4/5/2014 Corporate Monitor: 'Kuwait needs to foster sustainable investment' - MENAFN - Middle East North Africa . Financial Network

http://www.menafn.com/cm/corp_story.asp?StoryId=1093518529&corpID=408 1/2

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Arab Times - 30/05/2012

(MENAFN - Arab Times) "The four-year developmentplan launched in 2010-2011 aims at diversifying oureconomy by transforming Kuwait into a regionalfinancial and trade hub and such transformationrequires a significant expansion of our private sector,financial sector modernisation and a robust andattractive investment climate reinforced by a world-class legal and regulatory infrastructure," stated Ministerof Commerce and Industry Anas Al-Salah during theopening of the "Kuwait Insolvency and Creditor/DebtorRegimes Dissemination Seminar" that was held onTuesday at the Public Authority for Industry.

The seminar organised by the Ministry of Commerceand Industry in collaboration with the World Bankaimed at evaluating the functioning of the country's

enterprise credit and risk management environment in reference to the World Bank's 'Principles of EffectiveInsolvency 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, owinglargely to high and continuing demand for our domestic resources. Despite these advantages, the 2008 globalfinancial crisis has shed light on some of our own vulnerabilit ies to the international community on which we relyfor trade and with which many of our companies transact business and make investments abroad," pointed outAl-Salah

He added that the stakeholders must continue to deal with the casualties of the recent financial crisis bydeveloping workable solutions to promote corporate restructuring as investment companies have sustainedsignificant losses. "A new Financial Stability law was adopted in 2009, but has proven to be of only marginalbenefit for these companies. We are fortunate to have leading global restructuring experts who will share theirexperience in addressing these problems in other countries," he cited.

The Minister also stressed on the importance of building a sustainable and attractive business investment climatefor the future. He outlined that the ability to expand and sustain commerce and industry requires access tocredit 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 effectivelymanaged, which requires effective and functional registries, credit information systems and efficientenforcement and resolution procedures," he stated.

The seminar workshop attended by representatives of key state and private sector stakeholders was dividedinto three panel discussions. "The workshop provides a forum for the discussion of World Bank's Report in theObservance of Standards of Codes on Kuwait's Insolvency and Creditor/Debtor Regimes," pointed out Dr. RizMokal, Senior Counsel, World Bank. The World Bank Report provided a list of recommendations that wasdiscussed during the workshop by the panelists and the participants to enhance and strengthen each elementof Kuwait's legal, regulatory and institutional frameworks for enterprise credit.

The first panel discussion on 'The Kuwait Approach: Investment Company and Corporate Renewal' tackled onhow the global credit crisis has taken its toll on Kuwait's investment companies and businesses. The panelchaired by Dr Meshaal Jaber Al Ahmad Al Sabah, Chief of Kuwait Foreign Investment Bureau examined thecurrent state of the market and prospects for recovery and renewal of the investment companies andcorporate 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 andguest speaker from Turkey R Engin Akcakoca.

ProtectionThe second panel discussion on 'Credit Access, Protection, and Risk Management' chaired by AssistantUndersecretary for Economic Affairs, Ministry of Finance Sami Al Saqabi examined the important need indeveloping affordable access to credit, including small medium enterprises (SMEs), and its linkage to Kuwait'seconomic recovery and future growth. They also tackled that credit protection and risk management systems

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4/5/2014 Corporate Monitor: 'Kuwait needs to foster sustainable investment' - MENAFN - Middle East North Africa . Financial Network

http://www.menafn.com/cm/corp_story.asp?StoryId=1093518529&corpID=408 2/2

economic recovery and future growth. They also tackled that credit protection and risk management systemsalso facilitate efficient use and reuse. The discussion moderated and presented by Mokal with Johnson aspanelist focused on commercial credit information systems, security interests in moveable assets and intellectualproperty, registry systems, credit risk management framework and enforcement mechanisms.

Finally, the third panel discussion on 'Corporate Rehabilitation and Liquidation' that was chaired by AssistantUndersecretary of the Ministry of Justice Dr Mohammad Abdullah Al Ansari tackled the efficient rescue and exitmechanisms for business entities that are essential to maximizing business growth, developing a stable financialsector 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 insolvencylaws, preserving jobs and economic value through rehabilitation, maximizing values through efficientredeployment 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 duringthe workshop included the following under the Credit Risk Management Systems: Kuwait should consideradopting a generally applicable regulation to support both informal and quasi-formal restructurings for financiallydistressed 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 themodel of the consumer credit bureau CI-Net; and corporate governance practices should be strengthened andnew regulations should be introduced clearly defining accountabilit ies of officers and directors for trading whileinsolvent or while in the vicinity of insolvency.

PolicyOn the other hand, under the Creditor Rights Systems, one of the key policy recommendations forconsideration is for Kuwait to adopt a new secured transactions law for movable assets permitting as collateraltangible and intangible, present, after-acquired and future assets; creation of all-enterprise security and securityin generically described categories of assets.

Meanwhile, under the Insolvency Law/Framework, the key recommendation is to develop/adopt a newenterprise 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 alsoaccommodate pre-negotiated agreements guided by regulations.

Finally, one of the key policy recommendations under Institutional and Regulatory Frameworks is to promotejudicial specialization in the area of commercial and insolvency matters by ensuring that judges on thecommercial circuits should not be rotated off to non-commercial courts for at least three, and preferably fiveyears.

This would enable such judges to accumulate much needed specialist expertise and deep insight intocommercial transactions.

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