(MENAFN - Kuwait News Agency (KUNA)) Wary of their heavy reliance on oil and gas sectors, all GCC states have embarked on strategies and programs designed to diversify their economies, enhance private sector activity, improve education standards and boost employment for their nationals.
A report prepared by the Kuwait Finance House (KFH) said today that these efforts include large public spending programs on infrastructure, education and health with supporting investments envisaged from the private sector.
Not all are fully costed out, but Saudi Arabia's 9th Development Plan covering 2010-14 envisages spending of USD 385 bln. Kuwait's development plan meanwhile proposes USD 125 bln over the same time frame, while Oman's 2011-15 plan envisages USD 78 bln in expenditure, it said.
Meanwhile, Abu Dhabi, Bahrain and Qatar have established Vision 2030 frameworks and national development plans/strategies to achieve those visions. The National Development Strategy (NDS) for Qatar covering 2011-16 envisages spending totalling USD 226 bln, while Abu Dhabi's Vision 2030 report estimated spending of USD 160 bln during the five year period 2008-13, it added.
All GCC plans highlight investment opportunities in such sectors as transportation, power, water, utilities, health care, housing, ITC, education and training. Spending on infrastructure is expected to be particularly large in the coming years offering large opportunities in the construction sector. Transport projects are particularly prominent, with all GCC states planning to develop new interlinked train networks, as well as boosting roads, airport and port infrastructure.
The report pointed out that in 2010, the Kuwait national assembly approved a five year (2010-14) development plan aimed at restoring the economy to growth following the economic crisis post 2008.
The plan forms the first phase of a larger program known as Kuwait Vision 2035 that will run in five-year blocks over the next 25 years, and includes 1, 100 projects with an estimated value of USD 125 bln focused on both the oil and non-oil sectors. Similar to other GCC development strategies the plan focuses on economic diversification, including turning Kuwait into a regional trade and financial hub.
While Kuwait public finances are exceptionally strong, the report said, implementation of the development plan has been stalled both by political disagreements and institutional capacity constraints.
Kuwait needs to get parliament to approve and execute new laws aimed at supporting private sector engagement. Kuwait are thus likely to remain hostage to political wranglings. The state clearly has the financial resources to push ahead with its major infrastructure projects, but implementation will probably remain halting, it added.
It said state spending has certainly increased and topped USD 62 bln in 2011, but much of this represents larger government transfers in the form of grants and subsidies to Kuwaiti nationals. This has bolstered consumption, and may offers opportunities in retail and some services, but private sector activity has remained muted in the absence of large development spending.