The latest firm to open its doors wider to foreign investors is Gulf Cement. On February 27 the company announced its shareholders had approved a motion to allow foreigners to buy up to 49% of the company’s shares.
The shareholders also voted in favour of converting Gulf Cement into a holding company and changing its name to the Gulf Holding Company.
Only days before the Gulf Cement move, shareholders in the United Development Company (UDC) ratified a similar proposal, voting to amend the firm’s articles of association to allow foreigners to have up to a 49% stake, raising the barrier from the existing 25%.
UDC, which is developing the massive Pearl Qatar man-made island resort and residential complex, floated the proposal to further open up its share lists to foreigners in January. Before the vote, UDC’s chairman Hussein Alfardan had said the company needed to “remain flexible to adapt our vision and mission to capitalise on the powerful trends shaping our business”.
Last fall, one year after its launch, the Islamic lender Masraf Al Rayan was given government clearance to lift the stake foreigners could own in the bank to 49%, a move analysts predicted would leave it less exposed to the activities of speculators and strengthen its investment base.
However, one Qatari company that bucked the trend was Industries Qatar. On February 20, the steel, petrochemical and agrochemical firm’s board of directors deciding against lifting the cap on foreign ownership in the firm from 25 to 49%. The company had just reported year end profits of $1.3bn, up by 37.7% on the 2006 results.
The moves by Gulf Cement and UDC came as the ministry of economy and commerce announced a study into proposals to allow foreign investors to take up full ownership in certain sectors.
Khalid Al Darbasti, the director of the ministry’s department of investment promotion, said to the ministry was considering letting foreign investors own up to 100% of businesses in certain sectors that could add value to the economy. In particular, these would include export-oriented industries, he told local press on
February 7.
Among the issues the study would cover would be possible amendments to Qatar’s existing foreign investment law, Al Darbasti said.
Under the existing legislation, enacted in 2000, foreign investors are permitted to have a 100% stake in projects in the agriculture, tourism, education, industry, health and energy sectors, as long as these investments have been given state approval. In most other sectors, foreign ownership is limited to 49% percent.
Through an amendment to the law passed in 2004, foreigners were allowed to invest in the banking and insurance sectors, previously closed to them, though cabinet approval must be obtained.
According to Al Darbasti, Qatar attracted $1.8bn in foreign investments in sectors other than the hydrocarbons industry last year. With an increasing number of firms opening their doors to overseas investors, and with the potential for full ownership in some ventures being held out by the government, this figure should rise in 2008.
The increase could be even higher if foreigners are given greater access to Qatar’s privatisation program, as most of the sell-offs of state enterprises are still limited to Qatari nationals.
The latest of these came on February 28, when Qatar Petroleum launched the privatisation of 70% of the shares in its holding company Gulf International Services, which included Al Koot Insurance and Reinsurance, Gulf Drilling International and Gulf Helicopter Company. However, the initial public offering is restricted to selected institutions, which can take up 4.2% of the shares available, and individual Qatari investors, who are eligible for the remaining 65.8%.
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