Methods of Payment

AnchorAnchorAnchorAnchorAnchorKuwaiti banks offer the full range of financial services needed to conduct commercial transactions or develop projects. Letters of Credit (LCs) are traditional instruments for private-sector transactions. LCs may be confirmed by a prime U.S. bank for additional exporter assurance. As U.S. exporters develop longer-term relationships and there is greater trust in the creditworthiness of all parties, companies may be willing to accept documents against payment (d/p) or documents against acceptance (d/a). Deferred payment schedules are not common except in cases of large transactions where supplier financing plays a role.

Companies bidding on government of Kuwait contracts should pay careful attention to the way proposals are prepared and should strictly follow the administrative specifications. Financing costs and foreign exchange rate risks, wherever applicable, should be factored into the bid price. Bids which do not comply with administrative specifications (including financial criteria) are generally rejected. Government tenders often require bid and performance bonds. Bid bonds must be issued by a local bank, and range between 2% and 5% of the value of the bid. The performance bond will replace the bid bond once the tender is awarded and is 10% of the value of the contract.

The local representative, sponsor or account executive will pay foreign companies involved in major government-tendered projects. The concerned ministry or department will issue a check in honor of the beneficiary to be drawn at a local bank. In turn, the beneficiary will remit the amount due to the foreign company (Sub-contractor).

Banking Systems

Banks are under the supervision of the Kuwait Central Bank. The banking sector is fundamentally sound. Kuwait has 11 local commercial banks, which include five Islamic banks. The largest bank is the National Bank of Kuwait (NBK). Following an amendment to the Banking Law of 1968, the National Assembly allowed foreign banks to establish operations in Kuwait. Currently, 12 foreign banks have branches in Kuwait. Well-known financial conglomerates such as Citi Bank, BNP-Paribas, and HSBC operate in Kuwait.

Two specialized government-owned banks provide medium and long-term financing. The Industrial Bank of Kuwait offers financing for industrial and agricultural-related projects. The Credit and Savings Bank facilitates the purchase of single-family or multi-family residential units.Anchor

Exchange Controls

AnchorAnchorAnchorAnchorAnchorThe Kuwaiti Dinar (KD) has been pegged to a basket of currencies since May 20, 2007. It is freely convertible and given strong foreign-currency earnings and foreign-currency reserves, its exchange rate vis-à-vis most major international currencies is stable.

US Banks & Local Correspondent Banks

Citi Bank is one of ten international banks currently maintaining operations in Kuwait. Other international banks include BNP-Paribas, HSBC, and regional banks from the UAE, Qatar, Saudi Arabia, and Oman. In 2013, the Kuwait Central Bank announced that foreign banks would be able to open multiple branches in Kuwait on a case-by-case basis.

For more information on the banking system please read the section Capital Markets and Portfolio Investment of the Investment Climate Statement.