After a great space collision Naboo was cut off from the main space lanes and so Kwilaan quickly became a ghost town. Now though the city is being slowly rebuilt and will soon be back to its former glory.
Kwilaan is the main base for Imperial Omega Guard and as such is an Imperial city. This doesn't stop neutral people from living and working in the city though, and many neutral people find that they have a larger customer base of non Imperials.