Kuwait is a member of the Gulf Cooperation Council alongside Bahrain, Qatar, Oman, Saudi Arabia and the UAE. The country is also part of the Greater Arab Free Trade Area (GAFTA), a pact of the Arab League entered into force in January 2005 which aims to form an Arabic free trade area.
Non Tariff Barriers
It is impossible to import products from Israel and alcohol.
Customs Duties and Taxes on Imports
5% « ad valorem » most products. First need product and are not taxed. Some products have a tax rate of 10% to 12% to protect the national industry. There is a 100% tax rate on tobacco. For further information, visit Kuwait Customs website.
Importers apply for import licenses from the Ministry of Commerce and Industry and must be registered with the Kuwait Chamber of Commerce and Industry (KCCI). Licenses are valid for one year, are renewable, and allow for multiple shipments. Import licenses for industrial machinery and spare parts are also required, which are issued by the Industrial Development Commission of the Ministry of Commerce and Industry.
These documents are needed to import products to Kuwait:
Certificate of origin
A packing list
A Bill of lading
Some goods may require a license or additional documentation. Only the local agent is authorised to clear items at Kuwait Customs by showing an official letter of representation as well as a letter by the end-user.
With a GDP per capita based on PPP of Int$ 41,510 (IMF, 2021) and a median age of 29.7 years (CIA Wolrd Factbook, 2020 est.), the average Kuwaiti consumer is one of the wealthiest worldwide and is around the same age as the average consumer in most other GCC countries. Kuwaiti nationals comprise only a third of the population and there are significant income disparities among expatriates depending on their origin (Western, Arab, East Asian) and position in the job market. Kuwaiti consumer is a city-dweller (Kuwait being one of the first most urbanised countries in the world with a rate of 100% - World Bank, 2019 latest data available). They are also avid online shoppers with 2.4 million individuals (out of 4 million) already using e-commerce services.
Kuwaitis see their purchasing power fluctuate with oil prices. Ever since the 2016 collapse, consumer spending has been constantly growing reaching a 5.4% annual growth in 2018 (World Bank, latest data available). However, the COVID-19 pandemic has harmed consumer spending, leading to months of decrease. It is in 3Q20 that consumer spending started increasing again due to the pent-up demand for consumption. Since October 2020 the initial boost was quickly replaced by consumers' doubts concerning the recovery of the economy and the labour market. (National Bank of Kuwait, 2020). Less affluent consumers are also concerned with a possible decline in government subsidies, from which they have benefited over the last years.
Driven by rapid urbanization, the influx of the expatriate workforce, and a rising population of the young and affluent, Kuwait’s retail industry has grown dramatically over the past 10 years. High GDP per capita and the growing popularity of modern retail concepts and formats have also helped to position the country as a major hub for global luxury brands, earning Kuwait City a 9th place ranking among the top cities worldwide for retailing in property consultancy JLL’s 2016 “Destination Retail” report. However, after several years of rapid growth, subdued consumer confidence somewhat slowed momentum in the sector in 2015-16. Between government reductions in expenditure, demographic changes within the expatriate community and inflated commodity prices, the market is down across most classes and categories. However, in spite of this, a wide and growing array of international retailers are expected to level out the market ahead of another retail boom over the medium to long term.
The distribution system in Kuwait is divided between shopping centres, foreign markets and supermarket chains. There are two types of distribution networks:
the cooperative network: each residential zone has a cooperative society comprising a set of services and a supermarket. Most of these supermarkets are run by the Union of Consumers Cooperative Societies.
In 2017, there were just over 4 million internet users in the country, making the penetration rate 98%. That year, there were 1.3 fixed-broadband subscriptions per 100 inhabitants, a number that considerably grows when it comes to mobile-broadband subscriptions (227.9 per 100 inhabitants). Additionally, 86% of households had a computer, and 99.7% of them had internet access at home. Kuwait has showed a strong growth in the internet access due primarily to the high ownership of smartphones. With mobile penetration at high levels, the market focus has shifted from fixed to mobile data market.
In 2017, e-commerce sales in Kuwait reached an estimate of US$ 670 million and e-commerce penetration was 53%. Although the Middle East in general is a huge retail market, it is still behind in terms of e-commerce. Mall culture is still prevalent and there is a general lack of trust in online shopping as a whole. The high rate of smartphone penetration in the country — 240% — is one of the main reasons for e-commerce growth in Kuwait. The mobile operators in Kuwait offer one of the most advanced mobile networks in the Middle East and 100% of land area and population is covered by mobile network. In spite of that, e-commerce remains predominately limited to online banking and financial brokerage services, as most Kuwaiti companies do not conduct online B2B and B2C transactions. Paying bills online is the most common activity and in 2017, 53% of e-commerce users in Kuwait made money transfers over the Internet. Even though 97% of Kuwaitis use credit and debit cards, a major share of online shoppers prefer cash over all other payment methods when it comes to e-commerce. People in their thirties represent 65% of all online buyers. As for gender, 70% of e-shoppers are male and 30% female. The most popular online shopping categories are clothing, electronics and travel tickets and accommodations. Some of the most popular e-commerce websites in the country are digumz.com, xcite.com, taw9eel.com, ubuy.com, souq.com.kw, theyard-kw.com, and thouqi.com.
Organizing Goods Transport
Main Useful Means of Transport
Roads are modern and well-maintained in Kuwait. There is no rail transport in the country, which creates traffic problems around the big cities. There are seven airports in the country however only one respects the standards of international business. Kuwait has modern ports: Shuwaikh and Shuaiba are the most important. This is the best way to transport goods to the country.
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