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ARAB OPEN UNIVERSITY January 2021 BUSINESS DEPARTMENT KUWAIT NEWSLETTER ISSUE # 3 DR. JARRAH ALMANSOUR FATMA ALI NOUF ALOUDAH Business Program Coordinator Admin Coordinator Admin Coordinator

TO THE NEW YEAR

Table of Contents THE CHALLENGE OF CORONAVIRUSES ........................................... PAGE PANDEMIC AND LESSONS TO BE LEARNED MEDIUM AND SMALL ENTERPRISES AND ........................................... PAGE KUWAIT ECONOMY ADVERTISING .................................................. PAGE COMPETITON .................................................. PAGE .................................................. PAGE .................................................. PAGE

THE CHALLENGE OF CORONAVIRUSES PANDEMIC AND LESSONS TO BE LEARNED Corona virus has touched every aspect of our life; the education system is not an exception. This pandemic caused a substantial disruption to the traditional teaching system As part of the precautions adopted to control the accelerated spreading of coronavirus, universities shifted to online education, this was a sudden sharp shift. What are the outcomes and the effects of this shift on the students, the faculty staff, and the education system? This is an empirical question the answer for it needs empirical research based on scientific methodology (I and a team of my colleagues working on that right now to provide a partial answer). However, while waiting for the empirical results to come it is worthwhile to present some notes which are derived from personal observations and general talks with some students. In the beginning, the shift was discomfort and created a lot of anxiety. However, by the time the students adapted to this change and became more comfortable with the new ways of teaching. This adaptation was easier and faster for universities with a blended teaching system than others that depend only on the traditional method of teaching. That’s maybe because students and instructors have more experience and competencies to deal with such technology. Instructors played a major role in supporting and helping the transition to be smooth. Being physically distant does not mean being isolated. So, instructors were in ongoing contact with the students using all available means to answer their questions and alleviate their concerns. Several instructors, in addition to the academic and technical support, provided their students with emotional support. This support was of special importance for outstanding students who were afraid that online learning might negatively affect their academic performance. The instructors clarified to the students that this new experience freed much time and energy that can be used to go beyond the material provided in the textbooks (such as reading articles, YouTube videos, … etc) to expand their knowledge. Thus, Online education enhanced the students’ self-confidence and become more self-dependent. This enabled the students to rediscover themselves, they began to realize that they are part of the education process and active seekers of knowledge. PAGE # 1

This pandemic opened new opportunity to embed the technology-based teaching as an integral part of the education system. At least we need to use it as a parallel system to be ready to use during any crisis we might face in the future such as bad weather which might be extended for several days. So, using an online learning platform should be one of the skills that every instructor should master. Moreover, we found that some courses are more appropriate to be taught online than others such as practical and lab courses, so we should think of ways of how to develop interactive online courses to facilitate delivering these types of courses online. Also, it is fruitful to get feedback from the students and instructors as well about the challenges, obstacles, and difficulties they faced during the online experience to develop strategies to overcome them in the future. DR. HASAN ALEASSA Associate Professor PAGE # 2

MEDIUM AND SMALL ENTERPRISES AND KUWAIT ECONOMY DR. KAMESWARI PEDDADA Abstract The world economy has undergone momentous changes after the industrial revolution. Dependence on agriculture alone and dependence on single or a few raw material exports was considered bad for the national economies. Heavy industries lead to economic growth, but with fewer jobs, huge capital investment, and inequitable wealth distribution. Small and medium enterprises (SMEs) generate more jobs with less capital, support heavy industries, and enable sustainable economic growth. Oil-dependent and government-sector dominant Kuwaiti economy are not sustainable. It needs a diversified economy, privatization, knowledge industries, foreign investment, and SMEs. Importance of SME in the economy SME’s provide as much as two-thirds of all employment, with small firms contributing more to employment in low-income countries, than in high-income countries. Growth and productivity among SMEs vary widely from country to country. Such constraints fail to increase the per capita income. Both business environment and firm-specific factors affect the SMEs. Current Kuwaiti Definition of SME It is based on three elements, employment, assets, and earnings. A small enterprise is one with 1-50 employees, assets not exceeding KD 250,000 (the US $ 825,000), and earnings not exceeding KD 750,000 ($2.4 million) and a medium one employs 51 to 150, with assets not exceeding KD 500,000 (the US $1.6 million) and earnings not exceeding KD 1.5 million (the US $4.8 million). In the case of combined entities, their combined assets shall be subject to the above definition. SME Status of Kuwait Kuwait is the 4th richest country, and 2nd in terms of GCC per capita income. Oil is the country’s main natural resource. Kuwait’s industries are dominated by oil refining and downstream petrochemical processing. The non-petroleum related manufacturing and agriculture sectors are limited. The government sector dominance has resulted in disguised unemployment. Kuwait has formulated Vision 2035 to position itself as a center for trade and finance through favoring foreign investment and advancement othe private sector in economic growth, education, training of young people, and overall development. More attention is being paid to diversify the sources of income and creating more job opportunities by encouraging and supporting SMEs. The total number of approved projects (2016-2017) was 245. Total number of such enterprises as of 2017 was 33,000. During the period of 2013-2019, the total number of SME startups through the National Fund was 1116, categorized into Commercial 40%; Services 39%; Industrial 13.8%; Handcraft 4.4%; Agricultural 2.8%. PAGE # 3

