Attributes of the Program

a) Technology
Investments eligible for the program are those of manufacturing and production, involving a high technology contribution and those with export potential. It is desirable that the contractor's commitment be fulfilled in a manner that maximizes the transfer of technology. Projects may be submitted by existing Joint Ventures or by new Joint Ventures. Projects can include jointly executed Research and Development involving the education and training of Kuwaiti nationals. Any projects involved in training should concentrate on specific areas of high technology.

The transfer of high technology is stressed as the main goal of the program. This transfer may be achieved by the capitalization of certain technical skills as equity, through license arrangements and the assignment of skilled personnel to the Project. Transfer of technology will be evaluated impartially according to normal business practice.

The technology transferred must be updated throughout the life of the agreement. If approval for the transfer of technology is withheld by the overseas contractor's Government then the contractor shall make his best efforts to identify an equal alternative source. It is worth noting that the withholding of transfer approval does not relieve the contractor of his obligations under the agreement. It is expected that education and training of nationals for senior technical positions and management will be an integral part of each agreement.

b) Joint Ventures

Joint Ventures must be able to export and market their product. It is desirable that an overseas contractor already involved in international market will provide such avenues, or assist in the integration of these products.

Joint Ventures will be able to appoint their own management. This will include marketing and the transfer and updating of technology. A contractor without the necessary knowledge or expertise must arrange a partnership with someone. Joint Ventures will operate under, and be subject to, Kuwait Commercial Law.

In a Joint Venture the partners share proportionate responsibility for the technical, financial, administrative and educational aspects. A primary operating responsibility should also have an equity interest. Not withstanding this, the contractor will remain responsible for implementing the Investment Project. This will be true even if it had been originally conceived and implemented by a third party.

In exceptional circumstances, the requirement for 49/51 Kuwaiti ownership may be received; here we emphasize the expression "Exceptional circumstances", as the circumstances would have to be most unusual. The contractor can include overseas and local investors in the private sector who are able to assist the Joint Venture. The contractor can do this only if the local investors do not exceed 10% of the contractor's share. For example: if the local investor were to be the other Joint Venture partner, his share of the whole venture would be limited to 61%.

Local participants can be approved Joint Venture parties only if a contractor recommends them to the program. Joint Venture partners may be required to offer a percentage of their Joint Venture for public subscription. This is an interpretation of passages expressed in Kuwait Commercial Law.

Within the first four years of its operation, any changes in the ownership of a Joint Venture will be subject to the approval of the Ministry of Finance (Program Executive Office).

The Equity Investors and the contractor will be expected to maintain a minimum ownership of 39% for the first four years of operation and, thereafter, at least a 15% subject to the approval of the Ministry of Finance (Program Executive Office).

The contractor may not reduce his ownership at all until his program commitment has been fulfilled. Equity Investors may transfer some of their holdings to another approved Equity Investor or to the contractor. This is subject to the approval from the Ministry of Finance (Program Executive Office).

With the agreement of the Ministry of Finance (Program Executive Office), a contractor may appoint someone to administer, implement and supervise the operation of the Joint Venture. However, the responsibility for the successful completion of the project will remain with the contractor. Note: If such an appointment is to be contemplated then it must be mentioned in the original Project Proposal.