Qatar’s economy sets sights on new horizons

There has been a great deal of focus on the World Cup as an end goal for Qatar. But hosting the tournament was just one of many milestones marking the country’s physical and institutional transformation. “It was not that Qatar built up the country so it could host the World Cup,” says Akber Khan, acting CEO at Al Rayan Investment. “Qatar built up the country and it also hosted a World Cup.”

When FIFA chose Qatar to host the competition back in 2010, the population had doubled in a relatively short space of time and the country’s infrastructure was lagging. What Qatar managed over the subsequent 12 years was to complete a building programme that reflects not only the country it has become, but the country it wants to be.

Hundreds of kilometres of highways, rail, metro and tram lines were laid. Air and sea ports were built that are now the envy of the world. Qatar’s population and business community enjoys modern real estate and cutting edge telecoms infrastructure.

Foreign direct investment has played a huge role in helping generate growth and diversification. Bassel Gamal, CEO of Qatar Islamic Bank (QIB), points to data showing 70% annual growth in FDI from 2019 to 2022. “In 2022 alone, Qatar attracted $29.7bn in FDI, generating new jobs across diverse sectors such as technology, business services and finance,” he says. “Qatar has strategically positioned itself as an appealing global investment hub through well executed policies and a favourable business environment.”

The World Cup proved a stellar demonstration of how well Qatar’s infrastructure — from stadiums to social spaces — caters to mega-events. “Our successful hosting of the event changed the international perception of Qatar as an ultra-modern and dynamic country with a diverse and fast-growing economy,” says Ahmed I. Hashem, acting group CEO of Dukhan Bank.

Maintaining this momentum, the authorities have built an impressive pipeline of future sporting competitions. This includes the Asian Football Confederation Cup and F1 Grand Prix in 2023, the World Swimming Championship Doha in 2024, the FIBA Basketball World Cup in 2027 and the Doha Asian Games in 2030.

Reflecting the country’s success in becoming a go-to host for such events, Qatar’s sports sector is projected to make $26bn by 2025.

Sport is far from the only category of event drawn to the country’s world class capacity for spectacle. The World Horticulture Cultural Expo and the Geneva Motor Show will both take place in Doha this year.

A future filled with attendees and participants of global competitions and events is a boon for Qatar’s already soaring construction and property industries. “Real estate is clearly a booming sector — not only in terms of residential property, but also, given the rise of the tourism sector, in hotels, resorts and entertainment destinations,” says Al-Subeai. Tourism numbers are showing strong signs of recovering back to pre-pandemic levels.

In the residential sector, the authorities have implemented a series of reforms of foreign investment and property ownership regulations. These progressive legislative changes have opened the door for foreign investors to own properties in newly designated areas including The Pearl, West Bay Lagoon and Al Khor.

Trade is another area where Qatar has already established primacy and is set to reap the benefits. It is home to one of the world’s leading international carriers — Qatar Airways — and container volumes are soaring across its key ports.

Earlier this year, Hamad Port hit 8 million containers handled since its inception in 2016. Hamad ranked 8th in the world and 3rd in the Middle East region on the Container Port Performance Index for 2022.

“The local logistics market is forecast to outpace all competitors in the Gulf Cooperation Council region between 2020 and 2026, ranking in the top quintile globally and second in the Middle East,” says Sheikh Fahad Bin Mohammad Bin Jabor Al Thani, chairman of Doha Bank.

The fact that Qatar’s robust economic growth has been driven in large part by non-hydrocarbon sectors — not least construction and trade — is an important sign of evolution. This economic diversification has further contributed to Qatar’s resilience and attractiveness to investors.

But Qatar also recognises the need to diversify its economy further. The country already offers businesses and investors world class physical infra- structure. Virtually the entire nation has 5G connectivity and one of the two local mobile operators was deemed to have the fastest mobile network in 2022.

One analogy likens Qatar to a house that has been prepared to welcome visitors from all over the world. “You have your house ready for a huge party and everything is exactly how you want it to be,” says Khan at Al Rayan Investment. “The party was extraordinary. But now you want to continue to attract people, and that is an evolving proposition.”

Attracting businesses, investment and talent may require a different skill-set from one focused on construction projects, but it is a skill-set that Qatar’s government has been judiciously cultivating over the last few years.

In addition to minimal taxes, the authorities have worked to create a robust and reliable investment framework that caters to every sector from transport and technology to energy and education.

Part of this involves allowing greater foreign participation across the economy. Firms are already responding to the government allowing full international ownership. Logistics firm GWC announced in July that it had become one of the first companies in Qatar to raise its foreign ownership limit to 100%. The Qatar Central Bank (QCB) now allows listed Qatari lenders to accept up to 100% foreign investment, and major firms including Commercial Bank have availed themselves of this option.

