Kuwait said it will lift a regulation that forces foreign companies awarded government contracts to invest in the local economy, according to the country's finance minister.

Kuwait is scrapping the scheme after more than two decades in an attempt to attract more foreign capital, Finance Minister Anas al-Saleh told Reuters news agency.

"This is why we've frozen it to make sure it is not an obstacle for those firms to come in," he said, as quoted by Reuters. "We need to revise it."

The programme was first introduced as a way to decrease Kuwait's reliance on oil and to boost other industries within the country's economy.

The scheme was criticised for favouring larger companies with bigger economies of scale, as these firms found it easier to absorb the extra costs while smaller companies found it tricky to cover the extra cost.

The new rules could be implemented in six months, Saleh said.