Business
The emergence of a new economic alliance
THE SCO Summit in Tianjin, China, last week signaled the emergence of a new economic power bloc, an alliance consisting of major economies rich in petroleum, ga,s and minerals, with the largest populated nations. Certainly, this is leading towards the rise of powerful nations. It could threaten the position of the United States in the global market, potentially toppling its economic status.
The meeting of the leaders of China, Russia, North Korea, India, and Iran, in addition to the South American countries Brazil and Argentina, signals the birth of a new global power bloc, while other countries are standing by to join the new alliance. With the wealth of minerals, oil and gold, it can become a balancing global force. As we imagine such an alliance, it is calling for a one-day cut of oil supply to the world. These countries can surpass OPEC’s total crude oil production, as well as its oil and gas reserves. Perhaps, they have yet to realize their power.
However, it will emerge to tilt the balance away from the USA. Perhaps, this is neither the idea nor the purpose, but it could be used as a ‘standby’ one. From the point of view of OPEC, the new alliance of China, India, and Brazil represents the most important nations importing crude oil and petroleum products from the Arab Gulf countries and other members of OPEC. They also represent future growth and demand for oil. At the same time, they represent future economic growth and the place of current and future investments. We, in Kuwait, are in the right place to invest. It is an emerging market. Kuwait can grow with it in terms of financial investments and lessons to be learned.
Now is the right time and it is the right long-term investment. This is why Kuwait’s oil industry is encouraged to build and invest in refining, similar to what Saudi Aramco is doing. It is the second-largest consumer of oil, with almost 16 million barrels, covering about 25 percent of total demand, second to the USA with about 20 million. While the third-largest consumer of oil is India, with six million, short by more than 10 million barrels per day. The USA is almost steady with 10 million barrels per day. It is trying its best to remain closed to imports, but so far, it is failing to do so. Nonetheless, it is open to imports from all the relevant countries, without exception. Hence, it is the role of OPEC and its partners to push for more crude oil exploration and to dig for oil. The demand is there, and the alternative has yet to appear as a replacement. Luckily for oil-producing countries, the alternative is not yet with us. Fortunately for us in Kuwait and our neighboring oil producers, this is expected to happen sometime in the near future.
In Kuwait, are we ready for that future? It may be saddening, but it is vital to know about it and to be prepared. The choices are not many, but perhaps it is good to invest and collaborate with major international consultants to find and search for options. With the current number of investments globally, alternatives might be found. The search for an alternative to oil is a challenge and a struggle, as others are doing the same. The good news is that Kuwait is investing in the emerging markets and the new power of the future. As long as we invest in emerging markets, we are in safe hands and part of it.
Diversification and searching for ways and means to increase our returns on investments is the only way to plan for the era after oil. We have to continue to find and discover new emerging markets, as the current ones might have matured. With the possibility that oil is not lasting, we must be well prepared.
By Kamel Al-Harami
Independent Oil Analyst
Undersecretary of the Kuwaiti Ministry of Finance, Aseel Al-Munifi
KUWAIT CITY, Sept 9: Undersecretary of the Kuwaiti Ministry of Finance, Aseel Al-Munifi, on Tuesday emphasized the need to develop the tax system and achieve financial sustainability to promote economic integration among Gulf Cooperation Council (GCC) member states.
Speaking at the 15th meeting of the Committee of Heads and Directors of Tax Administrations in GCC countries in Kuwait, Al-Munifi said the meeting is part of ongoing efforts to coordinate GCC tax authorities and develop mechanisms to unify joint tax policies that serve the interests of member states and their populations.
She expressed hope that the annex to amend the unified excise tax agreement would be signed at the upcoming financial and economic cooperation meeting scheduled in Kuwait next October, which will bring together the GCC finance ministers. Al-Munifi also commended the heads and directors of tax authorities and the Unified Tax System Working Group for their efforts in preparing studies, working papers, and recommendations.
Khalid Al-Sunaidi, Assistant Secretary-General for Economic and Development Affairs at the GCC General Secretariat, said the meeting continues the process of cooperation among GCC countries in tax policies. He noted that the aim is to unify tax frameworks, enhance economic integration, and support competitiveness at the regional and international levels.
Al-Sunaidi added that discussions at the meeting included outcomes from the GCC Unified Tax System Working Group on redefining energy drinks to reduce the consumption of unhealthy products, and plans to establish a comprehensive electronic system for all types of indirect taxes, alongside other related topics.
During the meeting, GCC tax heads and directors reviewed recommendations and decisions from the 14th meeting and previous sessions, submitting them to the undersecretaries of finance in the GCC. It was agreed to form a technical working group to develop the electronic system for indirect taxes and to redefine energy drinks in the Unified Excise Tax Agreement according to international definitions and classifications.
The 15th GCC Tax Committee meeting held in Kuwait.
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