Qatar's political travails have expedited a drive toward diversification of the industrial matrix and of the markets its output is aimed at.
Underpinning an economy unquestionably benefitting from but not hostage to hydrocarbons, Qatar’s National Vision 2030 is already signposted with the FIFA World Cup 2022. It foresees galvanizing a young, skilled population to champion local output across key economic stalwarts, such as construction and hospitality. The former already claims the swiftest growth in the Gulf region, while the latter has seen the total available hotel rooms soar by over 1,000 in 2019. Many other sectors, not least those involved in the transition to a smart economy, promise similarly encouraging yields.
The basis for diversification The indications are indeed encouraging, not least Qatar’s third-place ranking in the International Institute for Management Development (IMD) International Competitiveness Report 2019. This 11-place YoY rise among 63, mostly developed markets, appraised government efficiency (5th), and business sector efficiency (10th), while with Qatar’s infrastructure hub ranked 40th. All meat and drink to strategic economic expansion.
Laying the groundwork At the sharp end of diversification are agencies such as the Qatar Business Incubation Center (QBIC). Fully owned by Qatar Development Bank (QDB), it was named best business incubator in the Middle East by Turkey’s World Business Angels Investment Forum in 2018. According to General Manager Hamad Al-Qahtani, the mission is no less than developing, “…Qatar’s next QAR100 million companies.” This requires established commercial verticals dependent upon innovators and SMEs in the value chain.
The letter of the law An economic model’s success is contingent upon its legal environment. Productively, Qatar’s investment climate encompasses privatization, public-private sector machinations, and foreign participation. The emirate has passed a raft of new laws, while amending existing ones to lubricate foreign investment, such as the Non-Qatari Capital Investment Law, and to establish the infrastructure to accommodate it through Investment Free Zones Law. Non-Qatari capital, up to 100% ownership, is now welcome at the table in all but certain sectors, such as banking. And, as of September 2019, new legal provisions enabled permanent expat residence. At the other end of the equation, a new consumer protection law further confirms the country’s commitment to international standards.
The three Ps National Development Strategy (NDS) 2017- 2022 treats Qatar’s need for public-private commercial partnership. Duly, 2019’s draft public-private partnership (PPP) law foretold major infrastructure cooperation spanning highways, retail development, and educational facilities. The framework provides land and offers investment in commercial models such as build-operate-transfer (BOT), build-transfer-operate (BTO), build-own-operate-transfer (BOOT), and operations and maintenance (OM).
Zoning out In 2019, Law No. 13 made provisions to establish Qatar’s Media City; this in a country with a pedigree in international production of broadcast media. Very much envisaged as an international hub for tech companies the media and digital innovation, it epitomizes Qatar’s information economy. Microsoft’s Azure Cloud Computing’s global data center has already been given the green light. The Qatar Free Zones Authority (QFZA) is currently anticipating the benefits to be reaped from the emirate’s pioneer free zone of Ras Bufontas. The facility provides resident firms an international regulatory system based upon common English law, as already enjoyed by investors elsewhere in the region. A second, Umm Alhoul Free Zone, adjacent to Hamad Port, is proudly billed as the world’s biggest greenfield project of its kind. The QFZA also penciled in a free zone in Msheireb Downtown Doha to house the nation’s Media City and serve as an ICT hub.
Qatar has chosen to see political adversity as a stepping-stone to wider self-sufficiency, and an economy leveraged against the vagaries of hydrocarbons. All this, despite major advances in the production of LNG, the commodity it historically left OPEC for to focus attention on. After all, no government spends USD6 billion on hosting a one-month kickabout if the wider returns are not obvious.