Large scale projects that were once the exclusive purview of the Qatari state are also being made available to foreign capital. “Private-Public Partnerships and divestitures of state-owned assets are increasingly common, enabling private sector involvement in major projects,” says Ahmed I. Hashem at Dukhan Bank. He points out that Hamad International Airport was built and is operated through a partnership with the private sector.

PPPs are also helping transform Qatar’s education sector — a strategic priority for the government, which has created strong investment incentives. Local firms are helping build schools and universities across the country.

The start of the 2022-2023 academic year saw the opening of schools built by Barwa Real Estate Group under the first phase of the government’s Qatar Schools PPP Programme. Internationally renowned universities — including Georgetown and Cornell — have campuses in Doha.

The authorities have been vocal about their desire to create a knowledge economy, which by definition requires a high level of education and skills. Qatar expects an influx of highly skilled expatriates targeting growing sectors like technology, manufacturing and services.

In a similar vein, the government has put real effort into advancing technology and innovation. Qatar’s Investment

Promotion Agency has played a pivotal role in promoting the country’s investment potential. “IPA Qatar has actively engaged with renowned companies, forging partnerships with industry

leaders such as Microsoft and Google on the technology side,” says Gamal at QIB. “Qatar has also committed itself to smart technology with the TASMU programme, and to leadership in innovation through initiatives such as the Qatar Science & Technology Park.”

These collaborations have not only strengthened Qatar’s global economic ties but positioned it as a prime destination for foreign investment.

Qatar has a proven history of attracting global firms, but in the past its primary appeal was energy supply and available land.

A partnership with Norwegian firm Yara more than 50 years ago has resulted in one of the world’s leading fertiliser exporters — Qatar Fertiliser Company (Qafco). The draw of abundant gas reserves has enticed Japanese petrochemical firms and European aluminium makers to set up major operations.

To sustain its economic journey, Qatar has sought to provide a comprehensive package that appeals on more fronts than simply power supply. Heavy industry and petrochemical operators have made Qatar their home, but the country wants to attract tech firms and light manufacturing too. And it is working.

French company Gaussin is one of many examples. It has partnered with a Qatari company to create the country’s first electric vehicle assembly plant, in the Umm Alhoul Free Zone. “This is an example of a company that could have set up pretty much anywhere in the world,” says Khan. But Gaussin chose Qatar.

There is no doubt the government recognises the need for continuous improvement. One such area is in the process of setting up companies — the permits, approvals and interactions with different government departments.

“Qatar needs to continue to enhance the regulatory environment, the frameworks and improve the ease of doing business,” says Khan. “There’s work to be done in a number of those areas to reach the country’s ambitions.”

Much of the registration process has already been digitised and the process brought on to an app. The launch of Qatar’s Investment Portal, a digital platform aimed at introducing foreign investors to business opportunities and facilitating expansion in Qatar, has further streamlined the investment process.

Last but by no means least, Qatar has a well developed and well regulated banking sector, able to help support the government’s economic development efforts. “In line with the Qatar National Vision 2030 and the country’s desire for industrial diversification, the Qatari banking sector plays a key role in supporting privatisation in semi-government areas such as energy, transportation, infrastructure, healthcare, education and telecommunications,” says Ahmed I. Hashem at Dukhan Bank.

The authorities are dedicated to fostering diversity and innovation in the financial sector. A perfect example is Qatar’s Fintech Strategy 2023, unveiled by the central bank earlier this year. This is designed to boost financial inclusion and make the country a global leader in digital and financial innovation. By 2027, the strategy is intended to have tripled the number of licensed fintech companies and generated a twentyfold rise in the number of fintech jobs in the country.

“It also aspires to elevate Qatar as an appealing hub for foreign direct investment and expertise, all while laying the foundation for a knowledge-driven economy,” says Gamal at QIB.

Qatar’s economic transformation has been rapid and remarkable, but in some sense the journey is a never-ending one. Qatar is not developing in isolation, and there is a strong element of competition between regional neighbours trying to attract the same pools of knowledge and human and financial capital. Where Qatar stands out from potential rivals is its commitment to constant improvement.

“Every successful investor must take both short and long term views to achieve their most ambitious goals and fulfil their potential,” says Sheikh Fahad Bin Mohammad Bin Jabor Al Thani at Doha Bank. “In a world where change has never been faster, every business and investor needs a like-minded partner to achieve that.”

Combining award-winning infrastructure, a young and highly educated talent pool, a supportive business environment, world class healthcare and an unparalleled lifestyle in one of the safest countries globally, Qatar is the partner of choice in the Middle East.