Qatar: A land of business opportunities

Qatar has always been in the news. Today, it’s in the news for two reasons. First, due to the illegal and unjust blockade imposed on this small nation by its neighbouring countries, and secondly, for being the host nation of 2022 World Cup. For the past several years, Qatar has been a rising star in this region. It has one of the fastest growing economies in the world and has carved for itself a special place on the global stage with its visionary policies, global interventions, charitable activities and foreign policies all of which are geared to make the world and this region a better place.

Qatar’s successful handling of the blockade is without precedent in recent history. Doha has turned this crisis into an opportunity, and with great vision and wisdom, and some manoeuvring, it has emerged victorious against some powerful neighbours. If a small country could overcome a crisis of this magnitude with such ease, the message is very clear: this is a country worth doing business with.  People inside the country and investors all over the world don’t have to look elsewhere if they are planning to put their money in new ventures. Qatar is the best bet in the current socio-economic scenario in the region.

 

Why invest in Qatar?

There are several reasons, which you won’t find in other countries. First of all, Qatar’s economy is built on a solid foundation which has insulated it from all kinds of regional and global economic upheavals. It has abundant energy reserves, especially gas, which can be exploited for several decades to come. It has the second-largest gas reserves in the world (896 trillion cubic feet or 25.4 trillion cubic metres) after Russia. Though several countries in the world have entered the global energy market after the discovery of oil and gas reserves in their territory, Qatar retains an edge because of the price factor. Also, Liquefied Natural Gas (LNG) is the fuel of the future, and as a manufacturer of this clean energy source, Qatar has a bright economic future.

So, Qatar offers the economic stability which every investor is looking for as a first condition of his/her investment. Economies based on manufacturing and services are susceptible to market turbulences whereas natural reserves offer a stability which has been proven over decades. One major reason Qatar was able to survive the sanctions imposed by the neighbouring countries was due to the strength of its economy. The siege countries have tried every measure to destroy Qatar’s economy by cutting trade links and by trying to weaken its currency in the international market. But the revenue from natural reserves was enough to offset the cumulative impact of all their retaliatory measures.

Blockade as an opportunity

Secondly, the blockade has completely changed the business environment in Qatar. It’s not an exaggeration when Qatar’s government says that the crisis has made the country and its economy stronger. The blockade came like a bolt from the blue. Both the government and the residents were taken by surprise. Saudi Arabia closed Qatar’s only land border through which came all the essential items which Qatar needed. With that single, reckless act of the siege nations, Qatar became aware of its shortcomings. What followed was a series of revolutionary measures from the government which are continuing even today. The government decided to achieve self-sufficiency in every sector of business and economy so that there is no need to rely on a foreign country for its needs. The rules were liberalised, incentives were offered, and the Qatar Chamber of Commerce and Industry took the lead in fulfilling the vision of the government.

When imports from Dubai and Saudi Arabia stopped, there was a huge vacuum in the local market. The local companies rushed to fill this vacuum by increasing their production and new companies were started in areas where there was a demand. Baladna is a wonderful example. Almost the entire Qatari population was relying on Al Marai, the Saudi dairy giant, for their daily milk, butter and yoghurt. Al Marai’s withdrawal from the market after the blockade created a shock. But within a few months, Baladna, a Qatari dairy firm, rose like a phoenix, and grabbed the entire market share of Al Marai. In all other sectors too, including agriculture, Qatari companies rushed to grab the new opportunities created by the withdrawal of Saudi and Dubai-based companies. The results are spectacular, with the country achieving self-sufficiency in almost all sectors.

Third, Qatar has built the most modern infrastructure, like ports, airport, roads, metro etc. Some of these projects, like the Hamad port, were started before the blockade, but was completed on a war-footing after the announcement of the blockade. The utility sector deserves special praise. Power outages are unheard of in this country, an achievement which even many advanced countries can’t claim.

The government gives the first priority to infrastructure. The massive expansion in road network in the country in the past few years has made the entire country well-connected. With the inauguration of the metro network, the infrastructure sector will get another boost.

Fourth, Qatar’s policies are investment-friendly. A new investor doesn’t have to go through a rigorous rigmarole of procedures and rules are simple and straightforward. Especially after the blockade, the government is taking every measure to make business smooth for companies.

Perhaps the most important attraction of Qatar in this regard is its low tax rates. No one will dispute the fact that Qatar is one of the most tax-friendly countries in the world. The ownership of a company, as per law, is on a 51:49 partnership basis, with a Qatari citizen or group owning 51 percent and the expatriates owning the remaining 49 percent. There is no tax on the profit of the Qatari partners, whereas expatriates have to pay ten percent of their profit as tax. This is one of the lowest tax rates in the world. And there are no other hidden taxes, and no Value Added Tax (VAT) so far, which makes Qatar an attractive destination. Moreover, the expatriates can repatriate their entire profit without any restrictions. The government has abundant foreign reserves as most of its revenue is coming from the exports of energy products – in dollars – and there is no need to withhold the funds of expatriates.

While discussing the strengths, we also need to take a look at the disadvantages. Qatar has a small population, which means the market is small. The total population of the country is only around 2.7 million, which is very miniscule. This means large industries - like automobile manufacturers – may not find the market attractive. But there is plenty of potential for Small and Medium Enterprises (SMEs). At the same time, this country has the potential to become a manufacturing hub due to its strategic location, and thus become an export hub.

Also, there is a need for improvement in some business and immigration laws to make the process easier for companies. Rents, both residential and commercial, continue to be high despite the correction in the market caused by the blockade. The situation is likely to improve with an increase in the supply as several new apartment buildings are coming up all over the country.

In certain areas, Qatar’s potential remains underutilised. For example, I think this country can become a technology hub. In fact, Qatar has better facilities and better infrastructure compared to established IT hubs in the world. With the launch of 5G network, the internet speed in the country is among the highest in the world and the availability of 24-hour utilities, without even a single outage, can make Doha an ideal location for IT companies, with the additional advantage of its strategic location. Only the availability of manpower in this sector poses a problem, but this is a problem that can be easily addressed by the government by further simplifying visa procedures.

The future looks bright because the government will continue its liberalisation policies and the finances of the state are likely to get stronger with a steady increase in global oil prices. The entire country can be considered a free zone with its liberal tax policies, but still, the government is in the process of setting up free trade zones with several incentives for start-ups and new companies.

There are already some government institutions helping investors. Manateq, Qatar Science and Technology Park (QSTP) and Qatar Financial Centre (QFC) are the major free/special zones now in operation while Qatar Development Bank (QDB) and Qatar Business Incubation Centre (QBIC) are supporting and promoting startups and industries.

Also, there are signs of a solution to the Gulf crisis because of some new developments in the region. There is an ease in tension because the siege countries have failed in their attempt to silence Qatar. Moreover, the United States and European countries are demanding an end to the blockade on Qatar and their efforts are likely to produce positive results.

Time can heal old wounds.

By CA. Abdul Khader MT

(Author is a Practicing Chartered Accountant in Qatar)