(MENAFN- Arab Times) "The four-year development plan launched in 2010-2011 aims at diversifying our economy by transforming Kuwait into a regional financial and trade hub and such transformation requires a significant expansion of our private sector, financial sector modernisation and a robust and attractive investment climate reinforced by a world-class legal and regulatory infrastructure," stated Minister of Commerce and Industry Anas Al-Salah during the opening of the "Kuwait Insolvency and Creditor/Debtor Regimes Dissemination Seminar" that was held on Tuesday at the Public Authority for Industry.
The seminar organised by the Ministry of Commerce and Industry in collaboration with the World Bank aimed at evaluating the functioning of the country's enterprise credit and risk management environment in reference to the World Bank's 'Principles of Effective Insolvency and Creditor Rights Systems,' the international 'best practice' standard.
Stable
"Although we are a relatively small economy, Kuwait is among the most financially stable in the world, owing largely to high and continuing demand for our domestic resources. Despite these advantages, the 2008 global financial crisis has shed light on some of our own vulnerabilities to the international community on which we rely for trade and with which many of our companies transact business and make investments abroad," pointed out Al-Salah
He added that the stakeholders must continue to deal with the casualties of the recent financial crisis by developing workable solutions to promote corporate restructuring as investment companies have sustained significant losses. "A new Financial Stability law was adopted in 2009, but has proven to be of only marginal benefit for these companies. We are fortunate to have leading global restructuring experts who will share their experience in addressing these problems in other countries," he cited.
The Minister also stressed on the importance of building a sustainable and attractive business investment climate for the future. He outlined that the ability to expand and sustain commerce and industry requires access to credit in a variety of forms, whether such financing is provided by banks or other financial intermediaries.
"Access to finance requires that credit providers assure themselves that the risks of default can be effectively managed, which requires effective and functional registries, credit information systems and efficient enforcement and resolution procedures," he stated.
The seminar workshop attended by representatives of key state and private sector stakeholders was divided into three panel discussions. "The workshop provides a forum for the discussion of World Bank's Report in the Observance of Standards of Codes on Kuwait's Insolvency and Creditor/Debtor Regimes," pointed out Dr. Riz Mokal, Senior Counsel, World Bank. The World Bank Report provided a list of recommendations that was discussed during the workshop by the panelists and the participants to enhance and strengthen each element of Kuwait's legal, regulatory and institutional frameworks for enterprise credit.
The first panel discussion on 'The Kuwait Approach: Investment Company and Corporate Renewal' tackled on how the global credit crisis has taken its toll on Kuwait's investment companies and businesses. The panel chaired by Dr Meshaal Jaber Al Ahmad Al Sabah, Chief of Kuwait Foreign Investment Bureau examined the current state of the market and prospects for recovery and renewal of the investment companies and corporate sectors by means of a workout framework adapted to the needs of the Kuwait economy.
World Bank Senior Consultant Gordon Johnson was the moderator of the first discussion with panelists KPMG, Kuwait Partner Anindya Roy Chowdhury, Kuwait Financial Centre Markaz Chief Operating Officer Ali Khalil and guest speaker from Turkey R Engin Akcakoca.
Protection
The second panel discussion on 'Credit Access, Protection, and Risk Management' chaired by Assistant Undersecretary for Economic Affairs, Ministry of Finance Sami Al Saqabi examined the important need in developing affordable access to credit, including small medium enterprises (SMEs), and its linkage to Kuwait's economic recovery and future growth. They also tackled that credit protection and risk management systems also facilitate efficient use and reuse. The discussion moderated and presented by Mokal with Johnson as panelist focused on commercial credit information systems, security interests in moveable assets and intellectual property, registry systems, credit risk management framework and enforcement mechanisms.
Finally, the third panel discussion on 'Corporate Rehabilitation and Liquidation' that was chaired by Assistant Undersecretary of the Ministry of Justice Dr Mohammad Abdullah Al Ansari tackled the efficient rescue and exit mechanisms for business entities that are essential to maximizing business growth, developing a stable financial sector and promoting a sound investment climate.
The discussion moderated and presented by Mokal with panelists ASAR Law Firm Partner Rob Little, Johnson, Christian Adams, Expert working on Dubai world examined policies, incentives and goals of formal insolvency laws, preserving jobs and economic value through rehabilitation, maximizing values through efficient redeployment of assets, fast-track solutions for rehabilitation and institutional considerations.
Among the key policy recommendations for considerations put forward by the World Bank and discussed during the workshop included the following under the Credit Risk Management Systems: Kuwait should consider adopting a generally applicable regulation to support both informal and quasi-formal restructurings for financially distressed companies similar to the 'London Approach' or the slightly more formalized process known as the 'Istanbul Approach;' consider creation of a full-feature credit bureau in relation to commercial lending on the model of the consumer credit bureau CI-Net; and corporate governance practices should be strengthened and new regulations should be introduced clearly defining accountabilities of officers and directors for trading while insolvent or while in the vicinity of insolvency.
Policy
On the other hand, under the Creditor Rights Systems, one of the key policy recommendations for consideration is for Kuwait to adopt a new secured transactions law for movable assets permitting as collateral tangible and intangible, present, after-acquired and future assets; creation of all-enterprise security and security in generically described categories of assets.
Meanwhile, under the Insolvency Law/Framework, the key recommendation is to develop/adopt a new enterprise rehabilitation and liquidation law that incorporates procedures based on international principles of good practice, as contained in the Unified Creditor Rights and Insolvency Standard; the new law should also accommodate pre-negotiated agreements guided by regulations.
Finally, one of the key policy recommendations under Institutional and Regulatory Frameworks is to promote judicial specialization in the area of commercial and insolvency matters by ensuring that judges on the commercial circuits should not be rotated off to non-commercial courts for at least three, and preferably five years.
This would enable such judges to accumulate much needed specialist expertise and deep insight into commercial transactions.
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