives.

�

a) Market Studies

Market studies and organizational policies are essential in order to promote effective trade, economic growth and development. Market studies are the starting point - similar to a compass, to guide and lead the local manufacturer to penetrate the targeted market/s, as they provide an insight into the market, enabling the local manufacturer to arrive at a decision either to explore or to discard the market by identifying the opportunities and the risks associated with the targeted market/s. It is necessary to visit the identified market/s to verify the facts verses the results of the analysis. The studies will involve a through research of markets, practices and regulation to explore whether the needs of consumers are being well served. These will be exploratory studies to gain the best possible understanding of the specific market functionality and dynamics. If a study reveals the need for further investigation or research within the jurisdiction of IEDC, it will utilize all its resources to conduct or act accordingly. b) Major Trade Shows and Exhibitions

Selecting an exhibition for participation or selecting a major event/venue to organize an exhibition is an essential and an integral part of any marketing/promotional plan. One of the positive contributions, of organizing successful event or participating in a major trade show/ event, is to build the knowledge of Kuwaiti industry, apart from exposing the local products, generating interest and initiating the flow of enquiries from the visiting global trade fraternity. Such events provide an excellent platform to directly interact with the global importers/distributors to exchange views and update oneself with the latest developments within the industry, market and its requirements, etc. A successful participation or event organization requires a meticulous planning right from the stage of identification and selection - of the event, venue, targeted markets and the most suitable local products which can compete not only with the similar local, but also from the regional and the other international products available in the targeted market/s. c) Distribution channels and buying groups

Establishing partnership relations with the major distribution channels and buying groups will open possibilities to ensure large volumes of exportations. However a basic rule to be followed prior to approaching such big players is to visit the market and the locations to acquaint oneself with the important information like - number of locations in the country, approximate annual turn over, the clientele they cater to, product displays and their shelf movement, current import sources, pricing structure, criteria for selecting the product, purchase quantities, import polices and finally the decision maker. This will help the exporter to formulate an offer which will confirm with their requirements – price, quantity and policy. It is sensible to select the products which have a strong marketing potential.

�

d) International Trading Companies

International trading companies are either present or have representation in most parts of the world and perform a vital role in the growth of commercial exchange. They represent a meeting point between the producers and the promoters and also provide a vital link between the product/s and the market/s.

The basic character demarcating these international trading

companies is their focused commitment and concentration towards their mission i.e. export, import and exploring new markets without being preoccupied by the issues of managing the industries and the production, which is beneficial for SME'S as they can solely concentrate on improving the production and the quality. There are many such units, particularly small and medium sized industries who find it difficult to manage the complicity of both - economically and operationally the requirements related to export activity, hence are contended with the local market. The services offered by such international trading companies therefore play a significant role for this sector i.e. by opening and developing new markets and providing assistance in importing raw material at competitive rates.

Opting for this concept, which proved its efficiency, will in fact help

SME'S to boost their exports. It is therefore recommended to examine the proposal in details - it's legality with reference to the industrial rules applicable in Kuwait, suitable changes required for adopting it to suit the local requirements, organizing its composition, defining its activities and the establishment of its credibility to achieve minimum �= � �!� ���� ������ ��� �� G�� ������ �����'�� ����'��� �$ ������ %.��categories of units could be adopted –� ��= � ������ �F'�� � �������� ��� ��local-foreign joint equity holding to assure exports. e) Promotion

A focused and a sustained advertisement campaign is a strongest medium not only to introduce the product but also to create a brand image of the products-country of origin. The powerful media tools available are – TV, Print – newspaper, magazines, Audio - radio, Electronic – Internet, besides attractive product packing, POP (point of purchase) material – posters, flyers, danglers, giveaways etc to name the few.

The market-product specific campaign should be designed and

focused on the bases of - the product, its quality, demand, targeted consumer segment, product USP – Unique Selling Points, competitive edge under the tag of MADE IN KUWAIT in the targeted market.

There should be a dual objective for such campaigns – first to

introduce the product and second to create awareness about the Kuwaiti industry in the targeted market/s, as currently the image of

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Kuwaiti industry in the majority of the international market is of an oil producing and exporting nation and not of nation having credible industrial capability, while talking about the industrial capabilities of Kuwait other than the GCC and the Arab markets, there is a look of surprise and disbelief on people's faces.

