The Kuwait National Assembly passed the law after three decades of discussion, the Kuwait Times said.
There has been an "impasse" between Kuwait's executive and parliament for several years years that has slowed reform, said Dubai-based Sachin Kerur of Pinsent Masons, the law firm behind Out-Law.com.
However, that has changed recently, with "a degree of cooperation starting to speed up legislation", he said.
"The recent volatility in oil prices has helped to convince many countries that it is time to open up markets to external investment," said Kerur.
"It will happen at different speeds from one country to another, but overall, the region is starting to open," he said.
The law also changes the process by which projects are awarded, allowing the Central Tenders Committee (CTC) to pick the second lowest bid for a project if it feels it is technically superior.
The CTC oversees all tenders except in oil rigs, exploration projects and military procurement which have now been exempted from 'prior supervision' by the CTC under the new law, allowing businesses to issue their own tenders and award contracts.