Reg No. 1 GC 027 • VOL 41 • No. 06 • June 2020 • BD3.5 | KD3 | RO3.5 | QR35 | SR35 | Dh35 www.gulfconstructiononline.com Forklifts & Boom Lifts Lifts & Escalators Quarrying Railways Lighting KUWAIT gulfconstructiononline.com Kuwait means halted progress completely, confirms a top official at a leading international mul- WAITING FOR VISION tidisciplinary firm based in Kuwait. “Like every other sector and industry, the construction sector now finds itself grap- TO MATERIALISE pling with a changed world, where projec- tions have been lowered, spending has been downsized and the project pipeline seems The health crisis created by the novel coronavirus and the record a little less robust,” Tarek Shuaib, CEO of low prices of oil have added to the manifold issues that Kuwait has Pace, tells Gulf Construction. faced over the years. However, given its significant sovereign wealth The Covid-19 pandemic has served a reserves, experts believe Kuwait will weather the storms well. double whammy to Kuwait, which is still hugely dependent on oil revenues, with oil prices having recently dropped to historic lows, and the resultant dive in business confidence. Since Kuwait instituted lock- downs to reduce the spread of the Covid-19 virus last March, around 39 per cent of businesses in the construction, contract- ing, architecture sector have shut down operations, revealed a busi- ness impact survey published by Bensirri PR (BPR), an independ- ent corporate, financial and polit- ical communications firm based in Kuwait. Nearly 31 per cent saw revenue drop by more than 80 per cent but were still operating when the sur- vey was conducted. The Kuwait Business Impact Survey (KBIS) gathered key in- sights from 498 Kuwaiti business- Work is in progress at a key campus of Kuwait University (see Page 34). es that were profitable in 2019 across 13 different sectors. The S THE world waits with bated Since then, the country has launched vari- report is believed to be the only Covid-19 breath to be rid of the Covid-19 ous projects as part of the programme in related business impact survey conducted in pandemic that has created may- partnership with the private sector. Kuwait. As many as 45 per cent of Kuwaiti hemA in every economy and every industry, Among the largest projects inaugurated business owners said they have suspended Kuwait’s construction sector is looking to last year was the Shaikh Jaber Al Ahmad or shutdown their businesses and another the country’s ambitious Vision 2035 pro- Al Sabah Causeway, one of the world’s 26 per cent were on the verge of collapse af- jects with hope to wade through this diffi- longest bridges, which links Kuwaiti City ter seeing their revenue drop by more than cult period. with Subiya area in the north of the coun- 80 per cent. No one disputes that some of the major try, paving the way for the future Silk City As part of measures to ensure business projects under the multibillion-dollar plan project, which is expected to be a significant continuity, 32 per cent of respondents have will face delays. However, the vision pro- magnet for foreign investment. adjusted employee hours or salaries in clear vides a long-term roadmap for develop- Another key enabler is the Kuwait Inter- violation of Kuwait’s labour law and 15 per ment and short-term hope to the belea- national Airport’s new $4.5-billion termi- cent have already started laying off staff. guered industry as safeguarding the health nal that aims to boost the aviation hub’s ca- Now in their third month of working cap- and well-being of its denizens is the prior- pacity to 25 million passengers, which has ital pressure, 56 per cent of business own- ity for the government agencies, for now. been making impressive progress despite ers/CEOs said they cannot afford to cover The Kuwait Vision 2035 was launched the novel coronavirus crisis. their fixed costs for another two months by His HH the Amir Sheikh Sabah Al The Covid-19 pandemic has decelerated under the new status quo, the survey indi- Ahmad Al Jaber Al Sabah over two years the pace of infrastructure development in cated. ago to transform the nation into an inter- Kuwait, as it has done in other states in the However, many in the industry expect the national hub for business and commerce. region and the world over, but it has by no ☛ Gulf Construction, June 2020 29 Kuwait gulfconstructiononline.com ☛ construction sector to bounce back once the lockdown ends, pandemic regulations ease and the world finds its balance again. As Pace’s Shuaib says: “As priorities are reas- sessed and budgets reallocated, development will remain a vital need and a key priority on the national level. Its timeline might change and priorities reshuffled, but Kuwait’s devel- opment agenda will move forward.” The country’s development agenda laid out by the ‘Kuwait 2035’ initiative aims to transform the country from a petro-state to a financial, logistics