Kuwait investing $15.6 billion in infrastructure

Like other countries around the world, Kuwait is finding it prudent -- given the low-interest global financial environment -- to invest in its infrastructure so as to modernize and create jobs.

A recent report reveals that Kuwait plans to spend $15.6 billion on infrastructure this fiscal year on projects like roads, the electric grid, and installations like airports and seaports. Also in the plans are housing and new residential construction, and additional renewable energy projects and initiatives. Like some neighbors, including Saudi Arabia, Kuwait is evaluating renewable energies like wind and solar to try to diversify and pivot away from over-reliance on traditional oil revenues.

The information on Kuwait's infrastructure program came from Khaled Mahdi, Kuwait’s secretary general of the General Secretariat of the Supreme Council for Planning and Development, who made the announcement to Al-Anba, an Arabic daily.

Mahdi said the government will foot the bill for nearly 50 percent of the investments, with approximately 33 percent coming from state-owned oil revenues and 17 percent from the private sector. He described the work as part of a “second five-year plan” for Kuwait, in which planners also want to boost tourism and financial investments in the country.

For more on Kuwait's finances, the Gulf News Journal spoke with John Angelis, a professor of business at Elizabethtown College in Elizabethtown, Pennsylvania.

“Kuwait’s investment in infrastructure is wise,” Angelis said. “Economic data consistently shows that government investment in infrastructure results in an outcome of double or more return. It's one of the best ways the government can stimulate the economy.”

Angelis also said that much of this work should include citizens and local workforces, rather than relying too much on outside labor.

"It's important not just to build more infrastructure, but to employ local workers as well as guest workers and specialists,” Angelis said.

Angelis pointed to infrastructure efforts by China that might have led to big GDP gains over the last few decades.

Other economists agree on the importance of infrastructure spending.

“Infrastructure projects -- electricity, roads, airports, water systems and telecommunications -- are the foundations of modern economies,” Balaji Viswanathan, vice president of Product at the robotics firm Invento, said.

“When you put up a power plant, you not only generate employment directly through construction and operations at the power plant, but also create an industrial base around the plant who would want to tap the power,” Viswanathan said. “These industries would get more entrepreneurs and employ more labor. These workers would purchase more goods from the markets, creating a virtuous cycle… . When you put a road through a backward area, you bring them close to employment options, markets and better healthcare. Infrastructure is the key to wiping (sic) poverty.”