This is a major hurdle being faced by the Kuwaiti exports today, this

necessitates for an aggressive sustained international campaign to create awareness about the industrial capabilities of Kuwait along with delivering a message to the consumer that the products manufactured in Kuwait are as per the highest standards prescribed by the international specification bodies and are second to none in quality when compared to any of the internationally manufactured similar products.

For an effective campaign in any of the targeted market/s, it is

advisable to source the service of reputable local company, as it best understands the dynamics of the local market and consumer behavior to create the harmony between the product, market peculiarities, consumer requirement to achieve the set objectives.

f) Trade Delegations

The search for niches market and plugging new gaps is possible by organization regular meetings between exporters and importers through the exchange of delegations. Industrial Exports Development Center will organize such meetings either by hosting foreign delegations or by organizing visit by Kuwaitis delegations.

The organization of these meetings between delegations,

concerning existing or targeted markets, takes part in building up direct relations. It is an advantageous occasion to take note of the reality about these markets needs by carrying out the comparison with the products of competition in order to adapt Made in Kuwait products in concurrence with the targeted market required specifications quality, price to reinforce its compliance and competitiveness.

The Center will host the foreign delegations and will organize the

program of the meetings with Kuwaitis manufacturers in order to facilitate the achievement of transactions and the good course of communication concerning the potential projects of partnership. The programs include in particular visits of pilot firms which will be selected for this purpose.

A determining aspect should be underlined about the construction

of equitable and trustful trade relations for mutual advantages: Not restrict the business acquaintance to sell to the partner but to open the possibility to buy from him and in particular raw materials and the semi finished products utilized either for the production or for the local market or export. This aspect is often neglected and reduces the

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degree of interest of partners and prevents the development of cordial relations and their durability.

Exchange of trade delegations enables the business community

apart from building cordial business relations and contacts also helps to know and understand the each other along with market-consumer related dynamics and requirements in a better light.

The gaps existing in the international marketing can be bridged by

the exchange of trade delegations between Kuwait and the targeted export markets/s or the potential lucrative markets. The IEDC – Industrial Export Development Center, at PAI – Public Authority for Industry, should regularly organize the exchange of such delegations, as such opportunities provide an excellent platform or a forum for the Kuwaiti business fraternity to discuss the possibilities of exploring each other markets, exchange of information related to each others experience in exploring other foreign markets, technological advances, or to conclude deals, exchange of buy new technology, establish joint ventures, etc.

The primary purpose of these delegations should not be limited to

the conclusion of any single deal but should incorporate a long term view of establishing a solid platform for building on a long term mutually beneficial relationship. The success of each mission is unique as apart from deriving maximum benefits it also helps in improving the chances of success and revenue of the forthcoming missions.

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EVALUATION

Drawing up the strategy and the liability of implementing it's applications through executive programs also necessitates implementation of measures and mechanism to periodically evaluate its performance vis-à-vis the achievement of the objectives it has been designed for and if necessary to modify or amend it to achieve the set objectives. It is to be noted that the results may not always be in numbers, but the in levels of the degree or percentage of success which can be evaluated in short term time frame. The quality results should be expected in medium and long terms time frame.

Also while evaluating the gross results representing an export

growth due to the implementation of a certain strategy, practical standards of analytical evaluation should be applied to measure the degree of success of the implemented program/plan.

The success rate should be evaluated by the achievement of the

objectives specified by the program/plan. The evaluation of the success ratio of organizing exhibitions should be evaluated by the logic objective behind the selection of the event/venue, planning, number of participants, numbers of visitors and the inquiries it generated, registered transactions and their value, its effect on the local business in terms of sales or if any trial order is procured by any participating establishment and not on the time frame of the exhibition. The evaluation process may require analysis of several other factors which may not be limited or depending on the participation alone.

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Material in this publication may be freely quoted or reprinted, but acknowledgement is requested, together with a reference to the

document source.

Industrial Exports Development Center ��7�E�$��3(��,�!��;����4�<'.���

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E-mail : edc@pai.gov.kw

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