and trade hub by 2035. The country currently derives around 55 per cent of its GDP, more than 90 per cent of exports, and about 90 per cent of its rev- enue from hydrocarbon products. The new terminal at Kuwait International Airport ... work well under way. Hence, both the government and legisla- tors – who do not see eye to eye on various thority for Housing Welfare (PAHW). its commitments to Opec. The deficit will issues – agree that private sector involve- In the oil and gas sector, Kuwait is ex- be plugged through withdrawals from the ment is the way forward for the country. pected to commission its clean fuel project General Reserve Fund (GRF). Kuwait seeks to attract $200 billion in for- (CFP) in September after 36 new produc- eign investment during 2020-35 to become tion units at its two main refineries – Al- SILK CITY a global centre for trade and finance. Ahmadi and Mina Abdullah – were com- Plans have been launched for $86-billion Also, with a large oil production capacity pleted in nearly five years. Meanwhile, Phase One of Silk City, a China-backed and significant sovereign wealth reserves, work is well advanced on the $13-billion Al construction project. This phase is expect- Kuwait has room to weather economic dif- Zour Refinery project, which is being con- ed to include an airport, rail network and ficulties. structed by a consortium including Dae- establishment of a trade zone. The project The ‘Kuwait 2035’ programme – which is woo (South Korea) and Sinopec (China). will be built around the Mubarak Al Ka- looking to draw a considerable amount of According to media reports, Kuwait has beer Port and aims to attract massive local foreign investment and has received already active projects worth around $495 billion, and foreign investment to turn the sparsely interest from China – is believed to include with nearly half of them in the design stage populated narrow northern end of the Gulf an array of 709 mega projects with a com- and close to 30 per cent in the construction into a trade hub and further Kuwait’s eco- bined estimated value of $230.4 billion. Of stage. nomic diversification plans. these, some 58 per cent are reported to be In its Kuwait Infrastructure Report for The project, however, has continued to under construction. the Q4 of 2019, Fitch Solutions forecast an be dogged by delays, not least by the latest A key project in the programme is the annual average growth for the construction Covid-19 crisis. ongoing $16-billion Mubarak Al Kabeer sector of 3.3 per cent between 2020 and port, located on Bubiyan Island. It forms 2028. While growth in Kuwait’s transport AIRPORT the centrepiece of the country’s develop- infrastructure sector will outperform the Leading Turkish builder Limak and local ment plans for the proposed $300-billion wider construction market, driven by the construction firm Kharafi National have Silk Road Project, which envisages the con- strong project pipeline in the road and port achieved considerable progress on the new struction of the $82-billion Madinat Harir segments, it will account for only a small state-of-the-art terminal at Kuwait Inter- (Silk City) and the development of five un- proportion of the country’s total infrastruc- national Airport. Terminal column works inhabited islands. ture industry value over the coming decade, are reported to have attained around 60 In the transport segment, another major the report states. per completion, while the floor slab works development that is eagerly awaited is the Growth in Kuwait’s energy and utilities (44 per cent) are ongoing along with shell $7-billion Kuwait Metro, which will extend infrastructure sector will underperform the cassette fabrication. The concreting work is 160 km, with 68 stations along three lines. growth in the wider construction sector, reaching the halfway mark, while the shell In the roads sector, considerable impor- due primarily to limited electricity demand cassette installation is ongoing. tance has been given to the development of and a poor track record of project imple- Limak Insaat Kuwait, a subsidiary of roads that connect the new housing cities mentation. Turkish builder Limak Group, is also the such as the South Al Mutla Roads and In- Meanwhile, Kuwait approved its 2020/21 lowest bidder for Phase Two of the new frastructure Development. budget early this year projecting a KD9.2 Kuwait Airport project with a figure of At least five major housing programmes billion deficit – another huge deficit for KD169 million. The scope of work includes have been launched and are making pro- the sixth year in a row due to lower oil construction of a parking area, outdoor gress under the purview of the Public Au- prices and production curbs in line with works and landscaping, a sewage and rain- 30 Gulf Construction, June 2020 gulfconstructiononline.com Kuwait water treatment plant, storage tanks, roads, ed by the PAHW.