Industrial Strength

Qatar

Economic News

22 Jul 2010
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Recent raids by authorities on facilities in Qatar's industrial area, aimed at enforcing regulations, have drawn attention to the growing role - and need for standardisation - of small and medium sized enterprises (SMEs) in the diversifying Qatari economy.



Qatar's industrial area houses a large number of SMEs, which are mostly focused around manufacturing.



While the oil and gas industry provides over 60% of the country's GDP, the SMEs in the industrial area are becoming increasingly important to the government's agenda, as the authorities continue their drive to diversify Qatar's economy. In 2004, manufacturing constituted the third largest contribution to GDP in the non-oil and gas sector, contributing QR6.5bn (US$1.8bn) or 6.3% of GDP.



A high proportion of business within manufacturing comes from petroleum refining and the production of chemicals, meaning the actual percentage of GDP that can be attributed to businesses situated in the industrial area is even smaller, estimated at around 2.5%. Nevertheless, the government intends to increase the percentage contributed by manufacturing in its diversification drive.



Ashghal, the public works authority, is in the final stages of completing an 81km road between the industrial area and Saudi Arabia's Abu Samra border crossing. This will connect the industrial area to the important market of its neighbour.



Conscious of the importance of private businesses to the economy, the new industrial area has grown up next to the original.



Situated only 10km outside Doha, the area is seeing the arrival of businesses to its 331 plots of land. However, while the advantages of the site have been widely advertised to attract businesses, not all companies locating there have been fully satisfied with the facilities.



"We were promised it would be well served and well equipped," one businessman who operates facilities in the new industrial area told OBG. "But we have had issues with telephone lines and the supply of gas. You end up paying more to start-up than you estimated initially because things just aren't physically ready yet."



At the same time, with the authorities continuing to develop Qatar's manufacturing industry and keen to expand the role of the private sector, Finance Minister Yousef Hussain Kamal announced plans for the establishment of an industrial free zone.



Reports in June suggested a site has already been selected for the zone, which will cover a 100 sq km area of land and be overseen by an independent body.



With an extensive downstream oil and gas sector already developing, the country could potentially support a whole host of manufacturing businesses using petrochemicals as the raw material for their products. The industrial free zone would provide even greater encouragement for SMEs to locate to Qatar, and with the continuing growth of the economy in mind, the recent focus of attention on the industrial area and the enforcing of regulations, seems all the more prudent.



As a result of raids by labour department officials, several labour camps were found in violation of hygiene standards, with a lack of facilities for workers, overcrowded and inadequately ventilated accommodation, overflows of raw sewage and exposed electrical wiring.



Those found in violation of hygiene and health and safety standards were given until the beginning of September to comply. It is expected that the raids will force employers to upgrade facilities in labour camps and raise the living standards of workers in the industrial area.



This is not the first time the industrial area has come under scrutiny. In June, the ministry of municipal affairs and agriculture cracked down on garages and workshops in the industrial area over lapsed commercial licences and abandoned vehicles.
Businesses were given one week to comply and crackdowns appear to be underway, judging by recent reports in the local press - automobile workshops without proper licences have been closed down, while those with correct licences have had to employ more staff to cope with demand.

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