Some of the milestones in developing the SME include: ·Industrial Bank of Kuwait in 1984 approved the program to encourage Kuwaiti small industries and crafts. Central Bank of Kuwait in 1992 instructed local banks to finance SMEs and maintain their viability in the local market. Public Authority for Industry has adopted the formation of an information base for local SMEs because of their importance in developing projects. Kuwait Chamber of Commerce and Industry in 1993 submitted a memorandum to the National Assembly to solve difficult economic problems, like debt problems. His Highness, the Emir of the State of Kuwait, donated $ 500 million in 2009 to support SMEs through the Arab Fund for Economic and Social Development. National Fund for SME Development was established in 2013 with a capital of 2 billion KD aimed at supporting the Kuwaiti economy in the public and private sector and supporting employment of the youth through financing SMEs. Kuwait’s vision 2035 envisages the revival of the entrepreneurial spirit of its people, a leading role for the private sector in the economy, creating ample jobs for nationals, and Government playing only a supporting role through creating a business climate to encourage local investment, competition, diversification, and growth. World Bank Group’s analysis revealed that the value added by SMEs in Kuwait trails far behind peer economies. Despite 94% of Kuwaiti firms being categorized as SMEs, the latter’s share in total value-added is only 3.1% and is concentrated in the real estate and retail sub-sectors. Though employing 23% of the total workforce, SME contribution to the Kuwaiti economy is marginal at 3% of GDP. The challenges for SME in Kuwait include: 1.Excessive regulations 2.Problems in recruiting and retraining skilled Kuwaitis 3.Perception and cultural set up in Kuwait. 4.Lack of access to capital 5.Lack of access to the latest in information & communication technology 6.Limited domestic market demand Starting a Small Business One, who wants to start a small business, need not be overwhelmed by fear of difficulties and failure. One can seek help or mentorship from startup incubators, or a local entrepreneur or small business owner. An idea doesn’t become a business without a lot of effort. The required actions can be broken down into seven steps for ease of management. Step-I: Market research needs to be done for an opportunity to turn an idea into a successful business. The workable among all creative and careful business ideas should be put into action. Step-II: A simple, low-cost business plan of vision, mission, objectives, strategies & action plan. Step-III: Choosing the business location PAGE # 4

Step-IV: Getting a domain name & business website (Go Daddy/HostGator/Weebly/Shopify). Step-V: Registering with government business registration office providing all details, like owner’s personal details, business/company name, business website address & logo, business location, and contact details. Necessary permits and tax registration obtained for SMEs. Step-VI: Business financing through owner savings, owner’s job remunerations, family & friends, Bank loans, mortgaging house or other property, business grants for SME, business angels, or crowd-funding through fundraising websites, like Kickstarter, Indiegogo, Fundable, Rocket Hub, and Gofundme.com. Step-VII: Launching and tracking of progress. Maintaining motivation against meager revenues by an effective marketing plan, retaining customers, and implementing required modifications. Small Business Ideas for Kuwait There are great chances for entrepreneurs to excel if they are determined to do so. Kuwait is unleashing young entrepreneurs through a foundation named INJAZ. There are several good startup business ideas for 2021 in Kuwait, especially for the youth and newcomers. Accessories & Clothing Business of Import Remote English language Tutor. Starting a YouTube channel Home-Based Child Care. Making a Job Consultancy Firm Launching an Online Course. Stock Brokerage Firm Gas Refilling Station Real Estate Business Car Wash Eye and Dental Clinic One-Stop Technology Centre. Pet Counselor Conclusion Encouragement for SMEs is an important step in achieving the Kuwaiti Vision-2035. A multi- pronged approach is being followed for the purpose and the results of these measures are eagerly awaited in the coming decades. (Dr. Kameswari Peddada, PROFESSOR, BUSINESS STUDIES, AOU-KW PAGE # 5