Al Zalzalah: financing development projects only targets startups

KUWAIT, Aug 10 (KUNA) Chairman of the Kuwaiti financial and economic parliamentary committee Dr. Youssef Al Zalzalah said here Tuesday a bill on financing the projects related to the country’s development plan does not target “lame duck” companies, the bankrupt ones or those which suffer from financial crises, but they aim at the start ups.

Dr. Zalzalah said in a statement to the press following a meeting held by the committee with the governmental side for discussing these proposals that a number of points recently raised by media on some companies making use of these bills should be “clarified”, particularly those losing or bankrupt firms which suffer from financial crises.

These proposals are “only targeting” companies that would be set up within the development strategic plan, namely, “the plan would necessitate the establishment of joint stock companies related to it.” He also pointed out that this participation in the capital of these new firms would be according to certain rates as 40 percent would be allocated for speculating among companies listed in the Kuwait Stock Exchange (KSE) and 10 percent for the government, while the remaining 50 percent would be open to the public subscription.

In the same vein, Al Zalzalah said that firms that would be set up as part of the development plan are, “new ones that have nothing to do at all with other firms operating on the economic scene in Kuwait.” He also said that there are fears in the banking sector that such bills might encourage the establishment of bodies that have no relation to the Kuwaiti banking entity, “and this is erroneous notion as all bills proposed assert the necessity of banks’ overtaking a vital role in financing the new startups.” Al Zalzalah added that, “these bills bind companies to apply for local banks to get the necessary finance, if it becomes clear that necessary budgets are gigantic, the companies should then resort to the project finance fund.” He also stressed that the banking sector, “would continue its activity and would play a big role in financing projects, namely fears on the mechanism of funding projects is out of place.” He also said that the committee’s meeting with the governmental side stressed that no body should benefit from the project finance fund except through law along with the necessity of applying the principle of transparency and oversight in the state actions.

Al Zalzalah also referred to the demand made by the government represented by Deputy Prime Minister for Economic Affairs, Minister for State for Development Affairs and Minister of State for Housing Affairs, Sheikh Ahmad Fahad Al Ahmad Al Sabah for a two week delay to help, “the government come up with a blueprint what has been made of proposal and to present a definite opinion on financing projects.” Al Zalzalah explained that money allocated for funding projects, “would be deposited at banks,” pointing out that the role entrusted to the fund is to ascertain the feasibility studies of these projects, then, “give recommendations for the banks to finance projects by state funds.” He also stressed the necessity of making use of the experience of other world countries in this field, noting that such funds exist in Singapore, Malaysia, Germany and Japan along with most world countries which embark upon big development projects, “and banks do not possess immense funds to finance these projects, and consequently the government does the necessary funding.”

Source: Kuwait News Agency