The UAE and Kuwait: A Journey of Financial and Economic Integration Between Two Brotherly Countries
Abu Dhabi - United Arab Emirates, February 24, 2024: The relationship between the United Arab Emirates and Kuwait is an exceptional example of two countries eager to enhance cooperation across various fields, including the financial sector. They are bound by several agreements and Memoranda of Understanding (MoUs) that contribute to increasing the volume of investments and trade exchange to higher levels. The latest of these agreements was signed by the finance ministries of both countries during the World Governments Summit 2024. The agreements cover the avoidance of double taxation on income and capital and the prevention of tax evasion and avoidance, which are part of the journey towards economic and financial integration and the free movement of capital between the two countries.
Among the most prominent MoUs in the financial field is the cooperation agreement between the Securities and Commodities Authority of the two countries. Additionally, a tripartite cooperation agreement in the field of securities was signed in February 2022 between the Abu Dhabi Securities Exchange (ADX), the Kuwait Stock Exchange (KSE), and the Kuwait Clearing Company (KCC). Statistics from the UAE's Securities and Commodities Authority indicate that the total number of Kuwaiti shareholders in publicly traded companies allowed for GCC citizens increased from 3 individuals in 2000 to 40,979 individuals in 2022. Furthermore, data compiled by the Federal Competitiveness and Statistics Center show that the cumulative number of licenses granted to Kuwaiti nationals amounted to 5,745 licenses in 2022 out of 30,508 licenses for economic activities in the country allocated to GCC citizens, with an increase of 302 licenses in the year 2021-2022.
In line with both countries' efforts to promote innovation as a work approach, the UAE Ministry of Finance signed a memorandum of understanding in April 2017 with the Sabah Al-Ahmad Center for Giftedness and Creativity, located in Kuwait, to enhance cooperation with the Ministry. The aim is to establish an environment conducive to innovation in various fields and enable employees to practice and use innovative methods in institutional work through developing projects and achieving economic partnerships with relevant entities in the field of innovation at local and international levels.
To enhance effective corporate governance practices for listed companies in Kuwait and raise awareness of their importance among these companies and all state institutions, the 'Governance Institute' for Corporate Governance, affiliated with the Dubai International Financial Centre Authority (DIFCA) and the Kuwait Capital Markets Authority signed a cooperation memorandum in October 2019. An MoU was signed in September 2021 to stimulate investment and enhance cooperation between the Kuwait Direct Investment Promotion Authority, the Abu Dhabi Department of Economic Development (ADDED) and the Abu Dhabi Investment Office (ADIO), which also signed an agreement in February 2022 with the COFE App to benefit from the Abu Dhabi Investment Office's innovation program and establish a headquarters for the COFE App in Abu Dhabi city.
Since the signing of the agreement to establish the 'Joint Committee' for bilateral cooperation in 2006 in Kuwait City, the two countries have taken steps that have contributed to strengthening bilateral relations between the UAE and Kuwait and propelling them towards broader horizons of cooperation and coordination. According to the UAE embassy in Kuwait, the investments flowing from the UAE to Kuwait amounted to about $837.8 million (3.07 billion dirhams) during the period from 2016-2020, while the value of Kuwaiti investments flowing to the UAE reached $1.745 billion (6.4 billion dirhams). Financial and insurance activities are the most significant sectors of Kuwaiti investment in the UAE, whereas the financial and banking sector is one of the most important sectors of UAE investment in Kuwait. The UAE also hosts two branches of Kuwaiti commercial banks out of seven Gulf banks permitted to operate in the UAE.
The trade between the UAE and Kuwait in the first half of 2023 reached 22.3 billion dirhams, while statistics compiled by the Federal Authority for Identity, Citizenship, Customs, and Port Security indicate that the total trade exchange between the UAE and Kuwait amounted to 44.8 billion dirhams during 2023, and 44.1 billion dirhams during 2022, a growth of 15% compared to 2021.
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